Please send me SCA's fortnightly briefing:

October 13, 2010

Beware the corporate interlopers

When social enterprise became the new zeitgeist, and there was kudos (and resources) to be won by joining this new movement, it was inevitable that all sorts would be attracted – mostly well intended but some not so.  Signs that Big Society may be going the same way. All of a sudden the big corporates are lining up to play their part. Jan Bebbington at St Andrew’s University is wary. She thinks big business should stick to what it does best

A study of the CSR policies of 12 of Scotland’s largest listed companies, found that spending year on year on corporate good citizenship increased in defiance of the tough economic conditions. They included Standard Life (+12%), Weir Group (+8%) and Wood Group (+5%), even though the latter two companies were found to be among the least active in the area relative to their size. Cairn Energy, Alliance Trust, Aberdeen Asset Management and Stagecoach all also claimed to have maintained or increased spending. This came at a time when spending on advertising in the UK plunged, down 12% between 2008 and 2009.

Jane Wood, chief executive of charity Scottish Business in the Community, said the findings were reflected across the board. She said: “Around 70% of chief executives say the recession has resulted in sustainability becoming more important.”

She said ethical behaviour was becoming increasingly important to consumers, especially in the wake of the banking crisis, and that businesses would in future be penalised for not taking their responsibilities to the communities in which they worked seriously.

The study revealed that consumer-facing companies put more effort into CSR than business-to-business companies, suggesting that the general public is more swayed by corporate behaviour than business clients.

Wood said the rising importance of CSR meant it had a role to play in the UK Coalition Government’s controversial vision of a Big Society, stepping in where the public sector would have to retreat in the wake of the coming cuts. She said: “Where you go into a local authority area and they maybe need to do a project with schools such as mentoring or interview skills, we can get the private sector to deliver it.

“There’s environmental work, supporting charities, community engagement. We are missing the role that employers play in getting their employees to contribute to stronger societies.”

Professor Jan Bebbington, a specialist in accounting and sustainable development at St Andrews University, disagreed. She said: “Why should a publicly-listed company do the job of government, and where’s the democratic accountability if they don’t do it? It’s unfair and unreasonable to expect these companies to make it part of their duty to do good.”

She also questioned the CSR sector’s logic that 1% of profits should be spent on it – a level that Cairn Energy exceeded among the surveyed companies that provided data.

Bebbington said: “If business does a good job of fairly paying people and producing products that are good for society, why would you expect that they giv e 1% of their profits to charitable purposes? Surely they pay taxes and then the Government decides what to do with the proceeds? I am not sure we should be outsourcing that duty to the private sector.”