Business is changing, which is great news for civil society

By Ed Boyd, Co-Founder and Chief Executive, ReGenerate Trust

It is not an uncommon view that those who work for charities are more motivated by creating positive change in the world, and those working for businesses more by profit. Regardless of the extent to which this was true, the reality is it is changing. Business leaders are becoming more focused on their impact on the world.

The idea that business was only about profit was popularised in the 1950s, driven mainly by the Chicago School of Business and Milton Friedman, and an influx of profit-hungry buy-out firms driving company minds to focus on profits.

Today, that view is shifting. Business leaders are now as likely to think that the purpose of business is to find profitable solutions to the problems of people and planet, as they are to believe it is to maximise returns for shareholders, as found by polling by the British Academy and ReGenerate. They are partly motivated by the same moral impulses as the rest of us – who cannot look at the world right now and want to contribute to easing suffering? – but it is also just good business, given the strong and growing evidence that purpose-driven businesses attract talent, more loyal customers and greater investment. Ironically, not being focused solely on profit can help companies become more profitable.

Crucially, the purpose-driven business movement is taking companies out of the more superficial CSR based approach to social responsibility. This means that, instead of doing good on the outskirts of a business, their social purpose is being baked into their company’s DNA, making it a core part of their economic model and what drives incentives within their firm.

This represents a huge opportunity for civil society organisations. Gone are the days when the best that they could hope for from business is a small one-year grant or a few days volunteering. While these things are undoubtedly valuable, the prize is now so much bigger: there is the opportunity for radical partnerships that really move the dial.

While there is much that charities and governments can do by themselves, the sheer scale of business, and the innovative potential of entrepreneurs, can really help create breakthroughs on stubborn social issues.

So, how then to make the most of this remarkable opportunity?

First, we need to seize upon the momentum which already exists and find focal points around which to mobilise business. One way of doing this is to use the Environment, Social and Governance (ESG) agenda. In the ReGenerate paper, Solving for S, we explore how to use ESG to unlock the power of business to better help tackle big social challenges.

We suggest the investment community and social campaigners should find a single problem to unite and galvanise action around. This has been hugely successful with climate change. There are many social issues that could be advanced by a rebooted ESG agenda. To really gain traction, an issue must – like climate change – pose a systemic risk or opportunity to an investor’s portfolio, and be measurable. One such social opportunity could be a focus on providing good jobs to people with social barriers to work. Millions of people have social barriers to work, such as a disability, criminal record or a single parent struggling to find the flexibility they need. Access to secure, fairly paid employment would transform their life chances.

This works for business, as it also benefits them. The UK is suffering from a serious labour shortage, with 1.2 million job vacancies and counting. As today’s Law Family Commission on Civil Society paper finds, “87% of employers struggling to fill roles and just over half (51%) reporting that skills shortages are their main challenge.” The inability to find talented employees is seriously holding companies back and proving a drag on UK growth.

Twenty years ago, investors were only just beginning to ask businesses what their greenhouse gas emissions were, or what levels of gender and race diversity they had throughout their organisation. Now they all do. What if they added to that a regular question of “What proportion of employees had a social barrier to work, and are any of them in full time work and considered to be in poverty?”.

Second, charities should search out and strike up radical collaborations with local businesses, as suggested by this Commission, which rightly recommends charities working more closely with business groups, and infrastructure bodies raising awareness of the benefits of charities and businesses working together.

Civil society organisations hold unrivalled data and insight into the true nature of social and environmental challenges – challenges that businesses are also likely to be setting out to solve, and have based their economic model and success on. This ranges from Greggs employing ex-offenders to reduce reoffending (and helping others to do the same) all the way through to Together All who have found an impactful, economically sustainable way of addressing rising levels of poor mental health.

Charities need businesses. And businesses, increasingly, need charities. Together, they have a far stronger chance of tackling the rising number of stubborn, endemic social and environmental problems that blight the UK. It is time for radical collaborations between them.

This piece was written in response to the publication of the report ‘Unleashing the power of civil society’