Placing corporate responsibility at the heart of your business is, of course, a brilliant way of helping local communities in these challenging times. But did you know it can also boost your books? We spoke to three companies reaping the benefits
A year after the 1981 riots in Toxteth and Brixton, the UK was suffering high unemployment and inner-city unrest. These events informed the creation of Business in the Community (BITC), a business charity dedicated to regenerating local economies. Its slogan was "healthy back streets make for healthy high streets".
"Following the riots businesses realised that what happens in the community impacts on them," says Andy Melia, CommunityMark manager at BITC. "They understood that working with communities is a sensible and responsible way to do business and that it has benefits for them as an organisation."
Mark Goyder, founder director of business-led thinktank Tomorrow's Company, believes that some of the reasons that led to the launch of BITC are resurfacing. "There is a danger of a growing divide between business and society through a lack of trust. Look at the recent riots, the vandalism of Fortnum & Mason during the spending cuts protest or Rupert Murdoch being splattered with shaving foam. It is a symbol of people saying business stinks," he says. The withdrawal of public funding from charities and community projects adds to the problem. "There is a big gap to be filled. Businesses are stepping up and saying we can make a contribution here," he adds.
Melia says corporate responsibility (CR) is increasingly important because the public is more interested in how business makes its money and how it affects society and the environment. "Today CR is about working in partnership with local organisations to understand the issues that affect your business and what you can do to offset that in a way that supports your business and is also good for the community," he says.
Many businesses have supported communities by training and employing local people, boosting the local economy by purchasing close to home, offering advice, mobilising volunteers, recycling and working to cut carbon emissions.
And it makes good business sense. Research published by BITC last year found that companies which measured their corporate responsibility outperformed FTSE-350 peers on total shareholder return in seven out of the last eight years. They also recovered more quickly following the financial crisis.
Goyder says the business benefits are multiple and varied. "There are obvious areas where CR pays. If you reduce your energy consumption you will save money and if you want to help save the planet you must reduce your energy consumption," he says. But there are areas such as reputation, talent and trust which are equally important but harder to measure.
There are benefits for staff morale, too. Melia cites the example of The Midcounties Co-operative, which found that among its employees who took part in volunteering, staff turnover fell from 31 per cent to 3.4 per cent. "As well as helping employees enjoy work more, CR can affect the bottom line in terms of reducing costs such as recruitment," he says.
Goyder believes responsible business starts with courageous leadership. "It's belief first and business case second," he says.
Here we talk to three companies with responsible business written in their DNA…
The Eden Project
Bodelva, Cornwall
Tim Smit, founder of the Eden Project, says it is crucial to be rooted in your local community. "If you're not you don't build the support networks to help each other though the good times and the bad," he says.
This was all too evident during last November's floods, which led to the Eden Project being temporarily closed to the public. "All our neighbours said, please open as soon as you can because our Christmas business will be destroyed if you are not open. We worked 24/7 and we opened. It's good to be needed," says Smit.
The Eden Project contributes around £80m a year to the Cornish economy. Analysts hired by Smit ask visitors their reasons for visiting Cornwall. If it is to just visit Eden then money they spend on their trip to the county is ascribed to boosting Cornwall.
Most of Eden's 437 staff (which increases to 700 during peak periods) are local people and Smit is passionate about training from within. He is also devoted to buying locally and uses more than 2,400 Cornish suppliers.
Many other companies are keen to link themselves with the Eden Project now the brand is well known. And Smit acknowledges that these tie-ups also create employment. "We offer longer contracts than most organisations because we are aware that if businesses want to grow they need long-term contracts to get a loan. We also know that the only way we are going to find jobs for our youngsters around here is if our neighbours' companies grow," he explains.
Smit believes many things have changed in Cornwall as a result of the Eden Project. "Before Eden, Cornwall always felt it was a long way away from everywhere else, a place for bucket-and-spade retro holidays. I think what Eden did was exorcise the ghosts of the failed historic industries and created a sense of a possible future. Local people started investing in local businesses," he says.
As well as financial benefits – the Eden Project breaks even on a turnover of £18m – Smit says being close to the community means those who are trying to shape the future of the county are often likely to collaborate with you. It also brings affection. "The ultimate satisfaction of running an organisation like Eden is walking into your local pub and people are pleased to see you. When our employees are out and about they wear their Eden fleeces because they get a warm welcome wherever they go," says Smit.
Tim Smit will be a speaker at the IoD Annual Dinner at the Lancaster London Hotel on 24 November. To book call 020 7766 8789 or visit www.iod.com/annualdinner
Call of the Wild
Seven Sisters, South Wales
Call of the Wild was launched by three old school friends with a love of the outdoors and a desire to start a business with its heart in the local community. They set up an eco-friendly adventure training centre on the edge of the Brecon Beacons where they grew up – an area "with fantastic natural resources" that was also a former coal mining area and one of the most socially and economically deprived parts of Wales.
"We set up not long after the mines had closed so things were a bit flat. You had to travel to get any work. We thought, there's an untapped workforce here," says managing director Geraint Lewis.
Lewis admits the first year was difficult since the trio had to change customer perceptions of the South Wales coalfield as a place full of abandoned pits and depressed people without jobs. Clients who signed up to a Call of the Wild training course in the Welsh valleys soon altered their image of the area and realised its beauty and potential. Since then the company has grown quickly. Around six years ago the focus moved to corporate leadership programmes. Lewis plans to employ another seven or eight people next year. Turnover is more than £1m and scheduled to double over the next three years.
Lewis says easier staff recruitment is one of the key benefits of being close to the local community. "Some of our staff have been with us since we started. Because I already knew them and their families, you don't get any nasty surprises," he says.
In addition, the company has embraced green energy, using air source heat pumps at its training centre and installing solar panels. It has planted more than 1,000 trees to offset carbon emissions.
Lewis says the local area is boosted by customers spending money in shops, petrol stations and guest houses. Then there are more intangible benefits such as giving free activity days to schools during quieter times and inspiring other local people to start their own businesses. "People think, if they can do it, why can't we? It's become a vibrant place to live."
Call of the Wild has renewed local pride. "When we won the Welsh Small Business of the Year award in 2008 the whole village was proud. Seven Sisters was on the map and it felt great," says Lewis.
Maloney's Budgens
Ascot, Berkshire
When brothers Vince and Dennis Maloney took on three former Budgens stores in 2008 they wondered how they were going to stand out from major retailers such as Tesco. "We needed to create something different and by working with the community, that was something we saw as different," explains Vince. The Maloneys talked to local communities in Ascot, Shepperton and Virginia Water where their three stores were based to understand customers' most urgent needs. From this they developed a strategic plan to tackle issues in a sustainable way, using the store's own financial and human resources.
One major initiative is the sponsorship of a breakfast club and supper club in two local schools that enable hard-up and one-parent families to leave their children at school so they can go to work. Other projects include a not-for-profit home delivery service for disabled people, donating waste bread and produce to animal sanctuaries and raising money for school sports facilities, church fetes and a local care home. The community plan has also helped raise the profile of local suppliers and boosted their sales.
Last November, Maloney's Budgens secured a loan from the Carbon Trust which allowed it to replace its old refrigeration units with ones that emit less CO2, meaning they are 20 per cent more efficient – a move that underlined to customers the firm's commitment to greener business. It has also changed its lighting, saving a further 20 per cent on electricity bills.
"We're doing it because it's the right thing to do but also because, as a small business, we have to keep finding ways to save costs," explains Vince.
When the stores were relaunched as Maloney's Budgens the business saw an upswing in turnover of 10 per cent. A couple of years on and they are still running at five to six per cent like-for-like despite competition from several nearby Tesco stores.
"Because of what we're doing in the community it pulls at people's heart strings. They like to see you are doing something and it pays dividends," claims Vince. Staff love it, too. "There's a waiting list for people to come and work for us, we get inundated with application forms."
In July, Maloney's Budgens won BITC's Small Company of the Year award. Vince says it was fantastic to be recognised, but he points out that the company doesn't embrace CR just for the recognition. "We do this to survive as a small business in a very difficult market."
Responsible business: the benefits
1. Brand value and reputation
2. Employees and future workforce
3. Operational effectiveness
4. Risk reduction and management
5. Direct financial benefit
6. Organisational growth
7. Business opportunity
Source: BITC
