This week the Shaftesbury Partnership led a debate held at the London Business School on the thorny issue of whether and how big business can benefit society, focussing in particular on whether they can, as Tesco claims, “use their scale for good”.
The debate was hosted by our friends at CSR MeetUp* and there was a good mix of people in the room, including graduate students, CSR practitioners, and other professionals from the corporate sector, all contributing to a lively discussion.
As a general proposition, the impact of a private business (corporation) falls into three areas: as an employer, as a provider, and as a purchaser (we are restricting ourselves here to social impact rather than environmental impact). In the debate, we concentrated on the third area and in particular the work and experience of the Social Business Partnership which helps businesses to introduce and support social enterprises into their supply chains.
Making this happen, and taking it to scale, requires development on both the supply and demand side, and the debate covered both these in some detail.
The discussion on developments on the demand side (i.e. demand from commercial businesses for goods and services provided by social enterprises) was relatively uncontroversial. Creating social impact through procurement is very much on the corporate agenda, and we have identified a number of drivers for this. Legislation is certainly a part of the story. In the US, Supplier Diversity legislation requires the use of minority suppliers in public procurement. Here in the UK, the 2012 Social Value Act requires commissioners to consider how their procurement decisions "might improve the economic, social and environmental well-being of the relevant area“. The effects of this legislation are felt further down the chain in the private sector, and we often hear large companies referring to it and expressing a need to demonstrate social value themselves in order to win public sector contracts. Another major driver is the way millennials exert influence and pressure, and companies are finding they need to work harder to gain and maintain employee engagement and consumer loyalty.
How to increase this demand? The biggest challenge is to get buy-in to the idea across the whole business, not just CSR. There has to be a comprehension of the key challenges and core competencies of the corporate client, and exactly where the social enterprises can add value in that framework. To do this, the role of champions is key: initially within CSR teams, but increasingly at senior levels of management. Only then can purchasing professionals feel comfortable in taking the risks of engaging with the new sector.
The debate on the supply side – and especially how social enterprises should market themselves to the potential corporate clients – was much more energetic. Two opposing positions were put forward.
The first emphasised social mission: “All suppliers need to use their USP to win business, so why shouldn’t the social mission be the USP that makes a difference?”
The second rejected this: “No! The social mission is the nice-to-have. But all businesses, including social enterprises, should lead on service delivery and the bottom line.”
Our own experience is that social mission can definitely clinch the deal. We have seen a sea change in the attitude of a hard-nosed purchaser when they meet some of the workers in the social enterprise, who otherwise would be on disability benefits. And it seems almost dishonest to claim to be a social enterprise and then not mention anything social about what you do.
But that’s not enough. To get beyond tokenism towards scale and real change, the provider must be competitive. And that’s even more important in today’s world of supplier (and cost) consolidation. But it isn’t just a matter of price and quality. During the debate, innovation, flexibility and a more personal approach to service were repeatedly mentioned as clear benefits that social enterprises can offer.
In summary, social impact is “necessary but not sufficient”. To get large businesses comfortable with the habit of working with our sector, we need to be both competitive and impactful. And at Social Business Partnership, that’s what we look for before recommending a supplier to our corporate members.
*CSR Meetup is a group for people who work or aspire to work in Corporate Social Responsibility and its various forms with the aim of generating new thinking on what best practice CSR might look like, both in theory and in practice. The group co-hosts with the Net Impact Chapter of the London Business school a meeting every second Wednesday of the month.