The ‘S’ in ESG: How businesses can respond in a time of crisis
1 December 2022 5 minute read
In the aftermath of the recent budget, we’ve heard plenty about how bleak this winter will be. The Resolution Foundation warn that average real household disposable incomes will fall by 7.1% per cent this year, putting the outlook for living standards “in a truly dreadful place.” Food bank use has sky-rocketed, with the Trussell Trust recording its busiest ever six-months and anticipating levels of need will outstrip donations through the winter months.
So what does this fall in living standards mean for the ‘S’ of ESG? Among the many ways businesses can respond to the cost-of-living crisis, here are three things we think corporate social purpose teams should be considering.
1. Give more and give differently
Businesses are an important funder of charities—with FTSE 100 companies donating as much as £1.9bn a year in 2016 (2-3% of total sector income). At NPC we’re calling on all funders to give more, give differently and build capacity of their grant holders. This is no different for businesses (and corporate foundations) who are supporting community partners with grant funding.
Where your business can afford to give more to community partners, you should do so. Partners will be struggling as their energy, food and staff costs rise. This may well be coupled with rising demand for their services, as more households fall into financial hardship and look for help from charities. It is imperative that you get money out of the door quickly—so that your charity partners can continue delivering their programmes, and even expand them to meet new demand. You may need to advocate internally for increased budgets to support this work.
Where you are supporting partners with restricted grants, you should consider lifting the restrictions. Your partners need flexibility to direct funding where it is most needed, without administrative burden of agreeing this with you first. Think about other ways to reduce the time partners spend on admin for your benefit: can you simplify reporting forms, or replace written forms with brief phone calls?
2. Consider how you can use your non-financial assets
Not all businesses will be in a position to provide more funding to community partners. But you may have other valuable assets that you can leverage to solve a challenge for your partners.
The John Lewis Partnership, for instance, has used its much-anticipated Christmas advert to talk about the work of Action for Children. John Lewis already had a long-term fundraising partnership with Action for Children, but the advert has provided amazing exposure at a time when most charities are seeing a downturn in their community fundraising. Children in Need, for instance, raised £4m less on its annual appeal night than last year, a fall of 10%.
Using your brand isn’t the only way to help. During the Covid-19 pandemic, Tesco put the British Red Cross’s helpline number on its till receipts. The Red Cross would find it difficult to reach vulnerable people directly, whereas Tesco had direct access to millions of customers who might benefit from Red Cross support.
Your business may have other assets that could support your partners: take the initiative to think about what these might be, and start talking with your charity partners about innovative ways you can help. Remember that charities will be the experts in what support is helpful, but they may not have the capacity to proactively approach business partners at the moment, or know what options you have available.
3. Look internally—and work with HR
Finally, look internally at how you can support staff and contractors working in your own organisation. Are you already a Living Wage employer? If your lowest paid staff and contractors cannot live on their salary and turn to food banks and poverty relief charities to make ends meet, then you are contributing to—rather than alleviating—the demand your community partners are facing. Again, speed is crucial here: if it takes six months to agree changes, the worst of the winter will have passed, and your colleagues will already have fallen into arrears or gone without essentials.
If you are in a position to give pay rises, can you do this progressively (i.e. awarding a higher percentage increase to the lowest paid workers)? All colleagues will be facing a squeeze on their living standards, but those on the lowest incomes are most vulnerable to financial hardship.
Traditionally social purpose teams have looked outwards at how they can invest in communities. But increasingly there’s a need to look at how the business can help achieve its social mission by supporting colleagues. You should therefore bring HR and ESG professionals together to alleviate the pressures staff face.
ESG has taken a lot of criticism recently, with many businesses struggling to decide where to focus effort and how to measure results. As people all over Britain worry how they will cope this winter, social purpose teams have the opportunity to make a real difference to people’s lives. Come along to our event on 19th January 2023 to discuss how businesses decide the focus of their social impact work, plan their activities and—crucially—measure their impact.
And if you’re a charity, read our briefing Putting the ‘S’ back into ESG to learn how to ensure social issues are considered in ESG frameworks.
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