The study, the first of its kind in Scotland, was conducted by Social Value Lab and delivered in partnership with social enterprise development agency Firstport, CEIS, and the Scottish Business Awards. The project was supported by Scottish Enterprise, Highlands and Islands Enterprise, CGI and Caledonian MacBrayne.
Research included a nationwide survey of over 1,000 businesses of all shapes and sizes across Scotland, in-depth interviews with 34 business leaders and CEOs and detailed case studies illustrating good practice. Researchers also analysed the corporate social responsibility and reporting practices among Scotland’s 500 leading companies.
Over half (52%) of the business leaders that responded agreed there was a clear business case for investing in community, social and environmental issues but, more worryingly, almost a third (29%) felt the sole responsibilities of companies was to maximize profit.
While nine in ten Scottish companies (89%) felt they were delivering on their social and environmental responsibilities, the study concludes there is still a long way to go in areas such as representation of women in senior positions and involving staff in decision-making, for example. Of Scotland’s top 500 companies, only 13% of all board posts are held by women and over half (56%) of the firms have none at all. Just 4% of CEOs are women.
Social Value Lab director Jonathan Coburn explained: “The face of business in Scotland is changing. The traditional notion that business is simply about making money no longer holds true. There is growing influence from the emerging generation of business leaders whose personal values are reflected in how they do business, while the public is more ethically motivated and less tolerant of corporate negligence and corrupt practices.
“There is recognition by business leaders that people are more likely to admire,work for, buy from and support companies that they perceive to share their values. With social media, there is nowhere for businesses to hide – reputation is everything, as the Volkswagen emissions scandal showed.
“Many businesses are trying to do the right thing but face intense competition, tight profit margins and the costs of meeting existing responsibilities – they struggle to release the money or time to go further with their commitments. The aim of this study is to get a realistic picture of corporate responsibility and explode the myths. We wanted to get a balanced view.
Karen McGregor, chief executive of Firstport, who supported the research, said:
Social enterprises are leading the way in this area, operating ethically in the marketplace, doing the right thing by employees, and making a real impact in communities across Scotland. We would urge the private sector to look at how they can work alongside social enterprises, for example using them as suppliers, as well as learning from existing good practice.
Deputy First Minister John Swinney said: “There is a wealth of international evidence to suggest that promoting competitiveness and addressing inequality are important interdependent ambitions. Creating a fairer society is not just a desirable goal in itself, but is essential to the sustained, long-term prosperity of the Scottish economy.
“To that end we launched the Scottish Business Pledge in May last year. This is a voluntary commitment made by Scottish businesses to promote and practice the principles of fairness, equality, and opportunity. Through championing a culture of innovation, internationalisation, gender balance and fair work the Pledge helps companies to become both fairer and more productive, improving society and the bottom line at the same time.
“It is encouraging to learn that more than half of all business leaders surveyed believe there is a clear business case for investing in community, social and environmental issues. I am sure this proportion will continue to grow and I would encourage all those surveyed to learn more about the Scottish Business Pledge and what it can do for their businesses.”
The study shows that the larger the business, the more likely it is to formalise its commitment to corporate responsibility. For example, 32% of small companies reported specific initiatives, rising to 62% of mid-sized companies and 90% of large ones. This confirms the view that corporate responsibility in small businesses is driven by the owner/leader’s values, largely unplanned and with no desire for recognition. In contrast, some of Scotland’s largest companies are delivering well publicised and resourced CSR programmes and are more influenced by the interests of employees, public opinion and business image.
Maggie Morrison, Director, Public Sector Scotland, at leading provider of information technology and business process services CGI, said: “Acting responsibly as a business is the starting point to everything we do and we believe success comes from the strength and commitment of our employees. The CGI model of employee ownership means that our employees have the opportunity to share in the challenges and rewards of building the company. CGI has demonstrated across the world that it is possible to build a profitable and sustainable business whilst being responsible - transforming public services, bridging the digital divide, and supporting communities wherever we operate.”
Martin Dorchester, Managing Director of Scotland’s biggest ferry operator Caledonian MacBrayne, said: “Caledonian MacBrayne doesn't just sail to remote communities - it has been part of them for more than a century and a half. The responsibility we feel to both our staff and the communities we serve is genuine and significant. It makes absolute sense for us to go above and beyond the simple remit of a transport operator and employer to play a meaningful role - whether that is as a major customer of small suppliers, providing stability and a platform for growth, or as a promoter of quality local produce, for example running pop-up tastings on board our ferries bringing products to the attention of new audiences, then we are committed to doing this. Development of our staff is intrinsic to the success of this. We listen, we are constantly learning and we endeavour always to be a good major employer, loyal customer and a thoroughly responsible company."
The Better Business study sought to identify potential barriers to changing corporate behaviour and make practical recommendations to encourage more responsible and progressive business practices. The two main obstacles cited were the ability of companies to meet the costs and the lack of staff capacity to get involved in discretionary activities.
Business leaders said commercial realities and growing financial pressures to meet existing obligations, such as paying the UK living wage and dealing with pension auto-enrolment, and limited staff time and skills often separated what they would like to do from what they can do.
Others cited challenges of public ownership and shareholder expectations, with pressure to place short-term profits and share price above non-financial considerations, operating in highly competitive markets with low margins, and unscrupulous competitors who fail to bear the full costs of social and environmental responsibility, making it difficult for others not to follow suit.
Some business leaders voiced a lack of clarity about which voluntary actions - and under which circumstances - could lead directly to financial returns and which actions can help to create a more favourable business environment. The prevailing view among the business leaders was that action on corporate responsibility must come from companies themselves rather than further government legislation which could be difficult to enforce, might reduce competitiveness, and is unlikely to lead to meaningful or sustained behaviour change.
Around one in five businesses didn’t see any role for further government intervention.
Instead they called on government to increase engagement with representatives of the business community to develop a realistic understanding of what is possible and identify agreed measures. Others called for government and its public bodies to show leadership and demonstrate behaviours now expected of the business community, while championing and celebrating the contribution of business rather than reinforcing unfair negative stereotypes.
The full report is available at www.socialvaluelab.org.uk/betterbusiness
Notes to editor
Social Value Lab (www.socialvaluelab.org.uk) provides research, strategy, impact measurement and communications support to values-driven organisations. Based in Glasgow and operating as a social business, it works across the UK and internationally. The research was conducted between August and October 2015 and included:
A nationwide survey of business leaders online and by phone. This gathered views from a cross-section of 1,052 businesses registered in Scotland, employing people and operating for at least three years.
An analysis of the corporate social responsibility and reporting practices among Scotland’s 500 leading companies. This included a review of publically available material relating to the Insider Top500 companies, a group of businesses with a collective turnover of £191.3 billion and 731,627 employees.
A series of 34 interviews with established business leaders and organisations that represent and support Scotland’s business community.
To arrange an interview contact Carol Stewart on 07944 060322 or email email@example.com
CGI: Tackling Digital Inclusion
Founded in 1976, CGI Group Inc is the fifth largest independent information technology and business process services firm in the world. Approximately 65,000 professionals serve thousands of global clients from offices and delivery centres across the Americas, Europe and Asia Pacific, leveraging a comprehensive portfolio of services, including high-end business and IT consulting, systems integration, application development and maintenance and infrastructure management, as well as 150 IP-based services and solutions. With annual revenue in excess of C$10 billion and an order backlog exceeding C$20 billion, CGI shares are listed on the TSX (GIB.A) and the NYSE (GIB).
Since founding, CGI has based its operations on the belief that success comes from the strength and commitment of employees. Its unique model of employee ownership stands out in the industry and means that more than 70% of its 65,000 employees are also company owners (‘members’) who share in the challenges and rewards of building the company. As members, CGI employees embrace their social responsibilities and, as a company, CGI makes investments in the communities in which members live and work.
As part of its substantial seven-year programme of community investment in Edinburgh, CGI has set the bar high. It is now working with City of Edinburgh Council to make the city one of the most digitally included places in the country. One of its first investments is in the Digital Skills Academy, an established initiative from well-known local social enterprise Cre8te Opportunities. Through ongoing financial support and specialised employee volunteering support, CGI is helping to significantly increase digital access and training for elderly, unemployed and socially isolated people across the city. This is the beginning of a long-term commitment to transforming public services, bridging the digital divide, and supporting communities across Scotland.
Caledonian MacBrayne (CalMac)
With roots dating back over 160 years, CalMac provides a lifeline ferry service to Scotland’s remote west coast islands and peninsulas. Its 31-strong fleet serves a network of 24 islands and a number of peninsula ports. In doing so it supports local businesses, brings new and repeat visitors to the region, and helps safeguard remote rural and island communities for generations to come.
We see our role as lifeline ferry operator as more than simply getting people from A to B and back again.
To support its onboard catering CalMac has chosen to source produce from a local supply chain that includes two main companies and almost 50 local food, drink and goods suppliers. This provides an authentic taste of the destinations its ferries serve and makes a real difference to the passenger experience. It has inspired local suppliers to set their sights higher and further, including Island Bakery Organics on the Island of Mull which has gone on to sell its handmade biscuits through household name supermarket chains.
The emphasis on quality local produce has also assisted the development of CalMac’s galley crews, where at least 12 employees are now enrolled each year in the Certificate of Competency of Ships’ Cooks course at City of Glasgow College. Added to this, CalMac employs around 80% of its 1,400 staff from around its ferry network and uses local services to help clean and maintain its fleet.
These combined local employment and supply chain effects mean a £32 million annual boost to the economy of the west coast, from Ayrshire to the Western Isles.