The UK’s approach to corporate responsibility leads the world in many respects, though historical and institutional factors mean there are some idiosyncrasies
The UK’s approach to corporate responsibility leads the world in many respects, though historical and institutional factors mean there are some idiosyncrasiesNineteen eighty-two. As history-making goes, it doesn’t rate as a vintage year. The UK went to war with Argentina over the Falklands. Time magazine named the personal computer “Man of the Year”.
For the modern corporate responsibility movement in the UK, however, 1982 marks a watershed. In the wake of serious riots in the London borough of Brixton, a group of senior business leaders came together to see what the private sector could or should do to help. They took the name Business in the Community.
The early 1980s were also a time of radical change for corporate Britain. Privatisation was in full flow. Suddenly companies with a public mandate – utilities, telecommunications firms, airlines, public transport operators, and so forth – were falling into private ownership. The unwritten expectation was that their new private owners would adopt a public focus.
And as the UK private sector has grown over the past three decades, so too has its perceived duty to “give something back”. The current government’s theory of the “big society” contains an explicit invitation to the private sector to step up and take part.
For those companies with global operations, the expectation extends to the international arena. Hence many UK-based multinationals are today in the management vanguard on subjects such as human rights, supply chain impacts and climate change.
The notion of a bottom-line logic underpinning companies’ responsibility efforts has characterised the UK for some time. Not that philanthropic attitudes are absent. But the notion of non-strategic contributions does not dominate corporate mindsets as, say, in the US.
Underpinning such thinking is the UK’s model of “hybrid capitalism”, argues Kenneth Amaeshi, Senior Lecturer in Strategy & International Business at University of Edinburgh Business School.
The UK finds itself somewhere in between the free-market voluntarism of the US and the social welfare system of mainland Europe. Put in other terms: the shareholder remains king, but he is (or must show himself to be) answerable to his subjects’ concerns.
Societal values are part the mix. In general, UK businesses – and, by extension, the nation’s capitalist culture – expound the widely held belief that “it’s good to be good”, as Amaeshi puts it. In a similar vein, work requires a purpose. And the purpose cannot be money alone.
Pure share value maximisation is therefore frowned upon. So too is the garrulous flaunting of wealth (as the perennial denouncement of “fat cat” bonuses demonstrates). In that sense, corporate responsibility acts to legitimise market capitalism. It also smoothes its sharper edges.
Institutional structures play an important role too. The UK has a legal framework that is comparatively robust, though not overly litigious. The country also boasts a strong quasi-regulatory structure courtesy of a host of non-binding voluntary initiatives. The result is a business community accustomed to relatively high levels of transparency and public accountability.
This is helped by a well-developed and (mostly) independent voluntary sector. Non-profit groups are not against harrying companies. Not by accident do leading activist groups such as Friends of the Earth and Greenpeace trace their origins back to the UK. And the recent protests about tax avoidance have kept up this tradition. Likewise, the UK boasts a sceptical, non-deferential media that does not shy away from calling business to account.
All these factors combine to give rise to a comparatively sophisticated level of public discourse. That in turn promotes high consumer awareness, which has the effect of further elevating the bar for UK plc.
The presence of so many large companies in London makes it something of an intellectual epicentre. The UK capital is given extra weight by the City, one of the world’s key financial centres, of which the socially responsible investment sector is a small but vocal presence.
The geographically concentrated nature of the UK has its impacts as well. Few high streets are free of the nation’s major brands, such as Tesco, Marks & Spencer, Alliance Boots and the Co-operative Group.
“It means that when they do [commit to responsible business], it becomes a movement,” says Giles Gibbons, chief executive of London-based consultancy Good Business.
In some respects, the UK has led the way in developing the intellectual credentials and management practices that underpin the modern corporate responsibility movement. In terms of scope, it boasts a good balance between social and environmental issues. It terms of transparency, the willingness to report on non-financial issues also runs high.
UK business wasn’t always so progressive. Back in the early 1980s, the UK was known as the “dirty man of Europe”. Now UK companies can be found lobbying in favour of tough rules on climate change.
Nor is responsible business universal. Though the laggards and sceptics are growing fewer, they still exist. Even among the leaders, integrating responsible business and sustainability into mainstream operations remains a big challenge.