With divisions over Brexit damaging Britain’s social fabric, David Craik reports on how companies like Lush, SSE and Richer Sounds are trying to pair commercial growth with social progress
Warren Kozera’s journey to inclusive growth began, perhaps appropriately, at a church service.
“It was a Sunday morning about two years ago, and I was listening to a talk from a member of the Bolton Family,” explains Kozera, director at Barkers Commercial Consultancy. “He explained that the Family was a group of around 40 local businesses and charities that are collaboratively dedicated to creating social value for the people in the town. I gave my wife a nudge and said I could help.”
Not long after, Barkers became the latest member of the Family, whose work is closely aligned with Bolton council’s 2030 Vision to create “stronger, cohesive, inclusive, confident communities”. It meets once a month to review its activities and judge how it can coordinate support behind the council’s objectives and help each other with initiatives.
We aim to create clear, considered advice that can help a young person get a job, or encourage an executive to change their corporate structure
One example is Working Wardrobe, which was set up by housing group and Family member Bolton at Home. Its fellow members have helped provide unemployed people with mentoring, work clothes and free dry cleaning. Since June 2018, Working Wardrobe has supported 104 people, getting 52 of them back into work.
“We give pro-bono advice to charities and community-focused groups like theatres, but we’ve also created our own grounds maintenance social enterprise called Lifescape, where we get excluded groups in the region back into work,” Kozera explains. “That could be a NEET [not in education, employment or training], an ex-offender, a homeless person or someone out of the forces [who is] struggling to get a mainstream role. We have employed seven ex-offenders to date on full-time contracts.”
Another firm focusing on employment opportunities for under-represented parts of society is VHR Global Recruitment. It has partnered with Youth Employment UK, which helps teenagers create good CVs and coaches them through job interviews.
VHR is also a founding partner of the Fair Labour Alliance, supported by the Department for International Development and Humanity United, which aims to ensure that employees are protected from mistreatment and enjoy working relationships built on communication and respect.
VHR’s chief executive Danny Brooks says: “For both groups, their target audiences often lack access to helpful information, so we aim to create clear, considered advice that can help a young person get a job, or encourage an executive to change their corporate structure.”
It is vital that businesses recognise their role in society, he adds: “We are living through a time of heightened tension across virtually all elements of society. If a business can play even a small role in bringing people together it should,” he says. “Nothing happens in a vacuum.”
These companies form part of a notable shift in the UK to a more inclusive economy as a reaction to Brexit and other societal pressures
Large corporates have also been making inclusive strides.
Energy group SSE has invested in renewable energy projects outside of London to create jobs in areas that need them most. Food chain Greggs helps young people, ex-military and the long-term unemployed back into work. It also runs training schemes in prisons and work experience roles.
Retailer Lush is one of over 5,000 UK businesses that voluntarily pays employees a real living wage, which differs from the statutory national living wage in that it is based on what people need in order to live. Also thinking of his employees was Julian Richer, founder of Richer Sounds, who announced in May that he was putting 60% of his shares into an employee-owned trust. This meant his 50 staff shared a bonus pot of £3.5m.
These companies form part of a notable shift in the UK to a more inclusive economy as a reaction to Brexit and other societal pressures. A report from the Inclusive Growth Commission in 2017 said Brexit had forced open an “urgent debate” about the need to invest more in people and places and forge a more inclusive approach to growth in order to defeat social and wealth inequality.
Indeed, according to the Institute for Public Policy Research (IPPR), 44% of the UK’s wealth is owned by just 10% of the population.
The commission said this inequality came with a social cost and hampered long-term economic performance. It called for greater focus and investment in skills, early-years support and employment. Politicians, councils and businesses needed to see growth and social reform as on the same side of the coin. Businesses needed to boost productivity, offer high-quality, well-paid and flexible jobs, and include social growth in their planning.
CSR is mostly focused on risk-avoidance and public relations ... We want to find strategies that will help businesses improve their profitability and be more socially inclusive
Impact consultancy Palladium agrees that this is the core of inclusive growth: the intersection of commercial growth and social progress, the link between social and financial results to ensure long-term success.
“We are helping companies look beyond their traditional CSR programmes,” explains Eduardo Tugendhat, Palladium’s director of thought leadership. “CSR is mostly focused on risk-avoidance and public relations and not necessarily closely linked to the core business. We want to find strategies that will help businesses improve their profitability and be more socially inclusive.”
He says that having this visibility and changing the business model can be a challenge.
“Companies have a real credibility problem in society. They are viewed as only being interested in short-term profit and shareholder returns,” he states. “It’s harder for them to think longer term and [about] their broader range of stakeholders. You could focus on selling your goods to the 1% of the population who have the highest capital, but if you want to have a viable economy you need more of the population actively participating.”
“You need to understand your whole ecosystem and how to unlock better value, especially for those parts of society which are getting left behind,” Tugendhat explains. “We work on developing more inclusive supply chains, so, say, a chocolate company ensuring fairer payments and conditions for growers. We also look at helping deliver services and products to parts of the population left behind and bridging the skills gap in workforces.
“So many people don’t have the right skills, and this means businesses don’t grow as much, either. Businesses should form partnerships with training providers and ensure that they interview and hire people from disadvantaged backgrounds. It is a new business model, which aims to work for everyone.”
VHR believes its business has benefited greatly from its partnerships. “We have gained increased exposure. It has helped galvanise the team and lets them know they’re part of a business that’s making a difference,” Brooks says.
Kozera has also seen a positive impact. He has put some of his own personal funds into Lifescape and says 50% of Barker’s profits goes into its social value creation initiatives. “We’ve also invested our management time,” he explains. “We’ve done it because we want to help our local society, but it also gives us business benefits. There are many organisations like us who share our commercial goals, but they don’t have the same social goals. It has helped differentiate our business and make us a more compelling destination for employees who share our moral values. They are more loyal and productive and engaged employees. We have also gained new work and opportunities from the Family members. We haven’t yet recovered our costs and time, but it is a long-term project.”
The Scottish Salmon Company has seen average sickness absence rates amongst staff fall to 3.67%, from 4.3% in 2017. It has aligned itself with UN Sustainable Development Goals such as improving salmon welfare and offering attractive, safe and meaningful jobs. It has a modern apprenticeship scheme to boost employment in its rural location and has a staff-nominated community fund.
We found that businesses were trying to do the right things, but often because of squeezed margins it was hard to invest in job creation and their workforce
The Scottish government has also signed up to the UN goals, including providing decent work and economic growth. It believes businesses are key to delivering inclusive growth, but this must be combined with redistributive social, regulatory and fiscal policies. (See The wellbeing route to a more prosperous Wales)
A new South of Scotland Enterprise Agency has been created to drive inclusive growth and boost economic development across the mainly rural region.
It found that 85% of the 68 businesses it spoke to had three-year growth plans that include creating new high-quality managerial and apprenticeship roles. Many wanted to pay the real living wage but could not afford to do so, and a fifth were looking at adopting employee-ownership schemes.
They noted that the main barriers to jobs growth included transport connectivity and a lack of a large skilled labour pool, particularly youngsters.
“We found that the businesses were trying to do the right things, but often because of squeezed margins it was hard to invest in job creation and their workforce,” says Mark Hepworth, director of research and policy at The Good Economy.
There is a shift from a focus on shareholder to stakeholder value, and part of that is the workforce and the community
He describes inclusive growth as a place-based agenda. “There is a shift from a focus on shareholder to stakeholder value, and part of that is the workforce and the community,” he says. “Productivity, for example, depends on treating your workforce properly. Going into the community means working with young people in schools and on-site learning schemes. Indeed, one good measure of inclusive growth would be: as older people retire to what extent are you getting a transfusion of young apprentices and graduates to replace them? Young people bring different modern skills and attitudes that old people don’t have.”
He says this is particularly pertinent given Brexit and the potential reduction in eastern European labour.
Also reacting to populist political events is a new initiative set up by the G7 and OECD called the Business for Inclusive Growth coalition. This involves 34 multinational corporates, which have all agreed a pledge to take concrete actions to ensure that the benefits of economic growth are more widely shared
The programme includes tackling inequalities of opportunity, reducing regional disparities and fighting gender discrimination. They will seek to accelerate, scale up and replicate projects, including training programmes to upskill employees, greater investment in childcare, financially supporting small businesses and enhancing the integration of refugees into the workforce.
An incubator of public-private projects will also be created, offering companies access to the latest policy research, to help them launch and develop projects and undertake impact assessments.
Gabriela Ramos, who is leader of the OECD Inclusive Growth Initiative, says: “There was an idea in the past that inequality was a by-product of growth. It just happened. But now we are finding that this is causing social problems and leading to political consequences such as a rise in populism.”
We believe in giving back and embracing our social responsibility. It helps society and helps our business as customers seek out firms who reflect their values
She says the OECD will use a set of metrics to measure whether the projects are being effective, and that best practice will be disseminated down to SMEs.
Legal & General is one signatory. It has an existing philosophy of inclusive capitalism that has seen it invest in homes for homeless families, city infrastructure and helping its own staff with their personal finances.
It’s clear that inclusive growth means different things to different people. But at its simplest, being inclusive means businesses having a social mindset: of seeing themselves as part of society and using their power and finances to reduce inequalities, lack of opportunity and improve the environment. It is helping society grow as they grow. Firms can start on this path by identifying and working on community projects.
That’s what Ryan Jackson, founder of Gemini Parking Solutions, did when the group recently aligned with eForests, a not-for-profit organisation that is creating and restoring woodlands throughout the United Kingdom.
“We made a commitment to plant one new tree on behalf of every single one of our clients, for every new agreement signed,” he explains. “We are now looking at giving a proportion of our profits to charities and community support. We believe in giving back and embracing our social responsibility. It helps society and helps our business as customers seek out firms who reflect their values.”
Kozera of Barkers Commercial Consultancy admits that such social focus does come with extra work and strain but is a “positive reason to get up in the morning”.
“I can be on a client site providing some commercial advice on a £1bn infrastructure project and get a call from Lifescape saying a homeless person is in difficulties,” he says. "You jump from one thing which is vitally important to that client to something massively important for a vulnerable individual. It is very rewarding.
David Craik has been a freelance journalist for 15 years. He writes business news and feature articles for a variety of national newspapers and magazines
Main picture credit: phovoir/Shutterstock
This article is part of the in depth Inclusive Capitalism briefing. See also:
The Good Economy Bolton Family Working Wardrobe apprenticeships Youth Employment UK Brexi IPPR Palladiumt SDGs Scotland Enterprise Agency OECD Inclusive Growth Initiative