CSR or social enterprise: which has more social impact?

Social enterprise is a budding sector: a third of social enterprises in the UK are three years old or younger. Also, with an average financial backing of £58,000, social businesses tend to operate with limited funding. How does this affect the ability of the sector to deliver social impact, in comparison to corporate social responsibility schemes which have substantial financial backing? Recent researchhas found that CSR schemes need to take a more political direction in order for the movement to progress and bring about fundamental change towards a more sustainable economy.

In last week's Q&A, our expert panel discussed whether collaborations between social enterprise and CSR schemes are the way forward - and the challenges of making such partnerships work effectively to meet the respective goals of each organisation. Here we round up the best bits of their advice for your easy perusal.


Rodney Schwartz – chief executive, ClearlySo

Maryanne Matthews – director of corporate responsibility, EY

Michelle Clothier – managing director and co-founder, Livity

sustainable business

Amanda Feldman – director of impact and innovation, Volans

Robert Ashton – social entrepreneur and founder,Swarm Apprenticeships

Sanum Jain – head of communications and partnerships, GiveMeTap

Roisin Murphy – senior manager, corporate responsibility, KPMG

Ben Todd – executive director and co-founder,80,000 Hours

Matt Fountain – founder, The Freedom Bakery

Can social businesses work with CSR schemes to maximise impact – and are there any examples of this?

Rodney Schwartz: Social enterprises should be aware that corporate CSR schemes take an extraordinary amount of time, in most cases. Corporates can be quite insensitive to the limited capacity of social businesses.

Roisin Murphy: I think the supply chain is a really great opportunity for many social enterprises to engage with businesses. We work with social businesses through KPMG's Sustainable Procurement programme.

Matt Fountain: Why adopt "referrals" through public organisations when we can adopt effective recruitment policy [through CSR]? One example of our CSR partnerships is with Timpsons, who now own 1,050 stores across the UK. James Timpson has been key in developing recruitment, training and employment opportunities for prisoners.

Are partnerships with CSR schemes a solution for social enterprises struggling with finances?

Matt Fountain: Link up and link in with CSR. We have linked up with a local brewery and differentiating our product range by using their spent yeast and grain. Makes great bread! We are able to piggy-back on their reputation, market insight, and wholesale customer base to give us the best possible launch possible. This is what I mean about effective CSR.

Maryanne Matthews: Big business working with social enterprise isn't a silver bullet – but it's the right path. You need the right tax environment, funding, government support (such as the recent social investment roadmap) among other things to create a holistic approach to growing successfully, while at the same time making a difference. Something we also know from the social enterprises we work with is that not all of them want to be big businesses – they want to be small giants.

Some companies use CSR schemes to achieve different agendas

Maryanne Matthews: There has been something of a CSR evolution in the last decade among organisations. The trend today is towards business themselves providing the support and services young people and enterprise needs – ideally hand in hand with social enterprises. Team days, doing work in the community, philanthropic giving and being an official supporter of a charity or two, is still the norm for many businesses engaged in CSR. These activities have their place and are important for involving people; but do tend to place CSR as a side-project.

Amanda Feldman: CSR has tended to be a sidecar to the core business – when actually, what we need to do is embed social and environmental considerations into the way business functions, and investors value business. A few corporates are pioneering this at scale, while social entrepreneurs are proving it can be done from the ground up.

Sanum Jain: A social entrepreneur's vision is to see businesses operate without a CSR department or strategy, so to speak, but instead have these social objectives at the heart of the company.

Rodney Schwartz: People are becoming increasingly well-equipped to differentiate the "sensible from the cynical". More enlightened corporations, however, are figuring out how to integrate social impact throughout businesses. Some of this is enlightened self-interest, as they recognise that one day the negative externalities they generate will have to be paid for. In other cases, they realise their customers or members of staff want the company to move in this direction.

Ben Todd: There's certainly bad CSR: a tiny fraction of profits used to do 'charity' for maximum publicity rather than impact. But there's also some good cases. Merck discovered a drug to treat parasitic diseases in cattle, did the trials to show it could also work in humans, and then donated huge quantities to the WHO.

Is scale an issue for social enterprises engaging with CSR schemes?

Roisin Murphy: At KPMG we think there is a real opportunity to collaborate with social enterprises in our supply chain. We have had some great successes. However, one of the challenges we find is that is can be hard for some really small enterprises to deliver products and services nationally, which we often need.

Sanum Jain: GiveMeTap went from a small e-commerce only business to a part of corporate supply chains around the world. This wasn't easy and sometimes scale problems do mean we have hiccups now and again. However, I think that this "limbo" can sometimes be necessary for smaller enterprises to grow. Perhaps it should be part of a large firm's role in using these suppliers to help them along the way so that they are better placed for the future? That is, thinking long term.

Matt Fountain: There is a lot of support for social enterprise startups focusing on the first two to three years of trade, but little to aid into maturity, and never thinking about long-term growth. As most social enterprises are three years or younger, a revision of the infrastructure is needed – get that right and businesses and CSR projects can scale up nicely.

Maryanne Matthews: It is a big challenge for social enterprises that are often locally based to be able to get into the supply chain of big corporates. One way to move this on is to connect social enterprises to tier two or three suppliers, that can contract with smaller businesses.

Do 'CSR' or 'social business' labels really matter?

Rodney Schwartz: Labels are a substantial waste of time and are frankly quite arbitrary. It is all about your social impact and how your business model helps you to achieve that.

Michelle Clothier: Ultimately we'd all like it to be simply about the impact, but I think that both CSR and social enterprise or purpose-first business labelling has a role to play in positioning and communicating what it is you stand for (or not).

Roisin Murphy: For me, it is all about impact and being able to measure it. Measuring impact can be both challenging and complex, but doing so means that you can make better informed decisions to maximise the community benefit. We've done a lot of work developing frameworks to measure impact here at KPMG and we think it is really worth the time and effort to get this right.

How can consumers push corporates into committing more to CSR?

Matt Fountain: Unfortunately for any market economy there is the health in competition. CSR can work to enhance brands but they cannot create the product. Scaling up means ensuring quality to compete with other brands – it's about bringing the "product" with the "social cause" and forming a quality brand.

Robert Ashton: I think the answer to this is social media. In fact the only way is social media. #GoViral

Michelle Clothier: I think consumers are driving the need for social enterprise and also better, more meaningful CSR. The rise in consumers choosing to buy from the businesses they deem more ethical, or worthwhile, or simply matching their own values demonstrates that.

How can social enterprises foster partnerships with CSR schemes?

Robert Ashton: The key is to provide the corporate with a considered solution to a problem on a competitive edge, rather than bang on about your own vision/mission and expect them to support you. I'm in talks with one corporate about using the Swarm brand and its social values/impact to help them encourage the suppliers to take on apprentices. Often we overlook as social enterprises the value others can gain by associating with our brands.

Sanum Jain: Yes, there has to be a business case for the corporate in order for the partnership to be sustainable. This business case can come in the form of reducing costs or providing a solution to a currently problem.

What are the current and future challenges of CSR practice worldwide?

Roisin Murphy: One of the biggest challenges is in integrating corporate responsibility into every aspect of the business. In many cases this requires a re-education in organisations of what traditional CSR versus philanthropy is and what corporate responsibility or corporate sustainability is.

Robert Ashton: Firstly to make the ROI measurable, and then to move it to marketing, where it beomes part of the mix. Lastly, to accept that if it feels right, but is hard to measure, it probably is right and the payback will become evident later.

Rodney Schwartz: CSR strategies have to show value for shareholders as corporations are desperately trying to become ever more profitable. We can criticise this, but it is a fact. However, making customers and staff happier, prouder and more likely to join or buy from a given company is very much in shareholders' interests.



Source: The Guardian





All, 2014