My Lords, I, too, thank my noble friend Lord Leigh of Hurley for introducing this debate on such an important subject in an area he knows well and to which he has devoted much of his working life. In more than 30 years in business, the first five within a large American bank and the last five as a partner in a small financial services firm, I have witnessed some of the best and probably the worst business practices of our time.
There is no doubt that the 1980s were a time of excess, when perhaps the greatest contribution the City made to society was to the nation’s balance of payments and to its tax coffers. But we have moved on from those days, and in spite of all the banker bashing following the financial crisis of 2008—itself caused in large measure by excessive leverage in the world’s major economies—there is much we can be proud of in the increasing importance given to corporate and social responsibility by companies of all sizes.
As an advisor to the board of London Pensions Fund Authority, I witnessed at first hand its adherence to the principles of responsible investment, formerly known as ESG—environmental, social and governance. Although returns on investing in infrastructure or housing might in themselves be attractive, equal weight is given to the public good of providing employment, easing the journey to work and addressing local housing needs.
Large numbers of businesses provide charities and communities with vital support, through the provision of expertise and advice as well as cash donations. As the chairman of a very small social action project—a community centre known as the Pump House Project —I am eternally grateful for this support. The recent arrival of 13 reconditioned computers by First Line IT at knockdown prices, which were in turn paid for by Sovereign Homes, has enabled us to establish an invaluable digihub to serve the entire community.
Businesses have always engaged in philanthropy. As early as the 15th century, when the guilds of medieval Europe were established, codes of conduct were drawn up that frequently included some form of direct responsibility for the poor. A shining example today is the Garfield Weston Foundation. Supported by its UK business interests, it will quietly give away its billionth pound to UK charities some time later this year.
In addition to the donation of time and money, businesses are increasingly going further, placing a commitment to corporate and social responsibility at the heart of their day-to-day practices and operations. In the City, UBS set up and sponsored the Bridge Academy in Hackney 10 years ago, and retains an active involvement on the board, in its funding and in securing job opportunities for its pupils. On a much smaller scale, at Disruptive Capital, we endeavoured to fill entry positions through the City of London’s outreach and apprenticeship programmes. Your Lordships will all know of the Timpson family’s brilliant work recruiting ex-offenders as well as in training hundreds of apprentices every year, but probably will not know that the very small shirtmaker Emma Willis supports a community sewing project in Stroud which helps bring together diverse members of a very poorly integrated, disadvantaged immigrant community by developing a common skill. Since she started this, and started donating bespoke shirts for injured soldiers who have suffered amputations, her business has become increasingly profitable.
The growing tech sector is particularly committed to the concept of sustainable business—witness Nominet Trust, the country’s leading social tech funder. Founded in 2008 by Nominet, which manages more than 10.7 million domain names that end in “.uk”, it has donated £39 million to date. In all these ways and others, business is showing that it can be a tool for good and is playing a critical, albeit not always recognised, role improving lives and creating prosperity. As Maimonides wrote a thousand years ago, the highest form of charity is to create a job.
A recent report by the Centre for Social Justice endorses all these views. Its research concludes that the efforts businesses are making to embrace their social responsibilities are not only benefiting charities and communities—although this clearly could be reward enough—but are benefiting the businesses themselves. The CSJ’s report finds that when companies take their social and environmental responsibilities seriously, their brand value and reputation are enhanced, levels of employee engagement and productivity increase, and rates of employee retention improve. For all these reasons, and others, far from compromising financial returns, social impact invariably provides exciting opportunities for financial reward.
New SMEs in particular, employing as they do a large proportion of the working population, seem to be making an increasing contribution on various fronts, from recruiting a diverse workforce to engaging with their local communities. Some, like buddi, a tech company developing and manufacturing wearable medical technology, have a product that itself embodies a spirit of corporate and social responsibility, proving that intelligent start-ups can be profitable while also having a positive societal benefit. Organisations such as Business in the Community spread this message effectively. Other large companies, including banks, have social impact funds which put these principles into practice.
So there is both a moral and an economic case for businesses to take their social and environmental responsibilities seriously. Many already do, but I hope that those which do not will take the lessons I have outlined to heart. It is possible for business to be successful and to solve social and environmental challenges. As Jonathan Sacks—the noble Lord, Lord Sacks—wrote in The Dignity of Difference:
“From trade, both sides gain. When we value difference the way the market values difference, we create a non-zero-sum scenario of human interaction. We turn the narrative of tragedy … into a script of hope”.