Volunteering as the “S” in ESG/CSR

For many businesses it’s fairly straightforward to work out what can be done to reduce environmental harms and put in place appropriate governance. Sometimes social impact can be less obvious.

That was certainly my experience when I first became involved in CSR over 20 years ago. I was GC of a FTSE 250 business and had been given responsibility for reporting on our approach. I understood enough about carbon emissions to focus on the areas of highest energy consumption and how those could be reduced, but didn’t immediately see the social impact of a company distributing electrical components.

I don’t think the phrase had been coined that long ago, but the answer is to assess your business using the “double materiality” approach – assess how social issues affect your financial performance (sometimes called the outside-in view) and evaluate how the company’s operations impact society (looking from the inside-out).

Poor labour or health and safety practices in your supply chain could lead to negative publicity and even customer boycotts; careers guidance to young people that fails to highlight the opportunities in your industry can result in skills shortages that limit your ability to grow. Both are examples of outside factors that could harm financial performance.

If a company doesn’t engage and support its own employees, it will experience high turnover and low productivity. If it lacks diversity, it is potentially perpetuating social inequalities and will suffer from overly narrow thinking and be less adaptable than is necessary to succeed. Producing products that are not safe or delivering services of low standard will harm customers. As well as negatively affecting people – a social impact, these internal issues are also likely to have financial consequences.

If your business engages in activities that have a social impact, but don’t meet the double materiality test, that’s probably philanthropy.

The dictionary says philanthropy is (1) the practice of performing charitable or benevolent actions (2) the love of humankind in general. Clearly those must be good things but, as most businesses still have making profit as their primary motive, things that don’t contribute to that aim will tend to be regarded as peripheral. Whenever, purse strings need to be tightened to safeguard profits, those “charitable” activities will be amongst the first to go.

On the other hand, socially valuable actions that meet the double materiality test can, and should, be assessed against the other activities of the business and, because they contribute to financial success, have a fighting chance of permanence (or at least longevity).

Looking back to my introduction to CSR, I set out to uncover what was already happening in the company that had a social element. I found out that a group of employees had recently helped to redecorate a local place of worship, but when I asked more about why this had been chosen, discovered that none of the volunteers were members of the congregation, that we didn’t know if any of our work colleagues were, and that there was no intention to have any more interaction. Another group had collected litter from the towpath of a nearby canal – also something that had no link to our business.

As part of thinking about what we might do that would create both social and business benefits, I researched where most of the company’s employees lived and found that a high percentage were from a handful of local post codes. That led to us establishing a long-term volunteering programme with the secondary school covering those communities, delivering the following benefits.

• Many of the company volunteers had attended that school, or had children or other relatives that did, and were therefore highly engaged by this link.
• The company’s profile and awareness of its employment opportunities were significantly increased with the young people amongst whom we would want to recruit in the future.
• We were able to provide information to those young people and their teachers about what skills and experience were most relevant to our industry, thereby improving the chances that those seeking work with us in the future would have them.

These outside-in benefits, combined with the positive experiences for the school students, meant that this activity met both parts of the materiality test.

The people often most immediately affected by what a business does are its employees (so always a good place to start your thinking on the “S”). While there are lots of other socially valuable initiatives a business might make, there is strong evidence that a company-sponsored volunteering programme provides lots of value for employees, with knock-on benefits to their employers.

“Volunteering may be one of the best investments an employer can make”

This quote is from research by the Chartered Institute of Personnel and Development (CIPD) and charity, Education and Employers “The Value of Volunteering” (The-Value-of-Volunteering-final-8th-Jan-2021-1.pdf).

It is based on their analysis of the productivity benefits, skills gains, wellbeing, motivation and inherent brand and ESG value that flow to employers when they promote volunteering in their organisations.

The figures from the research are significant:

• 80% of volunteers reported benefits for communication, influencing and relationship skills and over half said their leadership had improved;
• 79% reported improvements to their sense of mission at work and 68% said they were more motivated;
• 26% said they were more productive at work.

Like most things in life, the more you put in, the more you get out, so where employers proactively support volunteering two thirds of volunteers are more likely to speak positively about their employer and 45% report strong or very strong benefits on work motivation, compared to only 23% if the employer is mostly disinterested.

More recently a significant piece of work was carried out by the Wellbeing Research Centre at the University of Oxford that tested whether individual-level mental well-being interventions by employers improve subjective well-being outcomes and whether the interventions improve subjective accounts of the work environment. Put simply, did participants say that their well-being increased and did they talk positively about their employer.

The Oxford research used survey data from over 46,000 workers in 233 organisations to compare participants and non-participants in common well-being initiatives used by companies. These included mindfulness classes, workload and time management training, mental health coaching, well-being apps, massage or relaxation programmes and volunteering.

The striking conclusions from the research are that overall volunteering is the ONLY intervention to suggest any benefits for workers’ well-being and the ONLY one that resulted in more positive reports of belonging and appropriate training for participants.

I think these are compelling reasons to make a volunteering programme that is company-supported and promoted part of the ESG strategy for most businesses, but whatever you choose to do in yours, I recommend that you:

• Assess whether it meets the double materiality test (if the answer is no, identify alternatives that do);
• Think first about impacts on employees, followed by customers, suppliers and the wider community;
• Make sure that what you do can be measured – and that what you can measure is outcomes, not just outputs. For example, the number of hours for which employees volunteered just looks at the level of activity, not whether it was positive. Tracking the skills gained or improved by the volunteers and how their levels of engagement and productivity increased demonstrates beneficial outcomes. These can often have a monetary value ascribed to them, allowing a business case to be prepared that supports the investment required.