Firms with a social conscience are businesses. They look like businesses and they operate like businesses. Employees get paid, owners take a wage. Firms with a social conscience devise and execute commercial strategies that build their business while also providing a social impact. At Unity Trust Bank, we call this our “double bottom line strategy”, meaning that we are focused on creating a positive social impact while also delivering shareholder returns.
By investing in the world around us, we all stand to benefit. I’m surprised my fintech colleagues haven’t discussed this more, as many are doing exactly this through their work. I wonder if the technology headlines are drowning out the financial inclusion, community development, mental health, and other socially beneficial stories that could otherwise be told.
I spoke with Dr Rebecca Harding last week, who advises the Council of the Society for Business Economists, and is a former chief economist at the British Bankers Association, as well as being a former adviser to the Treasury Select Committee. Dr Harding is very enthusiastic for the sector and has invested her time and expertise to explore the motivations, values and economic contribution of socially conscious enterprises. She told me: “We know that social and environmental challenges are here to stay, and they need a new business model to deal with them. Socially conscious businesses have that model.”
Needless to say, Dr Harding and I will be working more closely together to shine a brighter light on these firms.
It matters to be social
Firms with a social conscience are taking sustainability to a new level. They do not rely on donations, grants or funding over the longer term; they are scalable enterprises, providing genuine and secure support to their cause. Increasingly, people are sitting up and taking notice of this growing sector. With NatWest’s SE100 data report revealing a combined profit of £1bn, I think these models of business are already hitting the mainstream.
An obvious connection for me is of course Unity Trust bank, which I joined in May 2017. We are a bank proud of our social conscience, and work with other socially minded organisations. In H1 of this year alone, we provided a record £100m of loans to businesses and organisations that give back to society. The Big Issue, Divine Chocolate, Age UK, Cafédirect, and BrewDog are all fine examples of a firm with a social conscience, building their organisations while also making a positive impact on society.
A true startup success story is Toms Shoes, created out of a vision for a new “tom’orrow”. Its “one for one” mission was established, which sees a pair of shoes donated to a child in a developing country for each pair sold. This has resulted in more than 75 million pairs of new shoes being given to children in need. However, not all socially minded projects are created at startup. Traditionally, when we think of Tesco we think large profit-making machine, and while that’s still true, it has also taken social missions beyond the CSR report. In recent years, it has set up The Tesco Eat Happy Project to invest in communities through educating families about the food they eat, promoting healthier eating for children.
One of the biggest barriers to social entrepreneurship has been finance. While there have been many fantastic ideas out there, transitioning from a small-scale project into a large and sustainable business is difficult. Traditional sources of funding can look sceptical or just plain confused at a business whose sole purpose isn’t profit. This has changed in recent years thanks to organisations such as Social Enterprise UK, Big Society Capital and Big Issue Invest, who are all helping to connect organisations with investors that understand and buy in to the social mission.
Further to this, they also connect organisations to much-needed expertise and mentoring, helping these firms to plan, operate and thrive. This expertise is helping to grow the sector into a very interesting proposition in terms of financing and employment.
Another reason for the growth in socially conscious businesses is the consumer. We care about the ethics and contribution of the firms we engage with and want to put our money where our heart is. A Nielsen report showed that one in three consumers are willing to pay more for goods and services that are socially responsible, and a CSR statement on a website no longer cuts the mustard with information-rich, digitally savvy consumers. In the past three years alone, there has been a 30% rise in consumers saying their purchasing habits are influenced by their social beliefs (2017 Edelman Earned Brand study).
A more social future?
Further change is coming due to the nature in which communities are funded. The public wallet is increasingly challenged, and a new way to sustain the vital work in communities – giving support to those who need it most – is essential. Karen Bradley, UK secretary of state for culture, media and sport, commented in relation to the creation of the Inclusive Economy Unit in 2016, that, “There has never been a more important time for government, civil society and the private sector to come together to deliver a country that works for everyone”. Creating new ways to make our economy work so we can fix the unnecessary problems facing our society, while also creating economic returns, is both a complex and exciting venture.
With organisations such as Social Enterprise UK, government support and investors ready to nurture entrepreneurial spirits, there has never been a better time to turn social visions into successful missions. My busy schedule, with the multiple demands on my time and high-pressured deadlines, hasn’t changed since moving into the sector, but what I do now and how I think about it challenges me to deliver even greater results. It’s a challenge we all relish here at Unity Trust Bank, and I personally believe that in doing so we are banking on a better side of business.
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here.