How giving back can pay back

It is management’s responsibility, wrote theorist Peter Drucker in 1954, “to make whatever is genuinely in the public good become the enterprise’s own self-interest”. It has taken a while, but a growing number of companies appear to be heeding Mr Drucker’s message.

Many fast-growing businesses highlighted in the environmental, social and governance (ESG) category of this inaugural FT Future 100 UK list were picked because of their contribution to their local communities and wider society. Some have set aside budget for programmes designed to boost social mobility and share expertise with local charities.

NewVoiceMedia, a cloud customer services group, set up a foundation in 2010 to channel people, resources and technology to help not-for-profit organisations: one recent initiative supports reading schemes for disadvantaged children.

It also runs a club in which volunteers teach children how to code; helps charities to formulate business plans; and allows each employee to allocate about 20 hours of work time a year to charity work.

“It’s always been important to me to make sure that we’re not just there to make money — there has to be a higher purpose,” says Ashley Unitt, who co-founded the company in 2000 and is now chief scientist. “Not only is our product geared around making things better, improving the life of the call centre agent and the people who interact with call centres, we also want to give back to our local communities.”

Mr Unitt says the company benefits because its social initiatives help to attract and retain the best staff. It now has almost 400 employees in Basingstoke, San Francisco, Wroclaw, Sydney and Munich.

NewVoiceMedia favours doing things that are “employee-led”, he says, such as the code club. “We have a large technology department and what a lot of people are passionate about is coding, so it was a way for them to share that passion and drive with children.”

Lily’s Kitchen, a producer of premium pet food, is a Certified B Corporation, an international recognition for businesses that balance social purpose and profit, requiring them to consider their impact on workers, customers, suppliers, the community and the environment. Almost half its staff have volunteered in the community over the past couple of years, including in the relief effort following the Grenfell Tower tragedy. The company has donated more than 650,000 pet meals to rescue centres.

Social impact is spreading. Across the world, almost half as many people are creating start-ups with a primarily social or environmental purpose as those with a solely commercial aim, according to the Global Entrepreneurship Monitor, a multi-country study.

In the UK, almost 9 per cent of small and medium-sized businesses are social enterprises — meaning their aim is mainly social or environmental — while a further 22 per cent have some social or environmental goals, according to government data.

“For me, responsible business is far more than community involvement and ‘programmes’,” says David Grayson, emeritus professor of corporate responsibility at Cranfield School of Management.

It has been important to me to make sure that we’re not just there to make money — there has to be a higher purpose

“It is about core business behaviour: how a business treats employees, customers, suppliers. So it is much more about being a great place to work, treating customers well, taking responsibility for what is happening in its supply chain.”

Community initiatives have their place, he suggests, as long as they are part of an overall strategy to take responsibility for a business’s social, environmental and economic impact. Those that do it best are looking to have a positive effect rather than simply mitigating any negative repercussions of their business.

Among other FT Future 100 UK businesses, Cheshire-based technology company Trak Global uses telematics to help insurance companies understand the driving habits of their customers to bring down premiums and reward safer driving, thus reducing accidents.

Co-founder Kamran Mahmoudzadeh also set up a foundation in memory of his son, killed in a car accident in 2007. The company says it has raised tens of thousands of pounds for young people’s charities.

Redington, an investment consultancy focused on the pensions industry, founded a financial education charity run mainly by company volunteers. So far, according to the company, it has helped 4,500 children to learn how to handle money, and aims eventually to help 1m globally.

This was enough to earn it a spot in the ESG category of the FT Future 100 UK, alongside Falcon Green, a construction and engineering recruitment specialist. The company has helped inmates from Elmley prison in Kent to integrate into its workforce.

AnalogFolk, a digital advertising agency which impressed the FT 100 judges with its social programmes, has invested in initiatives including a mentoring network for students from poorer backgrounds.

Company philanthropy has a long history, running back to Quaker businesses such as Cadbury and Rowntree’s, which set up charitable foundations, or 19th-century American steel tycoon Andrew Carnegie.

But in recent times, companies have had a mixed ethical record. Scandals since the financial crisis have undermined trust. Corporate social responsibility, a popular concept in the early 2000s, became so discredited by tokenism that many now hesitate to use the term.

Amanda Mackenzie, chief executive of charity Business in the Community, believes corporate responsibility is improving, in part because of a new breed of leaders who “try to make it intrinsic to the way they run their business”.

She says many corporate activities are more coherent and sophisticated than in the past, but there are areas such as in-work poverty where “we need to have a big push on and get companies to move”. That could include paying a “real living wage” (£8.75 per hour, or £10.20 in London) or offering “zero-hours” workers the choice of a more secure contract.

Businesses that handle social responsibility well can be rewarded by better staff loyalty, and perform better as investments, according to researchers.

Prof Grayson is optimistic that the picture will continue to improve. “This is increasingly part of the factors that you want to be on top of if you’re going to have a fighting chance of your business continuing into the indefinite future,” he says.