By Adrian Ashton
All businesses will be familiar with the concept of the ‘annual return’: a once-a-year reflection on our performance in principally financial terms, usually filed by our accountants, and placed on the public register at Companies House for others to benchmark their performance against, or to asses our relative risk to be assessed against by potential investors.
And it’s been this way for as long as any of us can remember, but times are changing:
- - Companies Act 2006 saw the biggest shake-up of Company law in living memory, with Directors now having to be able to show how they’re considering the environmental, social, and community impacts of the business and their decisions.
- The Environment Agency requires all companies to manage their waste streams sustainably.
- - The Social Value (Public Services) Act 2012 means government procurement officers can ask us to evidence our local impact and ‘added community value’ in any public contracts we might be delivering.
- The rise of the ‘ethical consumer’ and ‘generation Y’ amongst employees and graduates means we’re being increasingly held to ethical standards internally and externally.
In light of all the above, the traditional annual return is starting to look like it’s no longer ‘fit for purpose’... but also in response to the above, there are a range of existing approaches and standards that can be adopted to allow companies to not only identify, but also report on their ‘social impact’. These range from internationally accredited standards such as AccountAbility1000 (with a methodology and principles that strongly parallel those of ISO), to politically endorsed approaches such as Social Return On Investment (which reports social impact as a financial ratio), to ‘Local Impact Measurement’ that present the findings of the report as a marketing-friendly infographic , and models including Local Multiplier 3 that track the contribution of a businesses’ purchasing and employment practices to the strengthening of the local economy it's based within.
What many businesses have found as they embark on reporting their social impact is that it makes little difference to their customers, but reaps dividends internally with regard to strengthening employee relationships, and making better informed strategic and management decisions to sustain the long-term future and success of the company in the context of its values and culture.
I’d be happy to have an initial chat with any fellow Chamber member as to how your business might begin to explore this issue further without expectation or obligation – or if there’s enough interest, perhaps we could ask the events team to put on a briefing seminar which I’d be happy to deliver.
Adrian is a member of the Social Return on Investment Network, a certificated auditor for the Responsible Business Standard, and an ambassador for the LiM tool (amongst other things...)