Volunteering as the "S" in ESG

Ahead Partnership

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 the social impact can be less obvious.

That was certainly my experience when I first became involved in CSR. While I am not sure the phrase had been coined that long ago, 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). For social issues, think about anything that relates to people.

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 mistreats its own workers, it will experience high turnover and lower 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, 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 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 other business imperatives and, because they contribute to financial success, have a fighting chance of permanence (or at least longevity).

This is where the link to volunteering that I promised in my previous article arises. If you read it, you will already know about the significant business benefits that having an active, company-supported volunteering programme can have. If you didn’t, here is the link - https://www.dhirubhai.net/posts/steven-webb-08754913_volunteering-businessbenefits-education-activity-7276981165545160704-un-9?utm_source=share&utm_medium=member_desktop

The social impact positives from volunteering definitely meet the inside-out part of the materiality test. The group most immediately affected by what a business does are its employees (so always a good place to start your thinking on the “S”) and employees gain a lot from volunteering. Making the right choice of activity can also mean it has outside-in benefits. For example, the volunteering that I discussed in the previous article was in education – business volunteers going into schools, or hosting pupils in their workplaces.

Research has shown that this type of employer engagement is important for tackling stereotypes, inspiring young people to imagine different futures and reducing disconnects between aspirations and the realities of the labour market. I saw this for myself when working at a company in video game development, an industry that has historically been very male dominated. In the first year of our volunteers going into schools to talk to 12/13-year-olds about careers in the industry, 50 girls who said at the start of the process that they had never considered video games as a potential career had changed their view by the end. For any of them that do end up following that path, the company that came into their school and inspired them will be the first they think of applying to. ?Just one small example of how volunteering in education could improve the future pipeline of talent for an employer.

I hope you are already convinced that company-supported volunteering is a sound approach to the “S” in ESG/CSR because:

·?????? It meets at least one side of the materiality test and is therefore directly relevant to what your business does

·?????? It provides significant benefits to your employees – the people you directly affect

·?????? The benefits to employees translate into business benefits such as improved retention, skills and motivation

·?????? Well thought out and designed, it can also provide outside-in gains, such as an improved pipeline for future recruits.

If not, then let me add to that list the hugely beneficial effect volunteering in schools can have on the young people you will engage with.

There is a significant amount of academic research demonstrating the powerful impact of employer careers engagement in education and the dramatic effects it can have on the young people who get to participate (I have referred to some studies below for those keen to find out more).

A couple of examples:

·?????? Young people who can remember 4+ activities with employer volunteers from their school days are 42% less likely to be NEET (not in employment, education or training in their early 20’s (1)

·?????? A programme of 10 careers talks at age 14-15 typically correlates to an increase in earnings worth 8% at age 26. (2)

Through my involvement with Ahead Partnership (Ahead Partnership | Social Impact | ESG | Social Value Consultancy), I have experienced first-hand the inspiring moment when a young person realises that a career they would otherwise never have considered is within their reach. Seeing that happen, or even being the catalyst for it, takes some beating in making you feel you have done something worthwhile.

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(1)??? Mann, A. et al. (2017) Contemporary transitions: Young Britons reflect on life after secondary school and college. Available at: www.inspiringthefuture.org.

(2)??? Kashefpakdel, E.T. and Percy, C. (2017) “Career education that works: an economic analysis using the British Cohort Study,” Journal of Education and Work, 30(3), pp. 217–234. Available at: https://doi.org/10.1080/13639080.2016.1177636.

(3)??? Mann, A. and Percy, C. (2014) “Employer engagement in British secondary education: wage earning outcomes experienced by young adults,” Journal of Education and Work, 27(5), pp. 496–523. Available at: https://doi.org/10.1080/13639080.2013.769671.

(4)??? Musset, P. and Kurekova, L.M. (2018) “Working it out: Career Guidance and Employer Engagement.” Available at: https://doi.org/10.1787/51c9d18d-en.