The Institute of Directors (IoD) has launched a national Commission to examine whether Business is a force for good; assessing how businesses create economic, social and environmental value, and where they fall short. Its report should be published in November this year. At the same time, the UK Government’s Social Value Model and the rise of ESG reporting frameworks show that measurement is becoming mainstream, not optional.
If the UK adopts formal measures of “business as a force for good”, micro, small and medium sized businesses will need simple, practical ways to show their positive impact, without the hoops big corporates have to jump through.
Contributing to Prosperity
The UK can measure business contribution to the economy in local job creation, fair wages and progression, support for apprenticeships, local procurement and productivity improvements. At the minute HMRC has all the data on tax and VAT payments but little of that is available for wider use.
Small businesses can track local hiring and training and could share a lot more information on wages and progression, record their use of local suppliers where possible, voluntarily share how much tax they pay, and document how their business supports local economic resilience.
Assessing economic contribution would be very valuable to the UK’s understanding of the part played by businesses of all sizes in various sectors and regions.
Improving People’s Lives
Measuring employee wellbeing, diversity and inclusion, community engagement and support for vulnerable groups, customer fairness and transparency and ethical supply chains may sound onerous, but would give businesses real insight into whether they are perceived as improving lives, and whether their behaviour is attracting customers who want to work with, talented people who want to work in them, and people who might be tempted to invest in them.
Running short wellbeing surveys, tracking diversity across roles and offering flexible working and partnering with local charities where possible, would also give businesses a useful insight into how well they fit into the Government’s Social Value Model, which already evaluates social impact as part of public procurement bids.
Reducing Harm
Measuring moves to reduce harm through carbon, energy, water use and waste reduction is already making an impact, not only on environmental harms but on the bottom line of many businesses.
Measuring and setting reduction targets on energy, water, transport, packaging use is already part of many business operations and switching to greener suppliers and repairing, reusing or recycling are moving up business priorities. The British Business Bank says that environmental metrics like this are core ESG measures for assessing impact.
Running a business fairly
Good Governance is good for business and good for making sure a business is a force for good. Transparent decision-making, ethical leadership, anti-corruption practices, clear policies and accountability, and fair treatment of workers and contractors, are all vital factors in running a business fairly.
When small businesses adopt a code of conduct, document how decisions are made, have simple complaints and whistleblowing policies, make sure that contracts are fair and transparent, and adopt basic anti-fraud and anti-bribery practices, they are less likely to make unfair decisions and expensive mistakes.
Good governance is central to operating as a force for good and behaviours shape real-world business decisions and outcomes.
Open about your impact
Public reporting of social value and clear communication with customers and suppliers builds trust. A simple “Impact Statement” which shares information about how you are doing with jobs, training, carbon, community support allows customers, would-be employees or contractors and investors to see you are being open about challenges and improvements, and not guilty of greenwashing or exaggerating claims. Bigger businesses increasingly need to report their social value through evidence-based metrics. Smaller businesses would find a similar set of measures gives useful insight into how their operations run.
Do not wait for Government
- Decide what matters most in your business and choose priority areas based on customers, investors or community needs.
- Gather simple data: track what you already do on jobs, training, energy use, community support.
- Talk to stakeholders and interview employees, customers or suppliers to understand what they expect from you and what they’d really like to see.
- Set goals for 3 – 5 improvements for the next year.
- Publish a clear, simple, impact report.
Evidence
The UK is moving towards formal ways of measuring whether businesses are a force for good, through social value and ESG, as well as focussing on economic contribution. Small and micro businesses can get ahead by adopting simple, practical measures that show their impact on communities and society, the economy, environment and governance. This is about proving what many small businesses do already: create jobs, support communities, act ethically, and drive local prosperity. They are absolutely vital to the UK, not just because of their vast contribution to the Government’s coffers, but for their impact on people’s lives. We need that evidence that proves we’re a massive force for good.
Key takeaways
- The Institute of Directors has launched a national Commission to examine whether business is a force for good, with formal measurement frameworks likely to follow that will affect how micro, small and medium-sized businesses report their impact.
- Economic contribution can be measured through local job creation, fair wages, supply chain spend and tax contribution – metrics that small businesses can track and share more openly.
- Employee wellbeing, diversity and inclusion, community engagement and support for vulnerable groups are increasingly expected measures of social impact, with low-cost tools already available to track them.
- Good governance – transparent decision-making, simple complaints processes and whistleblowing policies – is central to operating as a force for good and shapes real-world business decisions.
- Small businesses do not need to wait for government frameworks: choose priority areas, gather simple data on what you already do, talk to stakeholders, set goals and publish a clear, simple impact report.
