‘Social Impact and profitability are two sides of the same coin’ was one of the core takeaways from the Sedex Supply Chain Sustainability Conference, which took place last week at the iconic Barbican Conference Centre in London.
The theme of this year’s conference was ‘simplification’: acknowledging the complexity of progressing environmental and social sustainability in a field that is becoming increasingly multi-faceted and prone to duplication.
With this objective in mind, Mary Teakle, Head of Ethical Trade at The Body Shop; Richard Boele, Partner at KPMG Banarra; and Elaine Cohen, Founder of Beyond Business, joined Sedex’s Tom Smith to dispel some of the confusion surrounding the measurement of social impact, present the business case for social investment and highlight the importance of engagement in social projects.
“Social Impact is becoming one of the new buzzwords in business,” Smith remarked. “It’s becoming one of the key indicators that consumers, and those within business, are looking for.”
“Brands are recognising that they need to have purpose beyond making money,” Cohen added. “Take Walmart, for example: they built their multi-billion-dollar business on being the cheapest retailer in their sector. Yet several years ago they changed their tagline from ‘Always low prices’ to ‘Save Money. Live Better.’ What does that tell us? It tells us that globally the mood is changing and low prices are no longer enough. Consumers increasingly want to know about the impact of their money, on themselves and others.”
But for many brands this can present a challenge: how to identify their business impact and recognise the indicators which reflect improvement.
“Social impact need not be approached as rocket science,” Cohen reassured delegates. “Businesses can get caught up in attempting to quantify every effect they have on their communities. At Beyond Business, we teach a much simpler method.”
Negative impacts often happen in the supply chain, she explained, frequently within the most vulnerable or impoverished communities.
“Engage with these stakeholders,” she said. “They are the experts who can tell you where these impacts are and help you prioritise the most important ones to tackle. This quick method of identifying social impact is the way to spend more time improving your impacts and less time counting them.”
When tackling social impact, another common mistake brands make is to be preoccupied with their achievements without looking at the effects these have, Smith added: “You’ve got inputs - the resources a business commits; you’ve got outputs - what happens as a result; and you’ve got impact - what actually changes for society. Often we get stuck at ‘outputs’.”
Providing an example of measuring impact - not output - Teakle described how The Body Shop has approached the purchase of shea butter from women farmers in Ghana through its Community Trade program. Rather than focusing solely on paying a fair price, she explained, The Body Shop has looked closely at the impact the policy has had on the farmers’ quality of life.
“With shea butter, we’ve had a huge positive impact. These farmers had almost nothing, they lived in a harsh environment, in a culture that doesn’t really value women. Now they own successful businesses, they’ve been able to build nursery schools, medical centres and washing facilities. The women are proud that they've been able to help their communities.”
But is there a clear business imperative to improve social impact? The answer across the panel was unanimous.
“Projects like these should not be viewed as an additional business cost,” Cohen said, “but as an investment that brings significant financial benefits” - for both retailers and manufacturers.
“As a retailer, our social impact is a massive benefit to our business,” Teakle observed. “Consumers are becoming more socially engaged and increasingly they’re buying from brands like ours that can demonstrate their ethical business practices. The importance of that can’t be overestimated.”
A reputation for social responsibility can also help brands attract valuable talent, she explained: “We attract staff with sustainability already in their hearts and minds. They come to us because we’re the type of employer they want to work for.”
Furthermore, manufacturers are particularly at risk from a ‘business as usual’ attitude that ignores social sustainability, Boele warned.
“Prominent buyers such as M&S now routinely favour suppliers who demonstrate greater ethical performance,” he said. “In that context, social impact investment becomes a sound business investment.
“At the end of the day, both consumers and buyers are starting to look beyond cost. They’re wising up to the fact that you can only push prices so low before someone else has to pay.”