04/01/2011

The UK’s fastest growing companies have been revealed for 2011 and CSR is a common theme among many of them. While recent efforts to legislate for CSR may be misplaced says Andrew Wigley, All About Brands’ public affairs director, the overall case for CSR is indisputable.

If, like me, you have a natural curiosity for league tables and other trends among independent businesses, you may have seen the latest Sunday Times Fast Track Top 100 firms. Now in its 14th year, the league table has become a significant barometer of private company growth and this year’s Top 100 includes some well-known high street brands such as AllSaints and Cath Kidston as well as many lesser known business-to-business brands.

Despite the painful environment of the last couple of years, the Top 100 firms have increased their sales by an average of 85% a year over the last three years, growing from £727m to a combined £4bn, and creating 16,474 new jobs. It’s an impressive story and speaks to the drive among smaller businesses that time and again delivers results. It’s a story in which Government should be taking particular interest because it’s SME’s that will largely create the jobs in the coming years to offset the enormous wave of job losses from the public sector.

Having flicked through some of the companies in the league table, and read some of the narrative, I am struck by the importance attached by principals to the importance of sustainability and Corporate Social Responsibility. It’s no surprise that a growing number of companies in the Top 100 are labelled as ‘green’ companies.

They have identified an opportunity to develop and create products and services which are contributing to the booming green economy, one sector I think which looks set to grow exponentially. Beyond that, many of the Top 100 companies have progressive CSR policies which, their principals will argue, motivate staff and happy staff tend to return greater productivity.

It was perhaps logical, then, that the last Labour administration tried to address CSR into its last review of company law in the Companies Act 2006. That piece of legislation which came into force last year, as many of you will know better than me, became one of most impenetrable pieces of law although the government was very keen to vaunt it as being more accessible in terms of language than all previous legislation. That may be true, but at 1,300 sections, it is by far the longest Act ever. But I recognise it has probably reduced overall administration.

Its efforts to introduce the concept of responsibility or ‘duty’ for 'enlightened shareholder value' have, however, been controversial. It broadly replaced the old duty to act in the company's best interests, but requires directors to have regard to the longer term and to various ‘corporate social responsibility’ factors including the interests of employees, suppliers, consumers and the environment.

In theory directors are only liable to the company (or its shareholders on behalf of the company) for breach of this duty and if the company can demonstrate that it has suffered loss as a result of the breach. There have been concerns that companies need to leave audit trails on all decisions made, but the reality is that they should be able to demonstrate that they have encouraged a culture where the wider consequences of decisions are routinely considered. Most leaders and management teams do this intuitively, and that’s why many successful companies do try to put in place some realistic level of community engagement or efforts to use greener options or mitigate environmental harm.

It’s something we try to do at All About Brands. We offset our carbon (which is fairly easy since our emissions are relatively low) and are also Patrons of the Prince’s Trust, which is not an insignificant commitment given the size of our business. That has led to individual fundraising efforts among staff and included one colleague trekking through the Himalayas and raising £15,000 in the process. That stuff plays back well into the business and generates an optimistic mood that we are doing right. And I’m struck that that seems to be the case among a good number of this year’s Top 100.

Notwithstanding the question of using legislation to enforce it, CSR tends to increase those intangibles of well-being and happiness in workforce. But it also drives the tangible of greater productivity. The best definition of CSR that I heard sums it up - enlightened self-interest.

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