peter-hubbard_reducedPeter Hubbard

As the UK basks in an ongoing ‘productivity crisis’ and high-profile ethics breaches dominate the headlines, more and more organisations are taking a socially-conscious approach to business.Companies such as The Co-op Group, Lush and Timpson are high-profile adopters of the mission-led business approach that is now picking up momentum.

Responding to the demands to have a coherent mission-led business strategy, the Government recently commissioned a report into mission-led businesses. The aim of ‘On a Mission in the UK Economy, published by the Department for Culture, Media and Sport, and with the advice of many leading business leaders, was to assess the current data on UK mission-led businesses and to set a vision for future recommendations.

The facts are clear. Since 2010, the importance of “purpose” as a purchasing factor has risen 26 percent globally and the growth rate of brands identified as “responsible” is nearly double that of conventional brands. Evidence also suggests that Millennials are increasingly looking to work in organisations that have a clear purpose rather than just a career ladder.

In the absence of any generally-recognised governance structure that appropriately reflects mission-led businesses, the legal hurdles can be confusing. The fundamental issue is successfully adopting a “corporate design” that enshrines mission and purpose. Crucial aspects of a well thought-out solution include communicating purpose to increase employee engagement, creating social value through the supply chain and reporting transparently to employees and stakeholders.

Employee engagement

While companies need to ensure they have processes in place to pay wages in line with the National Living Wage, socially-conscious organisations may choose to go a step further and voluntarily pay the ‘Living Wage’ (£9.75 in London and £8.45 elsewhere in the UK). These figures are independently calculated each year based on what employees and their families need to live.

The cost of implementing these measures will be higher, but evidence shows that promoting employee wellbeing and enhanced quality of life among staff as well as engaging them in the organisation’s social purpose, leads to significant increases in productivity. Employees who are engaged with their firm’s social purpose deliver greater value, loyalty and longevity.

Mission-led businesses should therefore ensure employment practices mirror company values in all areas, spanning anything from maternity/paternity rights to annual leave and pay rates.

The supply chain

Mission-led businesses should examine supplier relationships and procurement processes to ensure they truly fulfil their ethical and social objectives. Here, businesses are free to set their own objectives but the public sector has already started to integrate social impact assessments into some tender processes.

For example, the Public Services (Social Value) Act states that public service commissioners must consider the social, economic and environmental benefits of a tender for services. Any business that is interested in winning these contracts must outline the social value of their own proposition. This can range from the number of apprentices they would take on and availability of training to ensuring products are sourced locally and minimising the environmental impact. Mission-led businesses can (and should) include these criteria in their own contracting to embed social value throughout a supplier chain, not only pursuing their own mission but also making them a more attractive business to partner with the public sector.

Transparency and reporting

At the heart of the mission-led ethos is delivering consistency to both stakeholders and shareholders. Communicating the progress of the social mission in the form of a transparency report is important and should be seen not only by shareholders, but customers and employees too. Businesses need to be held to account over their social commitment and an annual report restating purpose, outcomes and highlighting future plans is important for wider engagement. This can be used as the foundation for meaningful consultation with customers and employees to allow for greater accountability, and for deeper trust and loyalty to be built.

The future of mission-led businesses

While great developments have been made to ensure the UK is a fertile ground for mission-led businesses to grow, it’s important that momentum increases in order to reach and extend the potential for a mission-based economy. This is where further Government influence could help.

First, smaller businesses must be afforded greater opportunities to bid for public sector contracts than is usually considered. Therefore, the public sector, when letting out contracts, needs to do so intelligently and proportionately to avoid the creation of unmanageable risks. Recent studies on the “diseconomies of scale” show how much additional value can be created through such a balanced approach to commissioning.

Secondly, at the moment only bids for public sector service contracts are required to be measured for their social value. This should be widened to goods and works to ensure that the mission-led philosophy is one that grows.

For socially-conscious businesses looking to gain a competitive edge, formal commitment to a social purpose can drive significant benefits, including employee fulfilment, productivity and the attraction of new business. Firms should act now to implement processes and protocols that ensure these values are ingrained throughout the organisation and effectively communicated with employees, shareholders and potential customers.

Peter Hubbard is senior partner at mission-led law firm Anthony Collins Solicitors.