Progress | Centre-left Labour politics

Beyond the bottom line?

The lunchtime debate at Progress Annual Conference on Saturday, November 3 will be entitled ‘Should business promote social justice?’ Here, another speaker, Polly Toynbee, replies to Stephen Alambritis

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Business is a force designed to make the most money at the least cost for the benefit of its shareholders. That is its sole purpose and its legal duty. It has no inherent reason to be green, good or socially just and it is unreasonable to expect it to be. It is by nature amoral – as indeed is the press which is also a business and will only be ‘moral’ in so far as perceived ‘morality’ attracts readers. There is no ‘ought’ in enterprise.

By far the most important force obliging it to behave well is the government or international regulation. It is one of the paradoxes of the CBI state of mind that keeps clamouring for less ‘red tape’ and ‘regulation’, yet capitalism can only work well under the thumb of firm, fair and efficient government regulation. That’s why it never thrives where governments are weak and corrupt: Africa’s poverty exists because no one will invest in countries with governments that can’t guarantee basic property rights or enforce legal contracts.

The CBI resisted the minimum wage, predicting dire consequences. In fact most big companies with large low-paid workforces welcomed it – so long as it was strictly enforced on everyone. If all had to pay the same, there was a level playing field and it would drive out seedy employers engaging in unfair competition by paying below a fair wage.

Good government can and must regulate business for its own sake as well as everyone else’s. ‘Light touch regulation’ was not a good idea for the banking sector when Northern Rock went bust. Who saved the day? Government guarantees – let no one forget it. Out of control borrowing had to be rescued by the state and the taxpayer, but don’t hold your breathe for the Institute of Directors to recognise how much businesses of every kind rely on strong government and ‘red tape’.

Otherwise, only self-interest will ever divert business from its primary duty to make profits. Anita Roddick sold virtue in her delightful little Body Shop bottles. There is a growing market demand for fair trade and green goods – and there should be more of it. If the public demands virtue from business, they will get it. We will all only get goodness from business if we buy it.

The trouble is, people go on buying from bad businesses – reading Murdoch newspapers, for example. There could and should be a lot more public clamour against bad employers. It often takes surprisingly little public action to name and shame companies behaving badly to damage their bottom line, at which point virtue suddenly becomes a business necessity. London Citizens, a community group combining trade unions, local churches and others, gets results by local pressure and publicity in its campaign for employers to pay a living wage rather than the sub-survivable minimum wage.

Private businesses or mutuals might choose to be good for their own virtuous reasons, with private owners moved by charitable considerations or mutual members willing to forgo profit for virtuous purposes. But companies with shareholders by law always need to prove that everything is done for sound commercial reasons. Shareholders – or these days their legal representatives in pension funds – need to know a company’s virtue is either made by money or was imposed on them by regulations.

So business will only ever be as good as we make it be – either by the government we elect or by the strength of the collective EU’s will to enforce higher standards for all, which sadly British governments repeatedly veto or opt out of – as is currently the case on the agency workers directive. There is no ‘should’ for business to promote social justice. It is for us as voters and consumers to tell it what it must do.

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Polly Toynbee

is a columnist for the Guardian

Beyond the bottom line?

The lunchtime debate at Progress Annual Conference on Saturday, November 3 will be entitled ‘Should business promote social justice?’ Here one of the speakers, Stephen Alambritis, enter the fray

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Pack-IT turns over £1.5m a year through providing mailing, storage and distribution services. Profits for this Cardiff-based business stand at over £100,000. Easibind was founded 28 years ago and currently employs 100 people in Derbyshire. The Co- operative Bank employs thousands of people and has a turnover of billions of pounds and recently launched the first full internet bank in the UK.

Pack-IT is a social firm. Despite all the talk of bottom lines, profit ratios and turnover levels, its key aim is to provide training opportunities and permanent paid employment for people with learning disabilities. Easibind has benefited from a commitment to responsible business practice and attracts only corporate clients with an interest in socially responsible sourcing. The Co-operative Bank is the only high street bank with a customer-led ethical policy that says who they will and will not do business with. Last year the bank turned away some £10m of business that conflicted with its ethical policy. The bank is the Federation of Small Businesses’ approved financial institution for small businesses.

Those are just three businesses promoting social justice of their own free will. One can of course argue that there are more than four million other firms out there and ask what exactly they are doing to promote social justice? Well, in answer to that, the social enterprise movement is at last kicking off in the UK. Well known social enterprises include Cafedirect, Welsh Water and the Eden Project. These businesses are dynamic enterprises with a real social purpose working here and internationally to deliver lasting social change. Latest figures put the number of such concerns at 55,000 and growing, with a combined turnover of £27bn.

The business case for corporate social responsibility is now a mantra among large companies. If a big business wants to be an employer of choice among graduates then it needs brand differentiation. In an increasingly global and blurred business world a truly meaningful CSR policy that considers the interests of society will provide any business with that brand distinction.

But another way in which businesses promote social justice is simply in creating more jobs and in the move towards full employment. Employing more people who pay more tax means more people in the circle that is the dignity of work. Everyone in work means a greater chance of eradicating child poverty.
More business registered for the world’s most efficient PAYE system means more employers paying ever more generous paternity and maternity pay; more employers releasing their staff for public service as reservists, fire officers, special constables, magistrates, councillors or trade union officials.

More taxpayers and more corporate profits should mean more money for our public services and better schools for our children and more hospital buildings for those that need them.

There has been very little in the way of legislation to force businesses down the CSR route or to give out-and-out advantages to social enterprises, yet both these concepts have flourished. As one top entrepreneur puts it: ‘I always say social justice is good business. If people are given the opportunity for education then we create a taxpayer. And that’s profit for the country.’

The best way forward is to make a reality of the words we have all been listening to from the Treasury and Downing Street since 1997: to ensure that economic prosperity and social justice are not seen as two separate strands of thinking but go hand-in-hand when making policy.

Progressive centre-ground Labour politics does not come for free.

It takes time, commitment and money to build a fight against the forces of conservatism. If you value the work Progress does, please support us by becoming a member, subscriber or donating.

Our work depends on you.

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Stephen Alambritis

is leader of Merton Council

2 comments

  • I Agree with Polly there can not be a should .and however desirable for their own purposes it may be to be Green or whatever it can only be a choice or Legal requirement .
    In pursueing the latter course regard must be given to international competitiveness. It was pointed out to me in my radical sociallistic youth now long past .that we were an island living on trade the answere did not immeditaly spring to mind in the argument and after 60 od years I have still not found it.

  • Of course business should promote social justice – as long as they don’t end up capturing the agenda.

    Social justice must involve the redistribution of personal income, from the well-off to the less well-off. Inequality is bad. However, will business accept that? Maybe. Maybe not! But reducing inequality is a vital progressive task.

    Let’s be careful…

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