In a recent interview in Fortune, the chairman and CEO of Starbucks Howard Schultz shared key advice on corporate investment in social causes:
Companies should not have a singular view of profitability. There needs to be a balance between commerce and social responsibility...The companies that are authentic about it will wind up as the companies that make more money.
In real estate in the UK, social responsibility is particularly important just now, as the Government introduces the Localism Bill which gives local people more influence over what gets built in their neighbourhood and intensifies the duty of developers to consult with them.
But prior to the legislation coming in to force, for every real estate professional who is quoted in the media as committed to a new and authentic form of social contract, there's at least one other for whom social stuff appears to remain red tape, a barrier to profit that requires a process of de-risking.
Now it may always be difficult for the trader/developer to justify investment in social infrastructure when the ultimate benefit may accrue to their successors in title.
Also, the real estate sector retains some of the most charitable individuals in the business world - like Gerald Ronson of Heron International, said in this week's Sunday Times to have donated more than £30m ($46m/ €36m) and raised £100m ($153m/€121m) for good causes.
But if the bearings of the industry are to change towards a more progressive form of social responsibility, one step beyond charity or the risk register, it is only going to be because of a judgement around value - so we thought it might be useful to share some positive facts that we hope will act as a cheatsheet.
First, there's the business environment.
Corporate social responsibility is en vogue just now, as regulation obliges companies to meet more social targets as part of their licence to operate, the state looks to the private sector to fill gaps in public expenditure and some companies start to conclude that it's cheaper and more effective to pay for solutions to social problems that challenge profitability.
Second, there is a scattered collection of useful evidence that we gathered recently for a real estate developer in the Netherlands who hired us to advise them on the practical, effective delivery of investment in the social welfare of people living and working on their estate.
Returns may not match putting money in to rare earth metals :) but this random collection of indicators does start to picture total value.
- Social Impact Bonds: 7.5-13% p.a. return to social investors on reduction of reconviction rate [2011, Social Finance, Overview of the Peterborough Social Impact Bond]
- In a £2.5m housing development, £473k was saved in costs due to community engagement [2010, Sustainable Development Commission, The Future is Local]
- £1 invested in community development by local authorities generates £3 of social value [2010, New Economics Foundation, Catalysts for Community Action and Investment]
- Sustainable urbanism’ delivers higher densities and “developer value” uplift [2007, Princes Foundation/Savills, Valuing Sustainable Urbanism]
- Local estate agents in South Glamorgan attribute house price rise from £11k (1990) - £95k (2006) to community asset ownership & proximate development [2006, DCLG, Community Assets]
- Value to City Council of transfer of leasehold management of community centre to local community association = £43k [2009, Birmingham City Council Community Asset Transfer in Birmingham]
- Value of community participation in public space management in UK = £16m-33m p.a. [2003, Green Space report]
- Engagement of young people leads to reduction in complaints, damage/vandalism and higher levels of community satisfaction on housing estates [1998, Joseph Rowntree Foundation, Working with Young People on Estates]
Now there's a great old American expression that "if it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck."
Perhaps with more facts like this, we can start to marginalise the corporate social responsibility that looks, moves and talks like responsible business but has all of the authenticity of, er, a duck in a shooting gallery at the fairground.
Images courtesy of illustrator Eva-Lotta Lamm on Instagram. #crappycoffeeart
