Responsible governance

The conventional idea about the purpose of a business is that it should look to maximise profits and continuously grow. But experience and research suggest a responsible business and their employees exist to do far more than that, whether it’s looking after the wants and needs of their local communities or sustainably managing the planet’s resources for future generations.

Making profits responsibly, minimising the social damage of expansion and balancing the interests of all stakeholders – not just those of the owners – are all good principles of responsible governance.

Our research at the Centre recommends the following first steps for businesses wanting to begin or continue their journey in this area:

Step one: A shared vision of a sustainable world Based upon the Global Goals. Step 2: Aligned purpose Identify which Global Goals to prioritise. Step 3: Embedded social value  Put people and planet at the heart of business strategy. Step 4: Responsible mi

You’ll find the practical tools, resources and rationale for how to do these things below, together with many more research-based ideas and inspiring case studies on this key area of responsible business.

Research and ideas

Degrowth and responsible growth

It’s become the norm for national governments to measure the health of their economies by referring to growth in GDP (gross domestic product, the monetary value of all finished goods and services). Without perpetual growth in business activity and/or productivity – the argument goes – successive generations will become poorer and the welfare of society would decline. This social Darwinian ‘grow or die’ mantra has become so pervasive and canonical in conventional business, few question whether all growth is good, even when it evidently comes at the expense of society.

While some firms expand through innovation or buying up their competitors, others do so by deliberately driving their competitors out of business or exploiting their suppliers. Such aggressive expansion strategies may not only have damaging impacts on wider society (with unemployment and poverty wages, for example), they can also harm the business by immiserating staff, stretching resources and eating away resilience (history is littered with companies bankrupted by their world-dominating ambitions). Moreover, ever-growing businesses consume more and more resources and produce more and more waste, destroying the planet’s life-supporting ecosystems. As the environmental campaigner Greta Thunberg put it to the UN’s climate change summit in 2020: ‘We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth. How dare you!’

So, can sustainable businesses really have their cake and eat it when it comes to growth? Certainly there are proponents of ‘green growth’ who are optimistic that technological advancements will allow for a less resource-heavy, cleaner economy in future – an idea that underpins green industrial policies like the Green New Deal. But followers of the ‘degrowth movement’ see the very premise of sustainable development as oxymoronic, arguing that encouraging capitalist growth and consumption in a finite and environmentally stressed world is inherently unsustainable. More recently, ‘zero growth’ economists like Tim Jackson and Kate Raworth have sought to redefine the role of business in relation to human wellbeing and planetary boundaries, where a shared prosperity is possible with slow, low or no growth at all.

Profit maximization and responsible profits

Profits and businesses’ desire to be profitable isn’t inherently irresponsible, but the relentless drive to maximize profits regardless of the consequences is. Business is interconnected with all the global issues represented by the Global Goals, and the prosperity of business, society and the environment are inextricably linked. In this context, making trade-offs that damage people and the planet to maximize profits can clearly be seen as unsustainable and ultimately self-defeating. In our current culture of profit maximization, financial measures have become the dominant objective of business, rather than following any broader purpose. Instead, responsible firms need to decide what kind of impacts they want to have on the world, and create metrics that measure those things most valuable to them.

Social contracts

In business, this is the convention that companies operate with the consent of society according to obligations and rules that benefit everyone. The contract can be formally written and agreed as part of a company’s charter, but is usually informal and subject to changing public opinion.

In this blog for the Birmingham Business School, Emeritus Professor Andy Mullineux explains how businesses can use social contracts to rebuild trust with consumers concerned about sustainability and how the UK water industry is leading the way.

Tools and resources

B Corps

Join more than 5,000 companies worldwide as a certified B Corp committed to high standards of social and environmental performance, transparency and accountability.

The UK B Corporation Movement

Co-operatives UK

Find out more about co-operatives and how to start a co-op or convert your existing business into one.

Start a new co‑op | Co-operatives UK

Employee Ownership Association

From mutuals to employee trusts, learn more about the different employee ownership models and how to go about transitioning to one.

Employee Ownership Association | EOA | Representing UK EO

Global Goals relationship matrix

Want to work out what your company’s relationship with the Global Goals is in order to incorporate them into your values and purpose?

SDG matrix mapping: where do you positively/negatively impact on the global goals?

Use a Global Goals relationship matrix, like the one above, to identify which Global Goals you are either dependent on, have some control over, positively benefit or negatively impact (or potentially all four). You can then determine how you should actively work with them. For example:

  • If a business is dependent on ‘life below water’, it should look to protect or regenerate the marine environment.
  • If a business has some control over ‘good health and wellbeing’, it should at least look to do no harm in this area.
  • If a business contributes positively to ‘no poverty’, it should value and enhance those efforts.
  • If a business negatively impacts on ‘climate action’, it should look to mitigate or reverse those impacts.
  • And if a business is dependent on ‘life on land’, controls life on land, positively impacts on life on land and negatively impacts on life on land, this should be at the core of all its decisions!

Good Business Charter

Take the first steps to becoming a responsible business with Sir Julian Richer’s 10-point charter.

Good business charter promo row

Good Business Charter

Purpose-mapping concentric circles

Once a business has defined its relationships with the Global Goals (see the Global Goals relationship matrix above), the next step is to prioritize them in terms of the company’s potential to make a difference. This involves positioning each of the Global Goals in one of three concentric zones relating to core business purpose, strategic importance and influence on operations.

SDG concentric circles copy

Once categorized, businesses should consider how each Global Goal relates to others across the zones to explore in which areas any contribution would have the most potential impact overall. It’s a challenging and imperfect process, but even just having these conversations helps uncover what social and environmental consequences a business is having that it doesn’t know or chooses to ignore. It’s a useful way of seeing all the dots, joining them up and making new connections.

Ultimately, the emerging picture can help inform the drafting of a business’s purpose, values and strategy statements that would be demonstrably joined up with the UN’s global strategy for a more sustainable world. The Global Goals would then provide a shared vocabulary to use in ongoing business discussions and decision-making processes.

Putting these new values into action across the business tends to be a gradual process, working out from the centre of the concentric zones in the purpose map. Firms start by implementing a sustainable measure in a part of their business, and then they expand it across the whole of their core operations, before rolling it out to stakeholders and throughout their wider value chain of activities.

Responsible Business Tracker

Align your business’ purpose and values with the Global Goals using Business in the Community’s pioneering tool.

BITC promo row

Responsible Business Tracker

Social enterprises

Social enterprises are independent businesses that put people and planet before profits, with a clear social mission and commitment to give away or invest at least half of their profits in projects that benefit the local community. Social enterprises offer more flexibility than a charity (they can sell products and services as well as apply for grants) and investors in them benefit from tax relief.

Why is Why is Michael Sheen holding a spanner and what are social enterprises?! Chris Addison explains all.

Find out more about how the model works for a Birmingham social enterprise, Standing Tall, and the amazing work it does placing people experiencing homelessness into work and accommodation.

Responsible governance case studies

The Employee Owned Trust: Richer Sounds

  • The successful UK retailer became an Employee Owned Trust in 2019 after its founder, Julian Richer, sold 60% of his shares to the trust.
  • It marks the culmination of 40 years of responsible business practice that prioritised the welfare of its staff through paying a real living wage, opposing zero-hours contracts and offering year-round access to company-owned holiday homes.
  • The company is committed to becoming carbon neutral, free from conflict minerals and paying its fair share of tax.
  • Having spearheaded campaigns against zero-hours contracts and aggressive tax avoidance, Julian Richer has now launched the Good Business Charter accreditation scheme to encourage more responsible businesses and signpost customers to them.

Read More

Case study - Richer Sounds shop front

The pioneering global corporate: Interface

  • The US-based international carpet tile manufacturer – whose European HQ is in Birmingham, UK – has been a world-leader in sustainable business practice since 1994 and is now aiming to reverse global warming.
  • In 1994, its pioneering late president, Ray Anderson, set the company the ‘Mission Zero’ challenge of taking nothing and doing no harm by 2020, which it achieved a year early.
  • Starting with cuts to the petroleum used in its carpet tiles, Interface went on to become carbon neutral across its operations, reclaiming and recycling old tiles, and reducing waste and water consumption by 90%.
  • In 2017, Interface developed the world’s first carbon negative carpet tile that absorbs greenhouse gas. It’s part of a broader experiment with ‘biomimicry’ to create a ‘Factory as Forest’ in Atlanta that provides the same natural services as a healthy woodland ecosystem.
  • Now its ‘Climate Take Back’ initiative aims to give back more than the company takes from the Earth, restoring and making a positive impact on the planet to help reverse global warming.

Read More

Interface concept designers

How Heart of Midlothian FC broke the traditional ownership cycle

  • After being trapped in a ‘new owner – new hope – increased debt – disillusionment’ cycle since 1981 Heart of Midlothian FC recently became a fan-owned club.
  • Two crises had struck the club due to traditional business decisions being made by successive owners: the ‘stadium crisis’ in 2004 and the ‘Romanov crisis’ in 2012.
  • In 2013 Hearts was rescued by a coalition of an individual investor, Ann Budge, and The Foundation of Hearts, set up by dedicated fans to purchase the club and revolutionise how it was run.
  • Under the new ownership scheme the financial position of the club improved dramatically, including eliminating all long-term debt, construction of a new stand at Tynecastle Park Stadium, deals with problematic corporate sponsors cancelled, staff being paid a living wage and a reinvigorated role for Hearts in the wider community.

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Hearts logo

The local social enterprise: Standing Tall

  • The Birmingham-based startup has been placing people experiencing homelessness into work since 2020.
  • Founder and sole-employee Christy Acton aims to work with 20 businesses to get 20 people into work each year.
  • The former shelter worker offers joined-up support for candidates, providing paid, real Living Wage work and accommodation over a six-month transition period.
  • The unique Standing Tall model is both scalable and transferable with plans to expand UK-wide.

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St Basils: the charity taking a systemic approach to youth homelessness

  • The Birmingham-based charity wants to go beyond working with and alongside young people experiencing homelessness and try to prevent it from happening in the first place.
  • By tackling the structural as well as personal factors that drive homelessness and considering it as the ultimate exclusion, a more systemic and collaborative strategy has emerged.
  • St Basils ‘Positive Pathways frameworks’ is now being used by local and national governments to help ‘design out homelessness’ at a policy level.
  • Jean Templeton, Chief Executive of St Basils, explains why all of society, including business, has a vital and collaborative role in such a systemic strategy.

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