Earlier this year, KPMG International released a sustainability insight paper entitled Unlocking the value of social investment. It presented research into reporting of social investment by 100 of the world’s biggest companies (and their associated foundations) from across 11 countries.
It’s an interesting read, here’s our round up of some of the most insightful take-outs.
Creating shared value
“Best practice strategic community investments are those that create shared value for both the beneficiary and business. In my experience, there needs to be a clear business driver for companies to continue to invest in beneficial programs, for the investments to be sustained long term and to be effective,” Neil Morris, Partner, KPMG in South Africa, notes in the paper.
“There is a gradual shift occurring as companies move away from pure philanthropy towards more strategic social investments that create value for both society and the business. This means that companies may make social investments with the intention of creating shared financial, social and environmental benefits. I don’t see this as a conflict, because it means corporate funds are more likely to be invested long term and that society will benefit from the skills and expertise of a company investing in a manner related to its core business.”
- There is no universal term used by the corporate sector to define social investment. Among the most commonly used terms were: Community investment (21 per cent), social investment (19 per cent) and charitable giving/philanthropy (19 per cent).
- Based on the 100 companies studied, on average, the equivalent of 2.5 per cent of pre-tax profits were invested in social programs.
- The most common types of social investment, among the companies surveyed, were financial contributions (93 per cent) and employee volunteering (74 per cent).
- Only 9 per cent of the companies studied report the administration or management costs associated with their social investment.
- Some 93 per cent of companies quantify social investment inputs (i.e. financial and product donations, staff volunteer hours), with 88 per cent also recording outputs (i.e. participation levels of staff).
- However, surprisingly, only 20% of companies quantified any outcomes (results), while NONE of the 100 companies studied quantified long-term impacts (value). Essentially, once the process of giving was undertaken, no further assessment occurred to understand if the social investment was effective or should be continued or reviewed in future.
- Strategy is an element that is missing from many companies’ social investment plan. Some 32 per cent have a detailed strategy in place, but the average approach saw companies invest in five different areas without a clear plan in place.
While it’s good to see that social investment is occurring at such a high level, the need for better strategy, assessment and reporting of outcomes and impact is evident.
Does your business face similar problems with its social investment efforts? If not, how have you overcome them? Share your opinion or advice with us below.
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