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UK firms now spending up to 20% of turnover on CSR

October 2007

British businesses may be allocating more resources to corporate responsibility than is generally realized, with more than half claiming to spend between five and ten per cent of their turnover on social and environmental measures.

In a survey of 200 medium-sized companies, 104 said they were spending roughly that proportion in areas such as energy efficiency, ethical supply chain monitoring, and charitable giving. A further 22 said they were spending between ten and 20 per cent of their turnover, and two claimed to be spending more than 20 per cent. The remaining 72 spent less than five per cent.

Expenditure as a proportion of turnover generally increased with company size, but a sizeable minority were taking little or no action. Six companies claimed to spend nothing at all on measures to improve the social and environmental performance of their business, and 16 said they spent less than one per cent.

The vast majority of those surveyed had annual turnovers spread evenly between £3million ($6m) and £100m. Six companies had turnovers of more than £100m. Questions on spending were answered by high-level executives such as directors, board members, partners or chief executives. They were asked: ‘what percentage of your turnover do you currently spend on environmental/corporate responsibility issues?’

Grant Thornton, the UK accountancy group that carried out the study, said the level of spending was ‘higher than we would have predicted’. However, it warned that the figures should be treated with caution, as the businesses themselves defined their corporate responsibility spending. In some cases, for instance, companies might have included items such as season ticket loans for staff, or have put a cost on staff volunteering during company time ‘even though no cash was actually spent’. Although Grant Thornton gave the companies an indication as to what it viewed as CSR spending, respondents did not provide any detailed breakdown of their expenditure.

Mike Tuffrey, director of The Corporate Citizenship Company, which manages the London Benchmarking Group, a project to measure the community spending of companies, said the figures do not appear quite so surprising if one considers that many of the measures, such as those relating to the environment, would benefit companies financially. ‘These numbers are only looking at the cost side of the equation. In many cases, companies will be benefiting from this as an investment,’ he told EP. ‘They and their accountants should [therefore] be cautious about trumpeting spending claims.’

Grant Thornton was ‘surprised’ by the findings, and said they suggested that CSR ‘is now firmly engrained in the consciousness of UK business’ – despite 16 per cent of the companies questioned having no formal policies on corporate responsibility.

Investment in staff training development, and changes needed to meet new regulations, were the other main spending priorities of the companies.
 



Further Information
http://www.grant-thornton.co.uk
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