It’s been almost nine months since the first national lockdown ordered by Boris Johnson and the UK has gone through waves of triumphs and setbacks along with the rest of the world during 2020. One topic might be circling your mind if you’re a business leader: Brexit and corporate social responsibility.
One thing certain is that the world has been flipped upside down in regard to how we live, work, and volunteer. This brings us to a big important question: Should my business be focusing on corporate social responsibility (CSR) right now??
In this article, we’ll explore Brexit, COVID-19, CSR and the relationship between the three as of December 2020.
It’s been easy to lose track of what has been happening with Brexit when the world is all tuned into the latest updates of COVID-19. So, here’s a quick reminder of the timeline to date:
- January 31, 2020 – UK officially leaves the European Union and enters into ‘transition’ period, meaning it follows EU rules until Dec. 31, 2020
- March 2, 2020 – UK-EU trade talks start.
- The biggest issue being trade but other things discussed were: security, co-operation, medicine safety, etc.
- August 21, 2020 – COVID-19 takes center stage and little progress made
- Two major points: Fishing and State aid.
- Fishing: both UK & EU disagree on how much access EU boats can have to UK waters.
- State aid: EU wants to keep the same rules for the UK where the state can’t help with failing businesses because it gives an unfair advantage.
- Two major points: Fishing and State aid.
- September 6, 2020 – UK threatens to walk away
- September 8, 2020 – UK admits that Brexit changes would “break international law”
- September 11, 2020 – UK has its first major trade deal since leaving the EU with Japan
- September 23, 2020 – New permit system in the UK to avoid trade goods clogging up ferry goods to the EU on Jan. 1, 2020.
- October 2, 2020 – Boris Johnson says it’s up to the EU to meet an agreement.
- The EU responds by saying many technical areas such as aviation safety for example are there but there are still many differences to overcome.
Brexit and Trade
The UK and EU have been working on a trade deal all throughout 2020 since its initial exit in late January. While the UK remains in a ‘transition’ period, firms based in the UK have been free to buy and sell goods across EU borders without paying taxes.
If a new EU-UK free trade deal is not established this means that businesses will start having to pay taxes on imports and exports.
This will make UK goods more expensive and harder to sell abroad.
A small caveat is that the UK hopes to make separate agreements on services – so any service-based business from consultants, to musicians, to chefs, might be able to continue to work in the EU. However, this type of trade deal for services isn’t on the table yet.
So, this gives context to the overall Brexit situation but let’s circle back to how it’s affecting CSR more specifically.
Brexit and Corporate Social Responsibility
If there is a no-deal Brexit, we could see many gaps in legislation missing. For example, 80% of environmental laws in the UK currently come from the EU.
Many industry leaders agree with Beccy Speight, CEO of The Woodland Trust, who states that “the key to action actually lies with the corporate sector, as I feel I can’t rely on the Government to do the right thing around these issues.”
It is no secret that finances tend to run the show in many economies, and that’s why many believe it starts with investors and companies to make sure ethical processes are being practiced, rather than the government.
Investors are starting to align themselves with corporate responsibility practices and recognise the importance of social impact for their business regardless of Brexit.
One upside of Brexit is that supply chains are having to rethink their practices. Take for example free trade at the moment, it has done a lot of good for the economy, but it hasn’t been great for the planet. It’s been very easy to buy and ship things from all over the world leaving quite a large carbon footprint.
If more sourcing takes place in the UK, businesses will be forced to adapt to a new market and a new way of buying things.
Big corporations like Kellogg Europe have already said that Brexit will not affect the company’s internal sustainability plans because CSR is being “embedded into every business decision.”
Kellogg Europe has also pledged to adopt a new CSR reporting standard that is designed to give greater transparency to its investors and consumers.
Many large corporations had decided to take the narrative of their CSR journey into their own hands long before Brexit came into the picture and it seems that Brexit has encouraged many to take an even stronger stance on the importance of enhancing CSR within their organization due to the uncertain future of legislation.
There is no doubt that the short-term impacts of COVID-19 were felt immediately amidst global lockdowns, social distancing measures, and the increasing normality of seeing everyone on the street walking around with masks on. Remember at the beginning of the pandemic when that still felt strange?
It is certain that this pandemic will eventually end but it is also certain that it will live long in our memories and in the history books. It’s already changed the way we see the world, how we think, and how we do business.
Covid-19 and CSR
Despite recent economic uncertainties, increasingly companies have turned to CSR and social impact as a life raft through these difficult times. An example is the UK tea brand PG tips who partnered with Re-engage (a charitable organisation aiming to tackle the issues of social isolation and loneliness for elderly people) and trained volunteers to call vulnerable elderly people during the lockdown.
If we have learned anything from this crisis, it’s that we are capable of working together in new and innovative ways, and that incredible things can be achieved when we do.
There’s no denying that a positive response from companies that puts the needs of their people first, can have a huge impact on their reputation. In fact, companies stepping up to do good in times of crisis often leaves a more powerful, meaningful, and long-lasting impression with a customer than it would to see social good being done during a ‘peaceful’ time.
Although it may seem counterintuitive, the COVID-19 pandemic has actually offered companies the opportunity to support communities in real and meaningful ways, and to rethink their social impact generally.
So, why should we consider getting involved with CSR right now?
You might be asking: ‘how can a company worry about CSR when the organisation is facing such uncertain times? Well, you could argue that this is actually the most important time to show commitment to corporate social responsibility. Here’s why:
According to an article in the Harvard Business Review, research shows that people only truly believe that a company has a purpose and clear values when they see management making a decision that sacrifices short-term profitability for the sake of adhering to those values.
Many companies – small and large – talk about their values or about how much they care for their employees, communities, and other stakeholders. This year has been a chance to act on this commitment.
Positive steps and actions to help the greater good will not only help build a positive reputation, but it also increases employee engagement, helps the community, and it is the right thing to do.
In regard to Brexit, let’s look at the facts. The main area of negotiation on the table between the EU and the UK is trade. If a trade deal isn’t agreed upon come December 31st, 2020 then the UK will resort to basic World Trade Organization (WTO) rules come January 1st, 2021.
That means the UK would follow the most basic trade rules that the WTO has set up until they are able to make a deal with the EU and/or individual countries.
While many companies are concerned about the increase of price with a new set of trade agreements (or lack of), other companies are actually embracing it to reduce their carbon footprint and help the local UK economy. This might mean an increase in price for consumers but it also means a more transparent supply chain.
What next in regards to Brexit and corporate social responsibility?
On the surface, Covid-19 and Brexit negotiations look like impossible challenges for CSR managers and ethical businesses. However, as we have seen, periods of tumultuous change mean rethinking the way we do things on a large scale – and this can be a good thing.
If you want to know more about how Social Good Connect can help your company prioritise CSR and community impact in the era of Brexit and Covid-19, give us a call, or join our mailing list to stay in the loop!
Written by Amy Plesz