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Guest Blog: The Good Business Charter’s role in tackling structural inequalities

This guest blog is from Gerry Mitchell, social policy researcher, writer, community activist and co-author of Uncomfortably Off: Why the Top 10% of Earners Should Care about Inequality

The Structural Inequalities Alliance met with Jenny Herrera and TSB’s Kate Osiadacz to learn about their roles in building a movement of good businesses across the UK.

Globally, two thirds of the largest economic entities are corporations rather than governments, and they yield a huge and growing influence on our economic, social and environmental outcomes. Businesses are central to whether inequality will be addressed or not. Nationally, the UK is a country of small business: 99.2% of UK businesses have less than 50 employees; 74% of businesses do not employ anyone aside from the owner. And the past few years have been some of the most difficult that UK businesses face with 37% of businesses in Britain applying for credit in 2023.  

We know that inequality in Britain limits productivity, destabilises supply chains and jeopardises businesses’ social licence. By the same token, more and more businesses are realising the power of using sustainable business strategies not only to address the world’s most pressing challenges but to drive their firms’ success at the same time. On 23 January, the Structural Inequalities Alliance met up with the CEO of the Good Business Charter, Jenny Herrera and TSB’s Kate Osiadacz to discuss how businesses have used the Good Business Charter to build businesses’ capacity to make a positive impact on society, which is in turn, increasingly expected from their stakeholders.

Businesses accredited by the Good Business Charter have proven that they are responsible to the planet, their supply chains and customers by meeting the ten components of the charter. Namely,

  1. A real Living Wage. (We know from the Households Below Average Income survey published by the DWP and covering April 2021-April 2022 that 71% of children who were living in poverty were living in households with at least one parent in work. Wages must, at the very minimum, cover the costs of living.)
  2. Fairer Hours and Contracts
  3. Employee Well-Being
  4. Employee Representation
  5. Equality, Diversity and Inclusion (including organisations with more than 50 workers to reportCEO Pay).
  6. Environmental Responsibility
  7. Pay Fair Tax (including the spirit of the law)
  8. Ethical Sourcing
  9. Prompt Payment to Suppliers and
  10. Commitment to Customers.

Businesses need to meet all 10 components of the charter to qualify for the accreditation. As Jenny said, “you can’t care about the environment but not pay your employees fairly; or treat all your employees really well, but not pay your taxes.” This is, she admits, challenging for businesses. While some components of the process are binary, for example, a business either pays their employees a real living wage or doesn’t, others are achieved through a longer more complex process, one that may be part of a national context.

Some companies have lost their GBC accreditation when they do not meet all 10 elements. Capita is a recent high profile example, after announcing it would no longer be paying its employees a real living wage. Priya Sahni-Nicholas of the Equality Trust, asked how the GBC ensures compliance. Audits had been considered but these were deemed both costly and ineffective, instead the main drives to due diligence come from whistleblowing and companies themselves knowing that they have to follow through once the logo is on their website. And increasingly employees, potential recruits, suppliers, customers and other stakeholders all demand the businesses they deal with act responsibly and  expect them to be meeting these standards. In KPMG’s 2021 CEO Outlook, 58 percent of CEOs say they’re seeing increased demands from stakeholders — such as investors, regulators and customers — for increased reporting and transparency on ESG issues.

TSB is in its 5th year of running as a business accredited by the Good Business Charter.  Kate Osiadacz spoke of how simple it was to implement, (not requiring an onerous amount of evidence as with some accreditation schemes) and that critically, it built credibility (in that it is an independent accreditation) and trust among its stakeholders. As a result of the GBC accreditation, TSB committed to pay small suppliers within 10 days and even achieved a 6 month run of paying them within 7 days during Covid. Paying small suppliers promptly involved simplifying processes and more importantly, a ‘mindset shift’ rather than being operationally difficult.

Surveys of customers since their accreditation process, revealed that customers don’t know what businesses they work with are doing.  In other words, bad businesses are getting away with bad processes, so businesses, such as TSB, need to promote clearly what a good business is, then expectations will rise among the general public and also a movement will build as businesses work together to accredit themselves. Understanding the influence an accredited business has within their community of businesses is important.  Asked what the government could do, if given just one ask, Jenny replied “not giving money to businesses that are irresponsible!” Seems reasonable. And of course, as Caroline Tosal, the Equality Trust’s Structural Inequalities Alliance Network Manager pointed out, we all have a role to play in deciding where to use our personal spending power. Next time you are about to purchase an item or a service, look out for that Good Business Charter logo.

This is a guest blog and the views of the authors are not necessarily those of The Equality Trust