2016 Survey Report of the current state of Corporate Social Responsibility in the construction sector carried out by the National Federation of Builders.
From May to July 2016 NFB Business & Skills, the training and development arm of the National Federation of Builders, carried out a survey report of the current state of corporate social responsibility (CSR) in the construction sector. With a total of 45 respondents here is a summary of their findings:
This report provides a snapshot of current trends in CSR activity and reporting across the construction sector. It is a useful reflection of the current state of CSR reporting for audiences who take an interest in the subject. Construction clients, corporate stakeholders, academics and students, and policy makers will also find the report useful.
Corporate social responsibility (CSR) is not a new concept in construction. However, legislation covering environmental, social and ethical issues have helped to focus minds towards integrating CSR into business models.
The Social Value Act, for example, requires public sector organisations to consider the social, economic and environmental value that can be added to a project. The Modern Slavery Act requires companies turning over more than £36 million pa to produce an annual slavery and human trafficking statement. More widely construction companies will need to ensure their policies and procedures are in good shape to comply with contractual arrangements, and meet the demands of their clients to demonstrate transparency.
The continued focus on climate change at an international level has seen major economies commit to keeping global warning below 2 degrees. Given the impacts construction creates we need to make a concerted effort to contribute to mitigate our impacts.
But true CSR goes beyond legal obligation. It is about having a corporate conscience to ensure compliance with the law, ethical standards and national and international norms and go beyond compliance to deliver social good. It entails recognising and addressing the needs of employees, communities, supply chain and regulators. It is about being a responsible business.
Proactive approaches to CSR can help firms improve their appeal to a wider pool of talent and address skills gaps and skills shortages by attracting new entrants. Corporate values influence millennials’ choice of employer, being as important as pay and working conditions. Over half of respondents to a PwC survey said they are attracted to employers because of their CSR position and 56% would consider leaving an employer that didn’t have the values they expected.
Better CSR practices can also make good business sense. They help to build company reputation, increase productivity, aid employee recruitment and retention, increase market share and provide a competitive edge.
This report, prepared by Project Five Consulting on behalf of NFB Business & Skills, summarises the results of a survey carried out in May to July 2016. It provides a snapshot of the current state of CSR perceptions, CSR activity and reporting across the SME construction sector.
The survey was sent out to all NFB members as well as the wider construction sector and completed online. The results provide an indication of how CSR is perceived and undertaken across the sector.
Respondents to the survey were asked to state whether they were a member of a trade federation or not. As per the graph below, just over half of respondents were NFB members, 13% belong to various federations with the remaining 38% not belonging to any federation.
The majority of respondents were SMEs with 78% employing <250 people and 54% turning over <£11 million.
We asked businesses what they perceive CSR to be. The top four responses were: conducting business in an ethical and responsible manner (87%), reducing the company’s impact on the environment (75%) supporting communities (63%) and providing a safe and inclusive working environment for employees (62%). Only a very small proportion were unaware as to what CSR entails.
Respondents appeared to understand that CSR incorporates internal and external concerns. In addition, most believed that CSR is about supporting communities and not just donating money to charity (25%).
Other responses provided focused on ‘developing talent for the future’ and ‘enhancing the visibility of construction as a career to be pursued.’
82% of respondents stated that CSR is very important/quite important to their company.
To provide some insight as to why CSR is important to their organisation, we asked what the main drivers are behind their CSR efforts.
Brand reputation was the greatest driver with 73% choosing this option. Customers’ environmental concerns and employee interests came in joint second with 54%. Client requirements was fourth (51%) closely followed by community environmental concern (49%), while 41% reported that waste reduction was one of the main drivers for CSR activity and around one third highlighted pressure from stakeholders and regulatory compliance. Only 3% reported that do not undertake any CSR at all.
Other reasons provided as the main driver included:
“A need to support our industry and our communities”
“Personal belief by the Managing Partner that it is the right thing to do and that a strong CSR ethos reflects the way we do business”
“CSR is an integral part of our business, particularly in investing in local economies and providing apprenticeships and work placements. Using the right people, with the right skills, in the right jobs is essential to ensuring our workforce fulfil their true potential, netter still if those people are local”
Where respondent organisations undertake CSR activity the majority (71%) deal with it as an integral part of their business. The remainder either have a specific department, allocate responsibility to an individual or deal with it project by project.
When we asked what types of CSR activities are being undertaken across the sector a wide range of activities were identified. The most common was waste recycling (75%). Employee health and wellbeing ranked second with 67%, supporting communities was third and reducing carbon footprint ranked fourth. Encouragingly, only 5% didn’t undertake any CSR activity.
However, only 41% stated that they report on their CSR activity. Just a fifth of these said it is comprehensive, a third said their reporting is basic and just under half stated that it could be improved.
For those who don’t report, the main reason was that they don’t know how to (45%) with around one third saying they don’t have the time or don’t have the resource. Only 9% thought it was too expensive to implement while 8% don’t think it is important.
When we asked whether respondents had seen an increase in CSR performance being a core requirements for clients, 46% said they had seen an increase from the public sector, 26% from the private sector and 23% from both. Only 5% had not seen an increase in client requirements. Furthermore, 77% felt that their CSR performance would affect their ability to win work either now or in the future.
The next part of the survey sought to establish the impacts a lack of CSR activity and/or reporting has on respondent organisations. Whilst 67% reported that they have not experienced any impact(s) from a lack of CSR performance, there were a number who have.
The greatest impact was failure to qualify for tenders (16%) with small proportions stating that that they have seen a lack of employee engagement, had a disadvantage in recruiting new people or had been less competitive in the market place.
When asked whether they felt they had the in-house skills to address and fulfil their CSR requirements, most believed that they do (67%) with the remainder (33%) believing that they do not.
On a positive note, 59% said that addressing CSR would help them address skills gaps and shortages.
Corporate social responsibility (CSR) in construction is moving from a ‘nice thing to do’ towards being an integrated part of business delivery. Increasingly clients see CSR as a core competency of their supply chains and contractors are aware of the importance of addressing CSR from a reputation perspective and in meeting their client’s requirements.
There is also a broad consensus of the potential benefits of CSR for clients, for contractors and, more importantly, for society as a whole.
The fact that the majority of companies reported the main driver for CSR efforts as ‘brand reputation’ indicates that most recognise the way CSR affects the way in which their company is viewed by others. Put simply, good CSR practices can help build positive perceptions of organisations.
Nonetheless, our survey indicates that contractors lack detailed knowledge of CSR and many lack the skills, time and resource to implement CSR activities and report on performance. The results also suggest that SMEs are lagging behind their larger counterparts.
It is clear that there is a need to ensure contractors, and in particular, SMEs have access to the right support to develop their organisational competence and the skills of their staff.
Karen Dawes, training manager of the National Federation of Builders says “The construction industry recognises the importance of CSR and there is some excellent work being undertaken to deliver the benefits of a more responsible approach to business. We know clients are now legally required to consider issues of social value and community benefits alongside more traditional environmental compliance issues. What stands out most, however, is the needs of SMEs in comparison to larger companies. The industry is telling us it lacks the skills, the time and the resources to fully realise all the benefits of CSR.”
The results of the survey indicate that the focus for CSR is still on the environmental aspects although the focus is shifting to the social aspects and workforce issues, including employee health and wellbeing initiatives.
Environmental impacts have been high profile for some time, although the survey indicates that there is more the sector can do. The majority focus on waste recycling yet a quarter still don’t do anything in this area and less than three quarters have implemented carbon reduction initiatives.
“Tackling climate change by reducing global carbon emissions is probably the greatest challenge facing humanity. While CSR is much greater than environmental issues alone, the industry needs to do more to address its environmental impact” says Dr Andy Ainsworth, Project Five's lead expert on sustainability.
“What is perhaps more important in the context of this survey is that companies are telling us that they don’t have the skills, time and resource to implement CSR activities.”
The main reason companies gave for not reporting was that they simply don’t know how to. While larger organisations report having a department to deal with CSR, SMEs tended to allocate responsibility to an individual. So, while the data suggest larger organisations are better equipped to address CSR, over two thirds stated that it could be improved.
This should all be taken in the context of 82% of companies telling us that CSR is very or quite important to their company and that more than 50% would benefit from an increased understanding of CSR.
In summary, the National Federation of Builders’ Karen Dawes said, “We know clients want CSR and we know the industry believes it’s a good thing to do. We also know the industry needs some help, particularly SMEs. This survey provides some indication of where we need to put our efforts in developing our CSR capability.”
All the NFB members and other construction companies who took the time to complete the NFB Business & Skills CSR survey
Project Five Consulting who shared the survey with their own clients and who prepared this report on behalf of NFB Business & Skills