Businesses increasingly identify CSR (Corporate Social Responsibility) as being an important part of the recruitment process; demonstrating to new recruits that they are about to join a caring and socially concerned employer ("The Ethical Employee": report from Future Foundation and the work foundation 2004), this report looked at how a well developed corporate CSR programme can be a source of competitive advantage to employers.
Barchester Green Investment is an established organisation (est.1985) within the personal wealth management market, working mostly with private clients, Charities and Social Enterprises committed to ethical and environmental investment strategies.
Employee benefits and CSR
Ethical and environmental investment has grown rapidly since ethical funds first emerged in the UK in 1985, figures produced by the not for profit Ethical investment Research Service (EIRIS) show that at December 2007 there was a total of £8.9 invested in ethically screened funds, this is a very significant increase on the 1997 figure of £1.5 billion.
Research carried out by F&C (Foreign and Colonial) also indicates a significant level of interest in ethical and environmental investing amongst the general population. In May of 2008 F&C commissioned a survey with OnePoll looking at the public’s interest in ethical investment. The survey found that 88% of respondents felt that it was "important" or "very important" for companies to take social and environmental governance issues seriously.
The survey also found that 58% of respondents were prepared to invest their own money ethically.
As the Corporate Social Responsibility agenda has developed it has moved away from being about legal compliance to focusing on the integration of social and environmental responsibility into the core values of the business; Yogesh Chauhan, the BBC’s chief adviser on CSR and deputy chair of the Corporate Responsibility Group (CRG), put it very succinctly when he said "Corporate Responsibility is no longer viewed as a niche activity within companies and knowledge of CR issues is becoming a key competence for managers across business and industry".
By connecting corporate social responsibility with the employee benefits element of an employee’s overall remuneration the employer sends out a clear message about the seriousness of their commitment to CSR.
What are the key employee benefits areas this might cover?
Employee benefits divide into three discreet groups; insurance based benefits, pension benefits and salary sacrifice/green benefits such as cycle schemes.
Insurance based benefits-
These are benefits which are purchased for the employee by the employer using an insurance company, the main forms are; death in service, income protection, family income benefit and health insurance.
The opportunity- purchase insurance using a friendly society or an insurance company with strong CSR presence; for example Friends Provident or AEGON who are a FTSE for Good listed insurer.
Group personal pension schemes-
The majority of mid size companies, those with less than 1000 employees, have switched to offering Group Personal Pensions. The majority of pension providers offer an ethical fund or funds, but how good is their offer?
There are a number of pension providers with market leading ethical funds and others with poor performance from both a financial and an ethical point of view.
AEGON and Friends Provident offer Citywire AA rated ethical investment manager with strict ethical screening criteria. Aegon’s lead ethical manager, Audrey Ryan, recently won the Observer Money 2008 ethical manager of the year award.
Cycle to work-
The 1999 Finance Act introduced a tax exemption which allows employers to provide employee with cycles and accessories as a tax free benefit.
Employees using this scheme will enjoy a reduction of up to 50% in the cost of purchasing their chosen bicycle.
The rise of transformational investing-
Whereas investing ethically used to mean avoiding the bad or socially irresponsible; heavily polluting industries, arms manufacture, tobacco and investments in oppressive regimes. Transformational investment concentrates on investing in ways which produce competitive market returns and clear social and environmental benefits.
A number of these investments are now available within pension schemes.