Resources on Community Engagement and Investment

Sustainability is about the long-term wellbeing of society, an issue that encompasses a wide range of aspirational targets including the sustainable development goals (“SDGs”) of the 2030 Agenda for Sustainable Development adopted by world leaders that went into effect on January 1, 2016.[1]  Among other things, the SDGs including ending poverty and hunger; ensuring healthy lives and promoting wellbeing for all; ensuring inclusive and equitable quality education and promoting lifelong learning opportunities for all; and promoting sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.  The goals listed above are based on the recognition that society in general is vulnerable to a number of significant environmental and social risks including failure of climate-change mitigation and adaptation, major biodiversity loss and ecosystem collapse, man-made environmental planning and disasters (e.g., oil spills), failure of urban planning, food crises, rapid and massive spread of infectious diseases and profound social instability.[2]

Clearly the challenges described above are daunting and for most businesses it may be difficult for them to see how they can play a meaningful role in address them.  While it is common for “society” to be identified as an organizational stakeholder, the reality is that one company cannot, acting on its own, achieve all the goals associated with societal wellbeing.   However, every company, regardless of its size, can make a difference in some small, yet meaningful way, in the communities in which they operate, and more and more attention is being focused on the impact that companies have within their communities.[3]  Focusing on the community level allows an organization to set meaningful targets and implement programs that fit the scale of its operations and which can provide the most immediate value to the organization and its stakeholders.  Societal wellbeing projects and initiatives must ensure that the organization does not compromise, and instead improves, the wellbeing of local communities through its value chain and in society-at-large.

While the “community” is often mentioned as one of the stakeholders of any organization, it would be a mistake to think of community as a monolithic concept.  In reality, community for any organization is a complex network of multiple stakeholders, each of which must be considered and engaged including neighborhoods, community development groups, environmental organizations, development organizations, citizen associations, non-governmental organizations, local nonprofit organizations, local regulators and governmental officials, other businesses in the community, indigenous peoples and underrepresented groups in the community.[4]  All of this makes community engagement and investment especially challenging since each of these community stakeholders have their own issues, concerns and perspectives.

The legal issues associated with the community engagement and investment activities of an organization will depend on the decisions made by the organization regarding the types of contributions that will be made (i.e., cash, in-kind, human resources etc.), the nature of the projects and activities that will be supported and the specific topical areas of interest.  All businesses will need to determine the appropriate legal and organizational structures for their community-focused activities and this often means that a decision will eventually need to be made about whether to form a separate legal entity, owned and controlled by the parent company, through which community investments will be funneled (i.e., a corporate foundation).  Other common legal issues arise due to the nature of the business’ involvement in the community and would include mitigating potential legal risks associated with employee volunteer programs, sponsoring and/or hosting community events and entering into joint ventures and other types of alliance arrangements with local nonprofit organizations.  Specialized legal guidance will be required when businesses get involved in complex and high-regulated areas such as helping to provide financial services for low-wealth and underserved communities, supporting public and private financing of community cultural facilities, participating in community-based efforts to preserve open space while expanding the availability of affordable housing and assisting local courts looking to positively and proactively address juvenile delinquency by providing vocational training and job opportunities.

Businesses have long been called upon to comply with a range of formal laws and regulations in various areas related to sustainability-related responsibilities including laws and regulations pertaining to the environmental impact of their operations, the employment relationship, working conditions and health and safety standards.  However, apart from satisfying the requirements of local governments with respect to permits and licenses necessary for engaging in certain activities in the community, businesses generally are not heavily constrained by legal guidelines with respect to their community involvement and development activities.

This is an area in which voluntary standards have played an important role in providing business with ideas for objectives for their community involvement. Since the late 1990s there has been a proliferation of transnational, voluntary standards for what constitutes CSR, including standards have been developed by states; public/private partnerships; multi-stakeholder negotiation processes; industries and companies; institutional investors; functional groups such as accountancy firms and social assurance consulting groups; NGOs; and non-financial ratings agencies.[5]  While voluntary standards focusing specifically on the relationship of businesses and the communities in which they operate are still evolving, lessons can be drawn from many widely recognized normative frameworks, principles and guidelines such as the United Nations Sustainable Development Goals, the United Nations Global Compact, the OECD Guidelines for Multinational Enterprises (“OECD Guidelines”), the United Nations Guiding Principles on Business and Human Rights and the Future-Fit Business Framework.[6]  Specialized standards can be used as reference points for support of sustainability-related initiatives in local communities, such as requiring that recipients of grants and other investments for sustainable sourcing and agricultural activities adhere to the guidance developed by the Sustainable Agriculture Initiative Platform (http://www.saiplatform.org/).

Additional guidance comes from guidelines established for companies engaged in extractive activities where the potential for adverse impact on local communities is especially high.  For example, Equitable Origin (https://www.equitableorigin.org/) is an independent nonprofit organization dedicated to promoting socially and environmentally responsible energy development.  Equitable Origin claims to be the world´s first stakeholder-led, independent, voluntary standards system designed to enable high social and environmental performance, transparency and accountability in energy development.  Equitable Origin has developed EO100 Standards for Responsibility Energy, Conventional Onshore Oil and Gas and Shale Oil and Gas Operations, each of which are based on six basic principles addressing corporate governance, accountability and ethics; human rights, social impacts and community development; fair labor and working conditions; indigenous peoples’ rights; climate change, biodiversity and environment; and project life cycle management.  The Equitable Origin website contains references to technical information, tools, guidelines and best practices for topics covered by each of the principles including engagement and participation, resettlement, grievance mechanisms, community health, community investment and cultural impacts.

While many of the standards and guidelines discussed herein can reasonably be characterized as aspirational, the International Organization for Standardization (“ISO”) seeks to provide organizations with easy access to international “state-of-the-art” models that they can follow in implementing their management systems. ISO has developed and distributed ISO 26000 Guidance on Social Responsibility which, although not a management system standard, is a useful guide for improvement of organizational practices with respect to social responsibility.  ISO 26000 identifies and explains various core subjects such as organizational governance, human rights, labor practices, the environment, fair operating practices and consumer issues and, notably for purposes of this discussion, also explicitly includes community involvement and development among its core subjects.[7]  The issues for businesses relating to community involvement and development identified in ISO 26000 include community involvement and respecting the laws and practices of the community; social investment (i.e., building infrastructure and improving social aspects of community life); employment creation (i.e., making decisions to maximize local employment opportunities); technology development (i.e., engaging in partnerships with local organizations and facilitating diffusion of technology into the community to contribute to economic development); wealth and income (i.e., use natural resources in a sustainable way that helps to alleviate poverty, give preference to local suppliers and fulfill tax responsibilities); education and culture (i.e., support education at all levels and promote cultural activities); health (i.e., promote good health, raise awareness about diseases and support access to essential health care services); and responsible investment (i.e., incorporate economic, social, environmental and governance dimensions into investment decisions along with traditional financial dimensions).[8]

The first step in the process of designing, implementing and managing the company’s community engagement and investment should be developing appropriate strategies and policies.  If the company’s activities are limited to occasional actions that fall into the realm of traditional philanthropy (i.e., small grants to local nonprofits and/or annual volunteering days) it may actually be that it has no specific strategy, which may be fine for a short period of time when the company is just launching and has scarce planning resources that need to be focused on other issues.  However, as companies take on more ambitious plans with respect to involvement with communities and tackle issues that cannot be solved with one act, such as addressing poor education and poverty in the community, long-term strategies that go out three to five years are appropriate since the company’s resources will need to be committed to the issue over an extended period of time.  Strategies should describe what the company expects to achieve over the planning period in relation to its vision, mission and goals with respect to community development and how it plans to achieve those goals in terms of organizing and committing its available resources.

The development of a strategy is the time to focus on three fundamental questions.  First, the company should decide on the group within their community that will be the primary target of the activities.  For example, many companies prefer to be involved in programs for young people in their communities, such as improving primary education and/or providing recreational spaces.  Other groups that might be targeted include older people, community members with disabilities and groups that have been marginalized and/or discriminated against due to gender or ethnicity.  The next thing that needs to be done is to determine whether activities should be focused on specific parts of the community, such as a particular neighborhood, or can and should be scaled to have an impact throughout the entire geographic area.  For most companies, the answer, at least initially, should be to concentrate on the areas surrounding the company’s facilities.  Finally, in order to have a strategy the company needs to decide on the sector and related issues on which the community-related activities will concentrate.  Sector refers to the broader community development area, such as education, health, the environment and job creation, on which the company’s community-related activities will concentrate.  Issues are specific aspects of the selected sector, such as early childhood education in the education sector, encouraging regular medical screenings and tests in the health sector and entrepreneurship training in the job creation sector.

Community engagement and dialogue—sharing information and listening to community members to provide them with a voice on matters that impact them—is the cornerstone of everything a company does vis-à-vis the community in which operates.  Community engagement appears in many of the voluntary standards relating to sustainability and reporting on sustainability-related matters.  For example, the OECD Guidelines call on enterprises to seek and consider the views of community members before making decisions regarding changes in operations that would have major effects on the livelihood of employees and their family members living in the community and the community as a whole (e.g., proposed closures of facilities) and take steps to mitigate adverse effects of such decisions on the community.  The Sustainability Reporting Standards created by the Global Reporting Initiative, and discussed in more detail below, call for reporting organizations to discuss their management approach to local communities by describing the means by which stakeholders are identified and engaged with; which vulnerable groups have been identified; any collective or individual rights that have been identified that are of particular concern for the community in question; how it engages with stakeholder groups that are particular to the community (for example, groups defined by age, indigenous background, ethnicity or migration status); and the means by which its departments and other bodies address risks and impacts, or support independent third parties to engage with stakeholders and address risks and impacts.[9]

Effective community engagement must be built on a sense of trust between the company and the members of the community and engagement should be carried out in a manner that conforms to recognized standards of professionalism and ethical conduct.  In fact, the International Association for Public Participation (“IAP2”) has developed a Code of Ethics for Public Participation Practitioners that is intended to serve as a guide to the duties of public participation practitioners and ensuring the integrity of the public participation process.  Among the guiding principles in the Code are enhancing the public’s participation in the decision-making process and assisting decision-makers in being responsive to the public’s concerns and suggestions; building trust and credibility for the process among all the participants; carefully considering and accurately portraying the public’s role in the decision-making process; encouraging the disclosure of all information relevant to the public’s understanding and evaluation of a decision; ensuring that stakeholders have fair and equal access to the public participation process and the opportunity to influence decisions; and ensuring that all commitments made to the public, including those by the decision-maker, are made in good faith.[10]

While more and more companies produce reports that emphasize the importance of being a good “community citizen” and effectively managing their relationships with community members and the community environment, those same reports often reflect difficulties in identifying and describing specific goals for community involvement and the impact that company activities are having on the community.  As with all aspects of sustainability reporting, practices of companies regarding their disclosures relating to community engagement and investment have been evolving as time has passed and stakeholder interest in such activities has increased.  Although mandatory reporting requirements have been slow to emerge, the need to keep communities informed has found its way into global standards such as the OECD Guidelines, which provide that enterprises are expected to ensure that timely, regular, reliable and relevant information is disclosed to the community regarding the activities, structure, financial situation and performance of the enterprise and relationships between the enterprise and its stakeholders; and communicate information to the community regarding the social, ethical and environmental policies of the enterprise and other codes of conduct to which the enterprise subscribes (including voluntary standards relating to community involvement and development).

The Sustainability Reporting Standards developed by the Global Reporting Initiative (“GRI”) are the most widely used standards on sustainability reporting and disclosure around the world and include several types of disclosure categories that cover various aspects of community involvement, investment and impact.  The GRI reporting framework covers a wide range of performance indicators and disclosure standards in three categories: economic, environmental and social.  With respect to operations and other activities that might directly or indirectly have a material impact on their communities, organizations that have adopted the GRI framework are expected, among other things, to make disclosures regarding the impact that their investments and other support of infrastructure and local services have had on their stakeholders and the economy; the indirect economic impacts their operations and activities have had on their communities; community investment activities; engagement with local communities; the actual and potential negative impacts of their actions on local communities and their managerial approach to community issues.  Other topics may be included, such as community-based initiatives relating to racial equality and social justice.

A framework for reporting promoted by the London Benchmarking Group (“LBG”), which is managed by Corporate Citizenship, a global corporate responsibility consultancy based in London with offices in Singapore and New York, is an effective tool for quantifying and organizing information about their corporate community investment activities and, most importantly, assessing and reporting on the impact of their relationships with communities and how to manage it.[11]  LBG explained its framework as being “a simple input-output model, enabling any [corporate community investment] activity to be assessed consistently in terms of the resources committed and the results achieved”.[12]  Applying the framework begins with inputs (i.e., what resources did the company provide to support a community activity), continues with outputs (i.e., what happened within the community and the company as a result of the activity and what additional resources were brought to bear on a particular issue as a result of the company’s contributions and participation in the activity) and finishes with identifying and measuring the impacts achieved on various groups (i.e., the changes that occurred for people, organizations and the environment within the community and for the involved employees and overall business of the company).

One of the most-cited aspirations for business organizations with respect to their communities is providing a positive impact on community development and improving the quality of life and levels of well-being among the members of the community.[13]  ISO 26000 describes community development as improving the quality of life and levels of well-being among the members of the community.[14]  Community development is not the sole responsibility of organizations operating in the community, but rather comes from community stakeholders working together out of a sense of shared responsibility.  From that perspective, the goal for each organization is to find the best way for it to contribute, and the commentary in ISO 26000 suggests that organizations can contribute by[15]:

  • Creating employment through expanding and diversifying economic activities and technological development
  • Making social investments in wealth and income creation through local economic development initiatives both within and outside the organization’s core operational activities
  • Expanding education and skills development programs
  • Promoting and preserving culture and arts
  • Providing and/or promoting community health services
  • Facilitating and participating in institutional strengthening of the community, its groups and collective forums, cultural, social and environmental programs and local networks involving multiple institutions
  • Supporting related public policies and engaging in partnerships with governmental agencies to pursue development priorities identified during the course of the community’s own deliberative processes
  • Engaging with a broad range of stakeholders with special emphasis on identifying and consulting with and, where possible, supporting vulnerable, marginalized, discriminated or under-represented groups
  • Engaging in socially responsible behavior

ISO 26000 explains that some activities of an organization may be explicitly intended to contribute to community development, while others may aim at private purposes but indirectly promote general development.  For example, programs focusing on preserving local culture and arts, which typically take the form of financial support and employee volunteerism, are generally unrelated to the core operational activities of the business but presumably provide value through enhancement of the reputation of the business and tighter integration with various segments of the community.  On the other hand, investing in improvement to access roads and other aspects of the transportation infrastructure in the areas next to the facilities of the business not only provides direct operational benefits to the business but also are likely to provide indirect benefits to the community if the changes are well planned after consultation with impacted groups within the community. While each of the contributions listed above are important, businesses, regardless of size and like any other type of organization, do not have unlimited resources, nor do they necessarily have the expertise to make a significant impact, at least initially, in each of the areas.  Every business has the capacity to continuously engage in socially responsible behavior; however, ISO 26000 notes that beyond that the most important contributions to community involvement and development will depend on the circumstances in the community itself, the unique knowledge, resources and capacity each organization brings to the community and the degree of alignment between the activity and the core operational activities of the business.

Most businesses, once they reach a certain size and level of resources, provide support for the activities of organizations in their communities that are dedicated to addressing social issues or needs in the community.  The form of community contribution and engagement by a company can vary significantly, running from a one-time cash donation to a “good cause” to investment of cash, in-kind resources and management time into the creation of long-term partnership with a community organization that works on a broader and deeper solution to a particular issue that has a material impact on the business and the community in which it operates.  ISO 26000 notes that organizations generally choose from among a wide array of potential community social investments including projects related to education and culture, training, health care, income generation, infrastructure development, improving access to information or any other activity likely to promote economic or social development; however, when creating its community social investment agenda an organization should purposefully seek to align its contribution with its core competencies and the needs and priorities of the communities in which it operates and take into account priorities set by local and national policymakers and the actions that are already being taken by other community stakeholders.

While the potential benefits of community engagement and investment for businesses are often framed as being readily apparent, it is useful to consider ideas about the specific aims and objectives of corporate community involvement.  One comprehensive list included making people inside and outside the community aware of various problems in the community; ensuring that investment and development efforts occur across all sectors of the community and in multiple areas including education, health, recreation and employment; motivating members of the community to participate in community welfare programs; providing equal opportunities within the community for access to education, health and other facilities necessary for better wellbeing; building confidence among community members to help themselves and others; generating new ideas and changing patterns of life within the community in positive ways that do not negatively interfere with traditions and culture; bringing social reforms into the community; promoting social justice, particularly during times of emergency such as a pandemic or natural disaster; developing effective methods to solve community programs including better communications between community members and local governments; and creating interest in community welfare among community members and mobilizing those members to participate in the collective work for community development.[16]

Notes

[1] http://www.un.org/sustainabledevelopment/sustainable-development-goals/

[2] The Global Risks Report 2017 (12th Edition) (Geneva: World Economic Forum, 2017), 61-62.  The Report and an interactive data platform are available at http://wef.ch/risks2017.

[3] Communities have been described as individuals linked by issues (i.e., people concerned with the same issue); identity (i.e., people who share a set of beliefs, values or experiences related to a specific issue such as the environment or public health); interaction (i.e., people who are linked by a set of social relationships); and geography (i.e., people who are in the same location).  See Engage Your Community Stakeholders: An Introductory Guide for Businesses (Network for Business Sustainability, 2012), 3.

[4] Engage Your Community Stakeholders: An Introductory Guide for Businesses (Network for Business Sustainability, 2012), 3.

[5] C. Williams, “Corporate Social Responsibility and Corporate Governance” in J. Gordon and G. Ringe (Eds.), Oxford Handbook of Corporate Law and Governance (Oxford: Oxford University Press, 2016), 7, available at http://digitalcommons.osgoode.yorku.ca/scholarly_works/1784.

[6] Id. at 8-9.

[7] See International Organization for Standardization, ISO 26000 Guidance on Social Responsibility: Discovering ISO 26000 (2014) and Handbook for Implementers of ISO 26000, Global Guidance Standard on Social Responsibility by Small and Medium Sized Businesses (Middlebury VT: ECOLOGIA, 2011).

[8] Handbook for Implementers of ISO 26000, Global Guidance Standard on Social Responsibility by Small and Medium Sized Businesses (Middlebury VT: ECOLOGIA, 2011), 32-33.

[9] GRI 413: Local Communities 2016 (Amsterdam: Global Sustainability Standards Board, 2016).

[10] https://www.iap2.org/page/ethics

[11] From Inputs to Impact: Measuring Corporate Community Contributions through the LBG Framework—A Guidance Manual (London: Corporate Citizenship, 2014), 4.

[12] Id. at 6.

[13] International Organization for Standardization, ISO 26000: Guidance on Social Responsibility (Geneva, 2010), 61.

[14] Id.

[15] Id.

[16] http://www.studylecturenotes.com/social-sciences/sociology/339-aims-and-objectives-of-community-development

ADDITIONAL RESOURCES

Training Materials

CSR Handbook for SMEs

Discovering ISO 26000

CSR – ISO 26000 Basic Training Material

Implementing ISO 26000

Books

Community Engagement – A Guide for Practitioners

Community Engagement and Development

Community Engagement Toolkit for Planning

Connecting Cities & Communities with SDGs

Engaging Your Community

Handbook on Community Engagement

Investing in People – Guide for Community Development

Measuring the Value of Corporate Philanthropy

Navigating the SDGs – A Business Guide

Principles of Community Engagement

STAR Community Rating System (Version 2.0)

Stakeholder Engagement in Emerging Markets

Stakeholder Engagement Manual (Volume 1)

Stakeholder Engagement Manual (Volume 2)

Chapters or Articles in Books

CEI – Good Intentions Aren’t Enough (Good Works)

Articles in Journals

A Basic Guide to Corporate Philanthropy

Community Investment and Development (Business Law Today June 2019)

CSR’s Role in Community Development

Virtual Communities – Implications for Companies

Articles in Newspapers and Magazines

CSR Is Now Legal

Theses and Dissertations

Community Involvement and Employee Outcomes

Corporate Community Involvement Disclosure

Effect of CSR on Community Development

Papers

A Corporate Guide to Putting the SDGs to Work

A Guide to Effective Community Engagement

Business and the SDGs

Business Case for Corporate Philanthropy

Business ROI of Social Investments

Catalytic Philanthropy

CDCs Working with For-Profit Developers

Common International Standards for Community Development Practice

Community Engagement – Theoretical Concepts

Community Engagement (WHO)

Community Engagement Guide for Sustainable Communities

Community Engagement

Community Planning Toolkit – Community Engagement

Contribute to Community Development & Wellbeing

Creating Shared Value (Porter)

Delivering on the SDGs

Engage Your Community Stakeholders

From Global Goals to Local Impact

Handbook for Implementers of ISO 26000

Health Benefits of Volunteering

Implementing the UN Declaration on Indigenous Peoples

Importance of Compliant Giving Programs

Increasing Impact, Enhanced Value

Launching Successful Community Development Initiatives

LBG Guidance Manual

Practical Standards for Community Development & Empowerment

Reporting on Community Impacts

SDG Compass – Guide for Business Action on the SDGs

STAR Sustainability Goals & Guiding Principles (2010)

Starting a Community Development Corporation

Strategic Community Investment

Using Philanthropy to Build Long-Term Perspectives

What is Community Engagement

Government and Other Public Domain Publications

Community Engagement Guidelines (API)

Community Engagement Indicators & Measures

CSR Processes & Practices Manual

GRI 203 Indirect Economic Impacts

GRI 413 Local Communities

IAP2 Quality Assurance Standard (Community Engagement)

IFC Sustainability Performance Standards

ISO 26000

ISO 26000 and the SDGs

ISO 37101 Sustainable Development in Communities

OECD Guidelines for MNEs

Sustainability Reporting for SMEs

UN Declaration on the Rights of Indigeneous Peoples

United Nations Global Compact

United Nations Principles for Responsible Investment

WBCSD CSR Primer

Online Articles

Alignment Between SDGs and STAR Community Framework

CSR and The Supply Chain

CSR Supply Chain Compliance Programs

No Comments

Sorry, the comment form is closed at this time.