Tom Levitt: Building socially responsible companies that support their communities

On this episode of Better Business Outcomes, Sarah Waddington CBE from Wadds Inc. welcomes Tom Levitt, author of The Company Citizen and associate lecturer in sustainability for the University of West London’s Business School.

They discuss:

●      Leaders as people to follow and Frances Perkins as one of history’s lesser-known female trailblazers 

●      Delivering good at scale from a political, business and societal perspective and the positive and negative imprint created by every organisation

●      Why implementing an activist approach should be a consideration for every brand

●      The Community Interest Company Fair For You and its partnership with Iceland which, through a loan scheme, is helping struggling families across the UK put food on the table and received 40,000 applications in its first week

●      Brexit as a huge mistake which has crippled the economy

●      The Nolan Principles as missing from public life today

●      How looking at things in the long term leads to Better Business Outcomes

Presented by Sarah Waddington and Stephen Waddington

For more information visit https://www.wadds.co.uk/
With thanks to our production partners at What Goes On Media

Transcript

Sarah Waddington:

Welcome to Better Business Outcomes, where we discuss how good communication can transform and grow organizations with a series of global leaders who have set the standard for what great looks like. 

I'm Sarah Waddington from Wadds Inc, and I've been working in public relations for more than 20 years. In this podcast, you'll hear from leaders and senior communicators about their leadership journey and how they create social impact. You'll also understand the areas you should be focusing on to build personal and organizational resilience. Find out how product relations can unlock value for your business and enjoy a great listen along the way. 

Well, today I have the pleasure of welcoming Tom Levitt, who's the author of The Company Citizen, and whose community interest company Fair For You, has recently teamed up with Iceland to launch a zero interest loan scheme to help struggling families across the UK put food on the table. 

Welcome to the show, Tom.

Tom Levitt:

Thank you very much indeed, Sarah. 

Sarah Waddington:

This podcast, Better Business Outcomes is all about good leadership. What for you makes a good leader and who do you look up to?

Tom Levitt:

A good leader is someone who it's easy to follow, I imagine, because a leader that doesn't have followers is not much on the leader stakes. 

Back in my history, I was for 13 years I was a Labour MP, and for most of that time, Tony Blair was the Prime Minister. And frankly, we couldn't have had a better leader. He was popular, he was rationable, he was reasonable, personally, very approachable and great to be on that team. But I also take a longer perspective and someone who has very much guided my work, I suppose over the last 10 years or so has been someone who I then wrote a book about Francis Perkins who was the Secretary of State for Labour in the Roosevelt government of 32 to 45.

Sarah Waddington:

Okay.

Tom Levitt:

She saw at firsthand the problems of factory safety as early as the early years of the 20th century. She spent 20 years working in New York on factory safety issues, minimum wage, child labour, women's rights and so on. And of course, when she came into government, she created the New Deal, although she got very little credit for it. 

But the major changes in that, that happened on all of those issues, some of which like the American social security system are almost exactly the systems that that she set up 90 years ago. But she was an incredible woman with a fascinating personal life. And, and for me, she, she's very much an inspiration.

Sarah Waddington:

Another hidden female face of history. There's so many.

Tom Levitt:

Absolutely. Absolutely. And, and she was not only the first woman to sit in the American cabinet, but for nearly 30 years she was the only woman. And she still holds the record for any cabinet member for the length of time they sat in the American cabinet. But then you can't do 13 years in cabinet these days. 

Sarah Waddington:

Not anymore. Well, what a trailblazer. Let's talk about Sector for Focus, which you founded 12 years ago. This focuses on using the tools of business to create public good. Now that's something that matters very much to me. I know it just to you talk to us a little bit about that. How does it work?

Tom Levitt:

Well, I was a member of parliament until 2010. I, I'd spent my whole life believing that that government potentially had all of the answers. And I was also a, a great believer and activist within the, the charity sector. And again, in Parliament, I spent 10 years chairing the all-party group on, on charities and volunteering. 

Something happened though, in 2008, the crash came. And I think government, and I’m not being party political here, but I think government lost its way. It stopped being ambitious. We had a decade of austerity and the idea of government delivering good at scale was getting lost. Of course, charities were still there and they do some tremendous work, but it's never really at scale. And it was increasingly apparent to me that that business actually had the capacity for long term thinking and investment in a way that charities didn't. And, and that government had opted out of. 

Not only that, but businesses were starting to see the business case for being responsible for, for putting issues like sustainability high up the agenda. It wasn't very popular 15 years ago. But nevertheless it was starting. And today it's grown into a, a massive movement.

Sarah Waddington:

Huge movement, yeah. Definitely on Vogue now.

Tom Levitt:

Absolutely. Yes, indeed. So I took the, the view that capitalism although I'd sort of said for the years how opposed I was to it, actually it's nothing more than a toolbox. You can build a company and you'd use those tools to maximize profit if you want. Or you can build a company and produce public good. You're actually using the same tools from the same toolbox, but it's the purpose of the company that's completely different. And that, again, is another revolution that's been happening in the last 10 years.

Sarah Waddington:

Let's go into that in a little bit more detail. How can then management teams make social impact - if that's what we wanna term it - a feature of day to day company life? Is it by revisiting organisational purpose?

Tom Levitt: 

That's a very interesting question because you make a, a huge assumption in there. That is that actually every company has a social and environmental impact. The question is, is it positive or is it negative? And the way we measure growth, the way we've traditionally measured success - let's take GDP for example,measures only a small number of criteria and doesn't take into effect the true cost of the negative impacts that business and the economy has on the environment. 

So you know, profits help generate GDP, but they may also help to generate pollution and greenhouse gases and so on. And they are not factored into the equation. They were always ignored. They actually had a name for them, ‘externalities’. But they're not external. They're intrinsic. And only by taking those into account can you see what the true impact is. And only when you can see what the true positive and negative impact is, can you start to skew the balance towards the positive and away from the negative. And as I say, that again is much easier to do when you're looking at things on a longer term and not just looking for the, for short term gains. We, we know, you know, if you want the environmental change for the good, it doesn't happen overnight.

Sarah Waddington:

Yeah. Certainly more than just offsetting too.

Tom Levitt:

Oh, don't get me started on offsetting

Sarah Waddington:

<Laugh>. Well yeah, that's one for another day. We could be here for the full 20 minutes. 

It's really interesting though, isn't it, because actually you get people who, I mean you are a very early move in this area, but we have a lot of leader activists right now who have started to understand the impact that their own organization is making. How do you think organizations can bring an activist approach to the work they do? And should it be a consideration for every brand?

Tom Levitt:

I think it should be a consideration for every brand and did some work a few years ago generously paid for by the Joseph Rountree Foundation…

Sarah Waddington:

Wonderful organisation.

Tom Levitt:

Absolutely. To look at how small and medium sized businesses engage with their communities. And I'll just give you two of the findings of that research. One was ‘well it's not corporate social responsibility cuz we are not corporate, so it doesn't apply to us’.

Sarah Waddington:

Don't start me on that term <laugh>

Tom Levitt:

<Laugh>. No, absolutely, absolutely. It should be banned. 

Well, did you know that the first ever article written to say that the concept of corporate social responsibility was outmoded and outdated and of very little use was written in 1974?

Sarah Waddington:

You know, it doesn't surprise me. Yeah. And again, one for another day, <laugh>

Tom Levitt:
Absolutely. The term was first used in in 1955. 

But companies, those small companies, the small businesses did engage with their community, but not strategically. They didn't decide to, It just was a natural thing for them to do.

Sarah Waddington:

Organic. Yeah,

Tom Levitt:

Organic, You know, they sponsor the primary school's football shirts. Yes, there's a bit of advertising in it, but actually they do it because the people who work there have kids who go to that school, you know, and things like that.

Sarah Waddington:

They wanna see it thrive and flourish. Yeah, sure.

Tom Levitt:

Absolutely. They feel part of the community. 

And you don't actually, of course, in small businesses have people whose responsibility it is to look after the sustainability agenda or, or even the employee engagement agenda. It's only when you get bigger and you get specialists in those fields that, that you can make the most of it, but you can only make the most of it if they know what they're doing and, and if they're aware of that company's position in society and within the environment.

Sarah Waddington:

Yeah, 100%. 

Let's talk about fair for you. You've done so many interesting things throughout your career and we're only touching on a couple today, but in 2015 you co-founded another community interest company called Fair for You, which is backed by social investors. What was, what was the reason for that? What prompted you?

Tom Levitt:

I'll be absolutely honest, and say that wasn't my idea. There was a banker <laugh> who'd been all her life in banking and, and she'd reached a conclusion that banks did not have the interests of people on low incomes to the fore. And, you know, it's not difficult conclusion to reach, to be, to be quite honest. And she wanted a new approach to credit that would trust people on low incomes more than the present system did. Because what the system as it was in those days exemplified by a company called Bright House.

Sarah Waddington:

Oh yes?

Tom Levitt:

It's exploited people. With Bright House, to buy a 250 pound washing machine, you paid 10 pound a week. Now most families can afford 10 pound a week for that, but for three years, that's 1500 pounds for a 250 pound washing machine! Now cut a long story short, when we set up Fair for You, that same washing machine would be seven pounds a week for one year. So it's the saving, it's saving of over a thousand pounds there. And yet we can still run a business on that basis. So the emphasis was on putting our customers in.

She felt, you know, she wanted to create a business to aim people on low incomes. People told her, if you do that as a private business, people won't take you seriously.

Tom Levitt:

They'll think you want to exploit them. But she said, ‘I know nothing about charities. I know nothing about social enterprise’. So this very nice person said, We'll, go and see Tom. So the two of us got together and we used my contacts to get the structure right, the legal legalities of it right. And also to get those first trench of charitable foundations who invested in us. Cause we're a loan company and you can't be a loan company unless you've got money to loan. And we had to borrow that money in order to do that. 

So we set it up and over the next five years we, we didn't make a profit as, you know, <laugh>. A lot of companies don't. And if there's five years of operation, but we're breaking even now. And, and we will progress in the future. This is why I don't, we are a CIC, we are a social enterprise, but I don't call as a not-for-profit organisation. What we don't do is we don't take the profits out of the organisation.

Sarah Waddington:

Sure. It's all reinvested back in.

Tom Levitt:

Precisely, precisely.

Sarah Waddington:

So, it's fascinating the work that you're doing. You've most recently hit the headlines for your partnership with Iceland. Can you explain that latest scheme and and what the response has been like? Cause I think it's been, it's been staggering, hasn't it?

Tom Levitt:

It has. I should say that we'd done about 40,000 loans up until this summer. How many pieces of furniture or electrical goods have we repossessed? None. And of course we have a default rate. We manage that. We're dealing with people who wouldn't be given credit under normal circumstances.

Sarah Waddington:

Sure. Great that you've got social investors who are willing to take that risk.

Tom Levitt:

But that's, that's exactly what I was gonna say. It's about the appetite for risk. And it's about how you manage that risk. And the way we manage it is by putting our customers in control, treating them well and establishing a good relationship with them. And not just seeing them as cash cows. But anyway,

Sarah Waddington:

Do you know that humanisation point is actually very crucial because often it can be quite dehumanising for, for people who are in a tricky financial situation. I mean, we're seeing so many people go to food banks and that's hard. And asking for help and finding the help in the right places is hard. 

So to go to somewhere where you can feel safe in that relationship is, is so crucial.

Tom Levitt:

Absolutely. And, and that's why our customers give us 4.8 out to five on trustpilot. We are Britain's most trusted financial institution at, at Fair for You. 

Anyway, about four years ago, some very kind person invited me to come and speak at a conference. <Laugh>. Oh, it was you, Sarah!

Sarah Waddington:

<Laugh>. It was, it was, That was a great conference as well. And I was very appreciative of you given your time then too.

Tom Levitt:

But it wasn't just me. A guy called Richard Walker was there, the Chief Executive of Iceland. And it was that day, that meeting that led four years later to the launch of what we're calling The Iceland Food Club. And Richard was quoted in the press earlier this summer saying, ‘are you worried about competition from the other low cost supermarkets’? He said, ‘No, I'm, I'm worried about competition from food banks’ because you know, his customers are leaving Iceland to go to food banks. So not leaving Iceland to go to other supermarkets. And he also told me that, that when the summer holidays come along, every other supermarket, their takings go up. But because Iceland serves a lower income demographic, it's takings go down because families have to make their money last for longer over the summer. 

So we've trialed for the last few months a £75 loan scheme. And when we launched it formally nationwide in August - it's an interest free loan scheme which can be topped up up to six times a year. A person could never be more than a hundred pounds in debt as it were. And we asked them to pay back at 10 pounds a week. And if they can do that, then that's great. They can be topped up again. And I said a moment ago, we'd had, we'd done 40,000 loans in in, in five years. Well, in the first week of operation we had 40,000 applications.

Sarah Waddington:

It's staggering. And that it's absolutely staggering. 

I mean, it's fantastic that you're out there. The fact that it's needed in 2022 in the UK, which is supposed to be one of the richest countries in the world is, is beyond belief. But we are where we are and I'm hoping that this story will be inspirational for other businesses who are wondering how and what they can do at this point in time. Because I do think there is an issue with particularly the private sector also stepping in to help where perhaps the state has failed - my words, not yours. I'll take Yeah, I'll take that!

It's interesting that much of your work has been responsive to the politics of the time. Throughout the last decade. You know, we've lived through austerity, the pandemic, and now we're experiencing a political and economic crisis. Is it deliberate? Do, where do you stand on the politics of today? Are we leaving people behind? And do you feel the imperative to, to do your work because of that?

Tom Levitt:

It, it, it is thoroughly depressing, Sarah. And, and again, the nicest thing about working with businesses is they are not bound by the direction of the government of the day, and they can make interesting, innovative, and positive decisions and investments that will make life better for people.

Sarah Waddington:

And contributions.

Tom Levitt:

Absolutely. 

And it's also quite obvious, particularly about the, the management of the economy recently, that that business is not happening with the way government is going either apart from a, a narrow niche within high finance who just bet against failure. And that again, is no way to run an economy. Anyway rant over

Sarah Waddington:

<Laugh>.

Tom Levitt:

I think the Brexit decision was an absolute huge mistake. And nobody knew what they were voting for because nobody was telling them what Brexit would look like because nobody knew what Brexit would look like. They sure as hell didn't think it was gonna look like this, which is a, a mess, a complete mess. And of course saying goodbye to our largest market we are crippling our economy in that sense. And you know, people like Boris Johnson have to take a huge responsibility for that. 

But the other thing he did as Prime Minister which I believe was unforgivable, was just before the 2019 election, he systematically got rid of a couple of dozen of what I would regard as friends of mine, <laugh> within the to party people who had a, a lot of values in common. People who were, what they call One Nation Tories. I've never been a Tory, I never will be, but I could work with these people. They had values, they believed they had a responsibility. And there's this other strand of toryism which actually says - and I think probably Ronald Reagan summed it up where - when he said that ‘government's job was to get out of the way’, in other words,

Sarah Waddington:

Enablers,

Tom Levitt:

You know, you're getting government in order not to govern <laugh> in order to, to reduce regulation and so on. Even Adam Smith did not talk about, you know, the free and unfettered market when he was defining capitalism 250 years ago. He talked about the need for, for for good regulations and so on, which is absolutely right. 

But just, every day you know, there, there are ministers announcing this program won't be pursued any longer. These regulations will be scrapped and nothing will take their place. It's irresponsible.

Sarah Waddington:

So that brings me to my next question then. 

 You'll be familiar with the Nolan principles, which apply to anyone who works as a public office holder. And they cover seven principles, which are helpful to anybody who wants to be a good leader, I'd say. And they are selflessness, integrity, objectivity, accountability, openness, honesty and leadership. As trust in our institutions and media continues to drop. Do you think these are missing from public life today?

Tom Levitt:

Let me acquaint you with another bit of my history. The Nolan principles were put together by, you know, very well respected judge in nearly 1990s. And from 1997 to 2003, I sat on the House of Commons Standards and Privileges Committee. And we looked at standards in public life and all of the big cases from Neil Hamilton and Cash for Questions onwards were issues which which I was involved in and looking at. And, you know, people did have standards and if a minister was accused of doing something wrong, they were gone the next day.

Sarah Waddington:

That's right. Do you remember those days? Do you remember that? Absolutely.

Tom Levitt:

Yeah. Absolutely. We even had a minister, for heavens sake, saying she didn't think she was up to the job. So she stood down, which was ridiculous cause she was the best education secretary we had. 

But anyway, <laugh> That's gone, you know, we now have a prime minister who lied to parliament. We had a home secretary who's accused of bullying that stayed in, sorry, bullying case against it was found and she stayed in office. 

Tom Levitt:

Those standards have just gone. Out of government. I don't believe they've gone for the majority of parliamentarians. I don't believe they've gone in public life generally, but we've just had people who just don't care about standards who've been running government for the last few years. It's frightening. It really is.

Sarah Waddington:

Well, let's hope we see a resurgence of those values at the very top very soon. 

Now, sadly, Tom, we're outta time, which is just saying, cause I could talk to you all day. Yeah. I'm going to ask you very quickly to say what you think is the one thing that leads to better business outcomes

Tom Levitt:

Don't look down here, the short term near horizon, look up at the long term. And when you look at things in the long term, you see things quite literally in a different perspective. 

A very, very simple example would be, should we put solar panels on the top of, on our factory roof? Well, if we need to repay it tomorrow ‘no, don't’. But if you're gonna look at the advantages over 20 years, it's, you know, <laugh>, it's absolutely an open and shut case. Yes, of course you do. 

Sarah Waddington:

No brainer.

Tom Levitt:

No brainer. Absolutely. so thinking longer term, which is what businesses traditionally have been able to do, governments having historically been bound to some extent by general elections is a very, very advantageous quality.

I mean, let me give just one political example again. One of the proudest things I was involved with in government was bringing in the Sure Start scheme. Now the Sure start Scheme - did it work? We don't know. It’s gonna take 20 years to tell us whether investing in the under fives to that extent was going to produce better citizens, better qualifications, higher skills in 20 years time. But David Cameron removed most of it. We'll never know whether that was a good investment or not because the short term overrode the long term.

Sarah Waddington:

Sure. And what I hold it left in society when, when that was pulled. I mean in the community around here, that it was very, very much needed and still the impact being felt. Thanks Tom. 

Well that is the perfect wrap to today's Better Business Outcomes Podcast. Long term thinking is something we should all get better at including our political leadership.

Huge thanks for giving up your time today and talking to us about how business doing good is just good business.

Well, coming up later in the series, we'll be speaking to author of Technology Is Not Neutral, Steph Hare. So don't forget to subscribe for free wherever you usually find your podcast. And if you enjoy what you're here, please also leave us a review. See you next time.