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Measure for MeasureCelebrating the LBG’s first ten years

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LBG

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Six founding members:

BP

Diageo

IBM

Marks & Spencer

NatWest Group

Whitbread

Members who joined the founders topilot LBG’s ‘second generation’:

American Express

BT

Camelot

Centrica

Levi Strauss

Nationwide Building Society

News International

Railtrack

Rio Tinto

SmithKline Beecham

Unilever

United Utilities

and CAF as co-sponsor

LBG members who continue to develop the model:

Abbey

Allied Domecq

Altria Group

Anglo American

AOL UK

BAA

Bank of England

Barclays

BAT

BBC

BG Group

BNFL

The Body Shop

Boots Group

BP

Bradford & Bingley

British Airways

BSkyB

BT

BUPA

Cable & Wireless

Cadbury Schweppes

Camelot

Centrica

Cheshire Building Society

CMS Cameron McKenna

Co-operative Financial Services

The Co-operative Group

Credit Suisse First Boston

Deloitte & Touche

Deutsche Bank

Diageo

Dresdner Kleinwort Wasserstein

EDF Energy

EMI Group

E. ON UK (Powergen)

Ernst & Young

ExxonMobil

Friends Provident

Freshfields Bruckhaus Deringer

FSA

GlaxoSmithKline

HBOS

Herbert Smith

HSBC

John Lewis Partnership

Kellogg’s

KPMG

Linklaters & Alliance

Lloyds TSB

Marks & Spencer

Marsh

McDonald’s

mmO2

Morgan Stanley

National Grid Transco

Nestlé UK

NFU Mutual

Northern Rock

Pearson

Pfizer UK

PricewaterhouseCoopers

Procter & Gamble UK

Prudential

Reed Elsevier

Rio Tinto

Rolls-Royce

Royal Mail

Royal & SunAlliance

The Royal Bank of Scotland

RWE npower

SABMiller

J Sainsbury

Scottish Power

Scottish & Newcastle

Severn Trent

Shell International

Standard Life

Tesco

Thames Water

UBS

Unilever

United Utilities

UnumProvident

Vodafone

Whitbread

Woolworths

Yell

Zurich Financial Services

as at December 2004

Contributors to the LondonBenchmarking Group modelWe would like to thank all those who have contributed to the LBG’s developmentover the past ten years, particularly:

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In ten years the LBG has grown from the sharedideas of six UK companies, working together todevelop a standard for measuring, benchmarkingand reporting their community programmes, to arobust and comprehensive model, used byhundreds of businesses around the world.

Our watchword so far has been steady, sustainedgrowth and rigorous testing of the model, to ensureit works for companies of any size, from any sectorand in any country. Its users confirm that it helpsthem learn from each other, plan more strategicallyand report accurately and credibly.

As a founding member of the LBG, I am pleased tobe able to share in the celebration of ten years ofthe LBG’s growth and achievement. Above all, I wantto recognise the valuable contribution made bynearly 100 LBG members in ensuring the modeldrives innovation and improvement in corporatecommunity involvement, and stays relevant andresponsive to the needs of companies andcommunities. It is their work that makes the LBG work.

Our goal for the next ten years must be to ensurethat the LBG model fulfils its potential as the globalstandard for measuring and reporting corporatecommunity involvement, cementing companies’important role in communities and wider society. �

Geoffrey Bush is Director of Corporate Citizenship at Diageo.

ForewordFROM GEOFFREY BUSH CHAIR OF THE LONDON BENCHMARKING GROUP

Foreword: Geoffrey Bush 1Chair of the LBG

Foreword: Directors of The Corporate 2Citizenship Company

Why measure? 3ALISON GULLIFORD

CCI in short: a brief history of 6corporate community involvementDAVID LOGAN

LBG milestones 8

How we’ve done 10

LBG: the strategy now 12

LBG model in brief 15

What membership involves 19

Where do we go from here? 20MIKE TUFFREY

Contacts 21

Companies using the LBG model 21

Contents

“It ensures that you take a thorough reviewof your programmes and therefore is aneffective management tool. The group,especially the sector group, has beeninvaluable… different to any othernetworking circle.”

JUSTINE BENTHAM CSR PROGRAMMES MANAGER, KPMG

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It has been a great privilege for us to haveworked with so many talented and committedmanagers in the companies of the LBG over thepast ten years. From the start, members havebeen keen to answer three practicalmanagement questions, which are as crucialnow as then:

How are companies actually contributing to thecommunity, at the centre and out in the field?

Are we doing the right things, and doing them well?

Above all, are we achieving what we set out to do,and more besides?

LBG members have worked together to develop arobust, easy-to-use model that allows them tobenchmark their programmes and so help to answerthese questions. Their goal has been betterperformance, both for their community investmentsand for themselves as individuals, wanting theircompanies to see the benefits that flow from aprofessionally managed community strategy.

Looking ahead, we anticipate that reporting ofcorporate community involvement will become moreand more integrated into broader CSR reporting.Using the LBG approach enables companies to offerdefensible, quantifiable, cost-benefit analyses fortheir CCI programmes, alongside other CSR reportingcategories. Companies that embrace this rigour fortheir CCI tend to be developing similar disciplines fortheir CSR too.

We believe the LBG model is therefore of greatinterest to a much wider range of stakeholders, whowant to understand and evaluate how companiesmanage and report their social impacts.

When each of us started our professional careers inthis field, we knew at heart that corporatecitizenship was much more than communityinvolvement. The recent burgeoning of interest inCSR has confirmed that beyond doubt. Equally, weremain as convinced now as we were then, thateffective, measured and benchmarked CCI is thecornerstone for many companies’ approaches to theirwider responsibilities.

We hope that this tenth anniversary report will showto a new audience, as well as to some old hands,the continuing value of the work our greatcompanies do in their communities. �

ForewordFROM DAVID LOGAN JERRY MARSTON MIKE TUFFREY DIRECTORS OF THE CORPORATE CITIZENSHIP COMPANY


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“I want to know where I am.”The lack of a reliable way of calculating a ship’sposition from east to west was the cause ofconsiderable danger and loss of life as transoceanicvoyages became common in the 17th century. The UK Parliament established a £20,000 prizefund, eventually won by clockmaker John Harrison.Harrison proposed using a highly accurate clockwhich could keep time at sea, allowing sailors tocalculate the time-difference from a central point.Using the accurate time and the position of thestars, they were able to calculate their exactposition.

Philadelphia, Rome and Lisbon were all used asreference points, but as the volume of sea trafficincreased it became vital to have a single acceptedstandard for navigation. This role was filled byGreenwich Mean Time, making London the centre ofthe system of internationally-agreed time zones usedto this day.

COMMON STANDARDS HELP US GET OUR BEARINGS.

“I want to make sure I’m doing the right thing.”

Investors use measures such as return on capitalemployed to ensure they get the best financialreturns. Social return on investment can be harder tomeasure and may have a human as well as financialcost. A few high-profile cases of neglect and abuseby untrustworthy carers in children’s homes haveshown the need for careful monitoring to ensure thatchildren are helped not harmed, experience isshared and good work protected.

�Every project carries an ‘opportunity cost’ – the investor has to say no to another project.

�Unless good and harm are measured in someway, you’re left relying on feelings orimpressions when deciding what to do next.

MEASUREMENT HELPS US MAKE BETTERDECISIONS BY TELLING US WHAT WORKS AND WHAT DOESN’T.

“I want to do the right thing right.”

The film ‘Chariots of Fire’ charts the rise of HaroldAbrahams, the 100-metres gold medallist in the1924 Olympics. In a field dominated by giftedamateurs, Abrahams turned to a professional coach,Sam Mussabini, to improve on his natural talent.Through rigorous training, backed up bymeasurement and critical assessment, he achievedsmall, incremental improvements in hisperformance. By the day of the race, he knewexactly what he had to do to win. At the time, hisefforts won him notoriety. Now, his rigorous methodsand critical self-examination are common practicefor any serious athlete.

�As well as doing the right thing, we want to do it in the right way.

�We want to make things better, more economically.

�We want to improve on what we started with.

MEASUREMENT HELPS US CHECK IT’S BEINGDONE AS WELL AS IT CAN BE.

Why measure?MEASUREMENT IS MORE THAN A MANAGEMENT TOOL. IT PLAYS A CRUCIAL ROLE IN MANYDIFFERENT FIELDS OF HUMAN ENDEAVOUR. ALISON GULLIFORD CITES TEN EXAMPLES.

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“I don’t want any nasty surprises.“

Grainy film footage shows the Tacoma NarrowsBridge in the USA writhing and buckling like a toy inhigh winds. At the time of its design, engineers wereignorant of the risks that certain extreme weatherconditions could create, on a terrifying scale, theeffect which high-divers employ when jumping froma diving board into water. In July 1940 high windscaused the bridge to move to and fro at exactly its‘resonant frequency’, exaggerating its naturalmovement to breaking point. Before building amajor suspension bridge, engineers now takedetailed wind readings to model the stresses thebridge is likely to face.

�With experience, we can take steps to ensure that risks and threats don’t destroy what we’ve built.

MEASUREMENT HELPS US ANTICIPATEPROBLEMS AND RESPOND CORRECTLY.

“I want to check it worked out as planned.”

In 2002, the humanitarian aid agency, Tearfund, rana six-month hygiene programme for Afghan refugees,aimed at cutting the spread of diarrhoeal disease.Families were educated in basic hygiene precautionssuch as handwashing, and filtering and boilingwater. A month later Tearfund sent an evaluator toassess the project’s success. His initial impressionswere discouraging. Whilst he could measure theknowledge instilled and how people’s attitudes andpractices had changed, he needed to establishwhether the incidence of disease really had dropped.Families were reluctant to report their problemspublicly, making it difficult to measure whether theproject had achieved its goal. However by meetingthe families involved and discussing how theteaching had helped them, he collected a fund ofquotes and anecdotes which proved that theincidence of disease had dropped dramatically.UNICEF was so impressed that they committedsubstantial new funding to scale up the programme.

�Measurement does not have to be complicatedand scientific to be effective.

�A commitment to finding out what happened is what matters.

MEASUREMENT HELPS CHECK WE ACHIEVEDWHAT WE MEANT TO, AND DOESN’T HAVE TOBE COMPLICATED.

“I don’t want to waste my time.”

Experience shows that drug and alcohol education in schools works best when led by people whomstudents see as peers or respect as role models.Including life skills training, such as building self-esteem and role-playing how to say “no”, also helps.By contrast, programmes which are led by police orteachers, and which focus on how alcohol and drugscan harm, tend to be much less effective.

�It is not possible or necessary to measureeverything for all projects.

�By choosing an approach we already know to be effective, we can make informedpredictions – ‘modelling’ what can be achievedbefore committing.

�So we don’t need to measure drug-takingbehaviour or other events which are difficult to capture. Instead, we can concentrate onsimpler process measures like the number ofclassroom sessions provided and the number of schoolchildren who attended them.

�We can avoid the expense of extensive research surveys, and the time delay of waiting for events to unfold.

CHECKING OTHERS’ FINDINGS CAN SAVE TIMEAND MONEY – AND STOP YOU REINVENTINGTHE FLAT TYRE!

“I want to make a lastingcontribution.”

The closure and sale of school sports grounds acrossthe UK looks set to become another example of abenefit lost because no-one had taken stock of whatthey actually achieved. Six thousand fields were sold

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in the 20 years after sell-offs were made legal in1982, many making way for supermarkets, housingdevelopments or car parks.

Physical exercise will play a critical role in keepingthe UK’s population from becoming steadily moreobese, yet the opportunity to establish good patternsearly on is now diminished.

�Don’t be put in the position of having to close a good project because you couldn’t justify the investment.

MEASUREMENT HELPS ENSURE THE BESTWORK SURVIVES.

“I want to get better at what I do.”

The Hawthorne Effect was named after a series ofstudies conducted at the Western Electric HawthorneWorks in Chicago between 1927 and 1932 byHarvard Business School professor, Elton Mayo.Mayo was examining the relationship betweenworking conditions and productivity. Work hours,rest breaks, temperature and lighting were eachchanged in turn for a group of workers. Howeverover time, Mayo found that it didn’t actually matterwhat factors he changed: they all resulted inincreased performance. He concluded that the act ofmeasuring can itself affect performance. The workershe was studying reacted to the fact they were beingstudied by working harder and better.

�When people know you're measuring something, they try to make the measurementturn out right.

�So simply observing how things are workingactually improves human endeavour. It’s a fact.

MEASUREMENT CAN IMPROVE PERFORMANCE.

“I want to know where I’m going.”

During the 1980s, the UK government introducedefficiency targets for the National Health Service. A key measure chosen was hospital bed occupancy– how many beds were occupied on a census night.It was later argued that clinical managers, keen todemonstrate that all beds were occupied, had started

to delay discharging patients. As a result, manypatients stayed in hospital longer than necessaryand fewer emergency patients could be admitted.

�People will naturally take steps to improve theirperformance in whatever is being measured.

�Think about the effects of the measures you use.

�Ensure the process is constructive and doesmore good than harm.

BECAUSE MEASUREMENT PROMOTES CHANGE,IT MATTERS WHAT MEASURES YOU USE.

“I don’t want to be left behind.”

Lack of a common standard for financial accountingwas a factor contributing to the Great Depression ofthe 1930s, as investors lost confidence that theirmoney was being used honestly. The great variety ofaccounting practices between countries madestandardisation an uphill task, and for some yearsthe future of a common standard was uncertain.However the sheer advantages of speaking acommon language ultimately proved enough to givemomentum to a worldwide set of standards, whichare taking shape under the supervision of theInternational Accounting Standards Committee from1973. Common standards take time to catch on,but become the norm.

COMMON STANDARDS TEND TO BECOME THE NORM.

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Every one of these principles is true for thefield of corporate community involvement.

Companies that agree use the LBG.

For examples of how LBG members havebenefited from using measurement, turn topages 13-17 or log on to www.lbg-online.net


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Is CCI a new invention?Far from it – corporate giving has its roots in the19th century when businesses first becameincorporated. Many LBG members can trace theircommunity involvement to Victorian philanthropists.Jesse Boot, for instance, established NottinghamUniversity from the proceeds of his chemist shops,while William Lever built a model community forworkers of what was to become Unilever.

But surely modern community involvement is different from that?Correct - the key difference is that decision makingis no longer down to one business leader. Manyearly industrialists had the freedom to do as theywished with their company profits. As a broadergroup of shareholders took ownership of publiclytraded companies, they wanted to see how allexpenditures benefited the business. With this theearly days of grand scale corporate philanthropycame to an end.

So companies stopped giving to the community?They didn’t stop completely, but between the 1930sand 1970s giving slowed to a trickle. Nineteenthcentury philanthropists had responded to the socialproblems of the new industrial society. Demandgrew for the state to take the lead as it became clearthat philanthropy would be insufficient to meet allsociety’s needs.

So the welfare state elbowed corporate giving out of the way?To a degree: in Britain, the welfare state developedafter World War II with the emergence of a ‘welfareconsensus’ for the state to provide for everyone. This

left little room for companies to get involved insolving society’s problems. Indeed for much of thenext 30 years there was active hostility tobusinesses sponsoring social projects or having a sayin education. Then along came Margaret Thatcherand the general sense that she came to representthat things needed to change.

What did Margaret Thatcher do for CCI?She led an ideological assault on the welfare state -taking on the unions and reasserting the role ofprivate enterprise. Business was set free to makeprofits as never before, but in the widespreadrestructurings and layoffs of the 1980s, expectationsof businesses and their role in the community hadonce again radically changed. Older companies wereable to reconnect with their roots as pioneeringcorporate citizens, while newer and recentlyprivatised businesses were quick to see theadvantages of engaging with pressing communityand social issues. This enlightened self-interestmarked the start of modern CCI.

So why was the LBG needed?Out of this welter of contrasting expectations twothings were clear - companies faced greaterdemands than ever and the role of the communityprofessional was indispensable. When the chiefexecutive of an LBG founder member in 1994 asked for an assessment of the CCI function,including its efficiency and its impact on thecommunity and the business, there were no readyanswers. It was clear that new management toolswere needed to add rigour to the department’s work.Above all, the LBG shifted the focus from givingmoney away to investing resources for company andcommunity benefit.

CCI in short: a brief history of corporate community involvementA CONVERSATION WITH DAVID LOGAN


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Who else was working in this field?In the 1990s, several key organisations worked todevelop practical tools for managing CCI. The Centrefor Corporate Citizenship at Boston College in the US(www.bc.edu/centers/ccc) and Business in theCommunity in the UK (www.bitc.org.uk) bothdeveloped frameworks to encourage best practicebased on quality management techniques.Consultancy Bruce Naughton Wade, nowProbusBNW (www.probusbnw.com), also carried outpioneering work on standardised principles ofeffective CCI.

What does the LBG bring to the party?The LBG model provides a unique approach forvaluing company-wide contributions to thecommunity, including cash, time, in-kind andmanagement costs. It also provides a standardapproach to quantifying and reporting the value ofthose contributions to the community and to thebusiness. Finally, the model supports reporting of‘mandatory contributions’ to the community, madeby companies as part of regulatory requirements,and leverage, where company contributions unlockadditional funds for charitable causes.

The LBG model is completely compatible with othermanagement tools for CCI and is used by manycompanies to improve their response to therequirements of external standards such as the GRIand queries from socially responsible investors. Inthe UK, further examples include BiTC’s CorporateResponsibility Index and public reports such as thePerCent Club, the Guardian’s Giving List and TheSunday Times Companies That Count.

The model works best when companies co-operate asa group and share data and experience. The originalLBG is a group of almost 100 companies in the UK.Other groups are being set up around the world.

Does the LBG address wider aspects of CSR?The LBG model focuses exclusively on CCI, butprovides information in a form that can becommunicated to each stakeholder group, in abroader CSR report or a standalone communityreport. CCI is a key component of CSR, affectingimportant stakeholder groups including employees

and customers. It is a very visible part of acompany’s CSR strategy, often used as a first step indeveloping a broader approach, and thereforedeserves careful treatment and full reporting.

How was it developed?The LBG model was developed by membercompanies, working together to test the model andto feed back their experiences. The result is apractical, robust approach which addresses thethorny issues companies encounter when gatheringdata across large organisations and finding standardvaluations for non-cash contributions. �

Six drivers for the LBG� Provide a framework for analysing the costs

and benefits of CCI as used by otherbusiness functions

� Better management information to guidefuture strategy

� Shift the debate from costs of the CCIprogramme to benefits

� Capture and value key areas of contributione.g. employee time and in-kindcontributions

� Enable companies to compare like-with-like,using standard definitions and valuations

� Improve external reporting


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1994six companies start work to develop and test anew measurement model for CCI, facilitated by David Logan

1997publication of findings, the basic principles of the LBG model in, ‘Companies in Communities:Getting the measure’

LBG milestones

2000LBG membership opened up to all companiesoperating in the UK

2001launch of the LBG in Australia as the AustraliaBenchmarking Group, working with the National Centre for Citizenship (NCC) and ARTD Management and Research

2002launch of LBG in the USA as The Corporate Giving Standard, working with The Committee to Encourage Corporate Philanthropy

2003LBG model tested in new sectors, such as higher education

2003mandatory contributions added to reporting model

2003members agree to drive towards fourth generationof LBG and establish four sector groups to deepenuse of the model

2004membership approaches 100 in the UK

2004LBG is launched in France as the Group Françaisde Référence, working with Cap Juby

2004three groups formed to pilot more intensive output measurement

LBG’s first generation launch, pilot and publish findings

1997twelve more companies join the pilot group

1997-2000eighteen companies test and refine the model with support from David Logan, Mike Tuffrey and the Charities Aid Foundation (CAF)

1999publication of guidelines for defining and valuing the costs of a community programme in ‘Companies in Communities: valuing the contribution’

2000publication of guidelines for measuring what a community programme achieves in ‘Companiesin Communities: assessing the impact’

LBG’s second generation test, refine and issue definitive guidelines

LBG’s third generation mainstream use of the model


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In the fourth generation, member companies will:

�increase their use of the LBG model as amanagement tool, including benchmarking within industry sectors

�enhance output reporting to include not justproject measures, but whole CCI programmemeasures

�increase their measurement and reporting of impact and long-term benefits

The goal is increased take up of the model, both in the UK and around the world, working throughlocal centres of excellence, so that the LBG model becomes the international standard for CCI measurement. �

Towards LBG’s fourth generationembed as ‘the international standard’

“It’s a focused group of people with a similaragenda. This makes it very easy to pick upgood hints, tips and advice.”

BRUCE LEARNER COMMUNITY AFFAIRS MANAGER, KELLOGG’S

“LBG is a trusted model for capturing moreof our community involvement work. As wework as online media partner for a range ofcharity and community organisations,capturing in-kind donations on the AOLservice is crucial. LBG has enabled us totake an overview of where resources go anddiscuss this approach with other mediacompanies. We've also used LBG as aplanning model in discussions with charityand community partners. It's useful fororganisations to know how you'll be writingup projects and what you're looking for interms of leverage, impact and benefits.”

KATRINA KEELING HEAD OF CORPORATERESPONSIBILITY, AOL UK


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How we’ve done

1994

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1998 2000 2001 2002 2003 2004

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2001 2002 2003 2004

Submitting input-outputcase studies

Submitting leveragedata 2002 - 2004

Reporting internationaldata 2001 - 2004

Referring to LBG inpublic communications

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LBG membership growth 1994 to 2004

Total amount reported 2000-2004

Improving the depth of data capture and reporting2001-2004

Key developments in 2004

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Total number of input/output case studies reported

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Total leverage reported (£ million)

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Members reportingmandatory contributions

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Value of mandatorycontributions (£ million)

USA

ArgentinaBoliviaBrazilChileColombiaEcuadorParaguayPeruUruguayVenezuela

Costa RicaEl SalvadorGrenadaGuatemalaHondurasMexicoNicaraguaPanama

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Canada


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LBG reporting around the world 2004

Countries with centres of excellence

UK

France

Australia

AlbaniaAustriaBelgiumBosniaBulgariaCroatiaCzechRepublicDenmark

EstoniaFinlandGermanyGreeceGuernseyHungaryIcelandIrelandItalyKosovoLatviaLithuaniaLuxembourgMacedoniaMoldova

NetherlandsNorwayPolandPortugalRomaniaRussiaSerbia &MontenegroSlovakiaSloveniaSpainSwedenSwitzerlandTurkeyUkraine

AnguillaAntiguaBarbadosBermudaBritish VirginIslandsCayman IslandsDominicaDominicanRepublicJamaicaMontserratSt HelenaSt Kitts & NevisSt LuciaSt Vincent andthe GrenadinesTrinidadTurks & Caicos

Ascension Island

Falkland Islands

BeninBurkina FasoCote d’IvoireEgyptEthiopiaGhanaKenyaMalawimaliMorocco

NigeriaSenegalSouth AfricaSudanTanzaniaTogoUgandaZambiaZimbabwe

BahrainIraqIsraelJordanLebanonSaudi ArabiaSyria

BangladeshIndiaPakistanSri Lanka

Diego GarciaMaldivesSeychelles

CambodiaIndonesiaLaosMalaysia

PhilippinesSingaporeThailandVietnam

ChinaHong KongMacauJapan

KoreaSakhalinTaiwan

FijiSolomonIslands

New Zealand

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“The LBG has been instrumental in shapingour CCI strategy.”

YOGESH CHAUHAN DEPUTY HEAD CSR,BBC


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Companies are responding to changing socialattitudes by publishing more rigorous data abouttheir social performance. As consumers becomemore demanding and better informed, employeesmore ethically engaged, and a whole range ofother stakeholders more determined to holdthem to account, companies are publishingtargets for managing their impacts on society,and measuring and discussing their performance.

Serious CCI practitioners have long known that theinvestments they manage are an integral part oftheir company’s performance, to be handled withprofessionalism and accountability. As the LBGmoves into its second decade, we predict that themodel’s clear, accessible approach will become the norm.

The LBG’s strategy for this period, called its Fourth Generation, was approved by members at theJanuary 2003 Plenary. It focuses on reaching acritical mass of companies using the model in theUK, continuing to develop the model’s response tonew issues and sectors, establishing the model asan international standard, and more rigorous work tomeasure what companies’ community programmesactually achieve, both for the company and the community.

Critical mass in the UKAt the time of going to press, the LBG model isalready used by more than 100 companies. Thechallenge is to encourage all users – and otherinterested companies – to become members.Membership of a group enables practitioners torealise the model’s full benefits by sharing data witheach other, bringing perspective on their ownperformance and reporting. The LBG’s target is togrow the UK group beyond 100 members so that all companies serious about CCI consider thebenefits of membership.

Developing the model’s response to newissues and sectorsThe model is a ‘living’ framework. Whilst the basicbuilding blocks of inputs, outputs and impacts havebeen established for some years, the model growsand maintains its relevance as its members

continually bring questions and issues to the group.This process of answering questions, surveying othermembers’ practices and collectively agreeing policyis building a growing body of ‘case law’ – specificguidance on how to interpret the model for differentissues and sectors. This work is ongoing and beingdeveloped primarily through groups representingdifferent business sectors.

Sector work now takes place among international oil companies, UK retailers, financial servicescompanies, professional services firms and regulatedindustries. We see media, telecommunications,pharmaceuticals, alcohol beverages and internationalbanking sectors as opportunities for immediategrowth, and will aim to form new sector groupsaccording to need and critical mass. Issues willcontinue to be handled as they arise. Recentexamples have covered university research, free orsubsidised publicity, advertising and web space,training initiatives, town centre and crime initiatives,the use of space in retailers’ car parks, seniormanagers’ involvement in government and otherpublic policy initiatives, team sports days and blood donation.

Going globalA substantial proportion of LBG members are globalcompanies. Meeting their needs in future will requirea more international group, reflecting the full rangeof peers against which they want to benchmark andthe value of comparing practices across nationalborders.

LBG’s strategy is to encourage members to use themodel across all the markets where they operate.We aim to establish a global network of local‘centres of excellence’ to help grow members’understanding and application of the model and help share data in the standard LBG format. Suchcentres already exist in the USA and Australia, and a new centre has just been launched in France. Inthe USA 50 leading companies are now using themodel, applying it to approximately $4bn, or one-third, of US corporate giving. Ten companies areusing the model in Australia, and six in France.Immediate priorities will be to spread the model’suse to a range of countries in Europe and acrossNorth America.

LBG: the strategy now


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Looking further ahead, the LBG’s strategy is to formmore groups which benchmark across nationalborders, as the oil companies’ group already does.We see particular potential for launchinginternational groups as noted above in 2005 and tobuild on interest in South Africa, Argentina, Brazil,Mexico, Chile and the Philippines. As the home ofthe LBG model, the LBG in London will continue tofunction as a reference point for these and othercentres and companies around the world.

Better measurement of achievements In its first ten years the group has achieved and isusing a standard methodology for capturing andvaluing inputs, backed by a broad consensus. Apriority for the future is to broaden and deepenmembers’ use of the model to measure and reportwhat their programmes and individual projectsachieve. We will continue to track and encourageimprovements in members’ performance inmeasuring the outputs and impact of individualprojects, and the additional resources which theircontributions unlock from other sources. As part ofour ‘4G’ commitment, we have launched threegroups to pilot new work on behalf of LBG’smembership.

Cost-benefit: we know that community involvementcan impact the business bottom line in a variety ofways, from building skills and reducing employeeturnover to generating positive press coverage andnew business opportunities. The challenge is to puta credible monetary value on these benefits. Thiswill enable CCI practitioners to define the return tothe business for every pound spent, and enhancetheir positioning as a benefit rather than a cost tothe business. An LBG ‘cost-benefit’ working group istaking this forward.

‘Whole programme’ indicators: whilst some of ournewer LBG members are still learning to measureindividual projects, there is a demand from membersto define and measure the main ways in which thecommunity benefits from a company’s wholecommunity programme, for example how manypeople are trained by a range of initiatives. Again, an LBG working group is taking this forward.

“At Cable & Wireless the LBG model hasprovided comprehensive CCI data and arobust analytical tool, enabling us to:

� maintain support for CCI as a businesspriority through times of low or no profitbecause of its demonstrable businessbenefits, particularly in maintaining thereputation of the company.

� develop more discipline in trackingcommunity contributions. Before using themodel, we were unable to capture the valueof the internet connectivity we donated tonot-for profits as there was no method forcalculating the value. Now these donationsare recorded as in-kind contributions, withaccompanying outputs and impacts.

� recognise that we could use communityspend in the Caribbean more effectively bydeveloping a common strategy forinvestment across the region. As a result weconsolidated the community budget for allCaribbean branches to create a Pan-Caribbean foundation, with a tightly definedset of funding priorities.

� increase understanding of the distinctionbetween community investment andcommercial activity, clarifying reporting andinforming programme strategy.”

JOE FRANSESGROUP CSR MANAGER, CABLE & WIRELESS


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Testing measurement tools and techniques: apowerful technique emerging from America is thecalculation of social return on investment, or SROI.This enables a company running a communityproject focusing on employability, for example, tocalculate the overall savings to society for eachparticipant who finds work, through measures suchas lower unemployment benefits and increased taxrevenues. LBG is now working with nef (NewEconomics Foundation) in the UK to trial thismethodology among LBG members.

In these ways the LBG membership provides avaluable test-bed for different ways to measurecommunity projects. Within the framework of theLBG model, members pilot survey tools andsampling, for example, and share results with othermembers. Success will be measured according tohow many members take up and use these newtechniques and share their findings widely.

Getting the message acrossCompanies are faced with more demands for datafrom more diverse stakeholders than ever before.From NGOs and Socially Responsible Investmentfunds to governments and the UN Global Compact,organisations make frequent calls for businesses toaccount for their impact on society. By the end of2004, three-quarters of FTSE 100 companies andnearly half of Fortune Global 50 companies hadproduced some form of CSR report1.

Going forward, the LBG can help companiescontribute much more robust, credible data as partof their wider communications strategies. But atheart, as an initiative developed by individualsmanaging CCI for individuals managing CCI, ourprimary purpose remains to help the people actuallydoing the job to do it better. �

“At Vodafone we found the LBG modelvaluable to use with beneficiaries. It helpedus to clarify the project goals before startingand to define our objectives and measures.Our partners also found the approach usefulin subsequent conversations withprospective partner companies. The LBGmodel enabled them to demonstrate whatthey were achieving and to communicate thatclearly and concisely.”

SARAH SHILLITOSENIOR MANAGER,THE VODAFONE UK FOUNDATION

1 SalterBaxter/Context, Directions#3; trends in CSR reporting 2002-03.


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Guiding principlesThe LBG model follows the approach used by mostbusiness departments, such as marketing and HR,to provide a comprehensive accounting of costs andbenefits.

To ensure the model results in accurate andcomparable data, LBG members adhere to a set ofguiding principles:

LBG model in brief

Basis of the modelThe starting point for measurement is to be clearabout what you want to achieve. LBG membersidentified three major motivations behind corporatecommunity involvement:

� A sense of moral and social responsibility

� A belief that companies have a long term interestin fostering a healthy community

� Knowledge that CCI can have direct benefits to business

These motivations were used to identify threecategories of CCI:

� Charitable gifts

� Community investment

� Commercial initiatives in the community

Together these categories constitute a company’svoluntary contributions to the community. Eachcategory has a detailed definition to help measurehow the motives behind community involvement canimpact on a business.

� Motive matters and affects measurement

� The contribution should be charitable

� If in doubt, leave it out; it’s better to under claim

� Value the contribution at cost to company,not at what beneficiaries would have paid

� Be clear about the goal of the project –what are we trying to achieve?

– What is my investment actually buying?

– Ultimately, how is the world a betterplace as a result of this project?

Charitablegifts

Communityinvestment

Commercial initiatives inthe community

Mandatory contributions

Business basics

Intermittent support to a wide range of good causes in response to the needs andappeals of charitable and community organisations, increasingly through

partnerships between the company, its employees, customers and suppliers.

Long term strategic involvement in community partnerships to address alimited range of social issues chosen by the company in order to protect

its long term corporate interests and to enhance its reputation.

Activities in the community, usually by commercial departments, to support directly the success of the company, promoting its

corporate brand identities and other policies, in partnership withcharities and community-based organisations.

Community contributions or activities undertaken as a resultof the requirements of law, regulation or contract.

The core business activities in meeting society’s needsfor cost effective goods and services in a manner which

is ethically, socially and environmentally responsible.

The LBG model


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Beyond voluntary contributions, a fourth category,mandatory contributions, includes communityactivities which a company undertakes in responseto the requirements of a law, regulation or contract.As these are not voluntary, the LBG requires the costof these contributions to be reported separately fromvoluntary contributions.

The fifth category, business basics, includes all corebusiness activities involved in delivering productsand services which are critical to business, but notmotivated by community benefit. The manner inwhich these activities are managed has a significantsocial and environmental impact and is oftenreported alongside CCI in company reports, but isoutside the measurement scope of the LBG model.

Benchmarking inputsThe model provides the definitions necessary to put a monetary value on the ‘input’ costs of acompany’s CCI in four contribution categories,including the management costs associated withmaking the contribution:

� Cash

� Time

� In-kind

� Management costs

Typically members also analyse their ‘input’contributions by subject or theme and by thegeographic location of beneficiaries.

Assessing outputs and impactsIn addition, the model goes further by assessingwhat the company’s programmes actually achieve –the ‘outputs’ defined in terms of:

� Leverage of cash and other resources unlockedby the company’s contribution

� Community benefit, such as the number ofpeople who benefit

� Business benefits, such as publicity achieved

Beyond such immediate outputs, strategic planningof CCI programmes involves assessing the impact on

“EDF Energy is fortunate to have extensivesenior executive support for itsprogrammes. However, it was lackingprocesses for reporting and managing its contributions. Through the LBG, we achieved:

� a comprehensive assessment of our work with a range of communitystakeholders.

� feedback and input from across the business.

� an informed strategy to involve teamsacross the business.

� data to inform programme planning so we could maximise our outputs and impacts.

The LBG model has also enabled EDFEnergy to talk about the mandatorycontributions it makes to meet regulatoryrequirements, so that stakeholders cangain the full picture of the outputs andimpacts that flow from the company’sinteraction with society.”

ALISON BRAYBROOKSCOMMUNITY INVESTMENT STRATEGY MANAGER, EDF ENERGY

society and the business, where relevant. This is thefinal element of the LBG model. It involves revisitingthe goal of the programme and asking what hasactually changed as a result. New approaches suchas social return on investment (SROI) provide asound approach to quantifying a programme’s long-term benefits to society. These and other specificmeasurement techniques complement and enhancethe LBG model.

The example on page 18 illustrates how the LBG input output matrix is used to gather data on a CCI programme.


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“Rolls-Royce has been active in a wholerange of community areas since it started in business 100 years ago. Prior toimplementing the LBG model two years agothere was a process in place for capturingcommunity data, but one which focusedlargely on the area of charitable donations.

Joining LBG has given Rolls-Royce access toa network of other community practitionerswho are working to develop the evaluationmodel. This year for the first time Rolls-Royce is surveying right across its businessgroups globally to try and capture a greaterproportion of its contributions. Particularareas of focus include gifts-in–kind, such asengine donations and surplus office equipment,and employees spending company timesupporting community activities such as civicduties, kids camps and schools liaison.

The motivation for using the model is to geta better understanding of what the businessis already doing in CCI, not to police it.

Using the LBG model has provided a focusfor data collection and helps to demonstratethat community activity has become a trulyintegral part of the business. We recognisethat our ability to more accurately reflect ourcontribution to wider society is becomingincreasingly important – both in terms ofreputation management and in buildingstrong relationships with key stakeholders.”

RACHEL CLARKECOMMUNITY RELATIONS,ROLLS-ROYCE

How LBG members report their contributions

Charitable gifts9.9%

Communityinvestment

29.6%

Commercialinitiatives inthe community60.5%

Why do we contribute?

Cash 82.8%

In-kind 0.5%

Time 6.8%

Management costs 9.9%

How do we contribute?

Educationand youth

31.4%

Arts andculture

1.5%

Environment13.2%

Community development50.6%

Other 3.3%

What do we contribute?

Total contribution £3.8m

Case study: EDF Energy Core Responsibility Report 2003


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Case study: KPMG’s Ready for Work Programme

Key features of the LBG model

By managers, for managersThe LBG model has been developed by individualsmanaging CCI for themselves and their peers. It isbased on their experience of what really works andhelps them do a better job.

Share and compareThe LBG is primarily a resource for companies toCOMPARE their own community involvement withthat of peer companies, and to SHARE best practiceand ideas for improvement and innovation.

Focus on what mattersThe LBG agenda is member driven. Plenary sessions,sector group meetings and masterclasses aredeveloped based on member interest. Members worktogether to agree significant matters of policy. �

Inputs over two years (2002-4)

Cash £50,000

Employee paid time: 52 volunteerscontributing 3.5 hours each

@£32.10 = £5,842

In-kind £97,000, including projectdevelopment time of CSR team,leadership support from a UK Board member and EMA CEO,

provision of facilities for hosting thetraining days and other pro bono

support along the way.

Total: £152,842

Leverage

£105,000 from UK government

Community benefits

234 clients accessed thisprogramme, through

9 courses in 6 locations

4 placements at KPMG

59% offered jobs, with 43% accepting them

(compared with 18% at outset) across

entire programme

Changed perception ofhomeless people

Business benefits

Reputation among clients

Increased motivation,attraction and retention

of staff

Personal development foremployees who volunteer

Community impact

145 people gainedemployment

Saving to society from theentire project, through taxespaid and benefits payments

saved, of £3.9m

Business impact

New business contactsgenerated

Annual outputs

Programme objectives: The main aim of this programme is to get ex-homeless people back into full time,sustainable employment in partnership with Barclays, Marks & Spencer and Marsh. All figures unless statedare a proportion of the overall total, reflecting the KPMG contribution.

“I get at least 10 times my membership feeseach year. The LBG has avoided simply beinga talking shop and has provided anopportunity for companies to fullyunderstand their community contribution.”

ALAN EAGLE COMMUNITY AFFAIRSABBEY


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What membership involves

Each year members receive a comprehensivebenchmark data analysis, including sectorcomparisons, size of programmes, staffing andemployee volunteering. During the year, LBGmembers meet to discuss CCI issues in detail, tolearn from each other in private and to shareideas to improve their programmes.

Member benefits include� Individual consultation and in-depth assistance to

apply the LBG model

� Circulation of members’ benchmark data to seewhat others contribute, understand how theyvalue their contributions and learn from case studies

� A monthly members’ newsletter, with news onmeasurement topics, company reports andforthcoming events

� Two round-table plenary meetings per year for all members, with agendas based on topicssuggested by the group

� 15-20 specialist industry sector subgroupmeetings each year on specific measurementissues

� Access to the members-only section of the LBGwebsite, for advice on implementing the model

� Use of the LBG logo and the right to citemembership in external publications

LBG charter and managementLBG members agree to a membership charterapproved by the group. This covers a fewmanageable requirements such as:

� following the LBG principles in evaluatingcommunity contributions

� submitting basic data to the rest of the grouponce a year

� agreeing to keep other members’ dataconfidential

LBG members shape the group’s agenda through aSteering Group of member volunteers. The group ismanaged by The Corporate Citizenship Company. For members who are resource constrained or whoare interested in additional support, consultancyassistance can be arranged and some aspects of thework can be outsourced, such as data collection,customised reports for presenting the data and LBG data assurance. �

If you are interested in joining the LBG,please contact Sue Parsons or any memberof the LBG team at The CorporateCitizenship Company on 020 7940 5610 oremail: [email protected]

www.lbg-online.net


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The LBG is one of the unsung success stories of the UK’s evolving corporate communityinvolvement scene, as I believe this tenthanniversary report shows. However, this remainswork in progress, not job well done.

Yes, CCI professionals now have the tools to managetheir programmes effectively and efficiently. Butunderstanding about the real value and contributionof community programmes is still not strong.Internally, the annual budget round remains afraught process for most. Externally, the generalpublic thinks companies contribute much more thanthey actually do, while the media confusecontributions with social responsibility. Key opinionleaders, such as senior government ministers, arenot much better informed either.

So, looking forward, we need to keep on working.Here’s a three-part call to arms.

First, in the face of the (very welcome) growinginterest in corporate social responsibility, we need toreassert strongly the value of communitycontributions and of the community as a distinctstakeholder. If the battle a decade ago was to movethe debate on contributions from corporatephilanthropy to community investment, now there isa new front to defend – the distinction between CCIand CSR. And many community programmes don’tdo themselves any favours: they may be relevant toa company long term – financial literacy in schoolsby banks, for example. But are they reallyaddressing core social issues of pressing concern tostakeholders now, as CSR urges us to –unprecedented levels of personal indebtednessamong those banks’ customers, for example?

Second, within the management of CCI programmes,let’s not fool ourselves that we are using as amanagement tool the full power of the measurementdata we’ve now got, and so are able to demonstratevalue for money and effectiveness for company andcommunity. That’s what the LBG’s ‘4G’ agenda is all

about – benchmarking meaningfully in sector,measuring outputs from the whole programmebudget not just flagships, and moving to assess longterm impacts from major investments. Even after adecade, LBG members cannot rest on their laurels.

Third, we urgently need a wider effort to educatepeople outside companies about the truecontribution that the corporate sector makes. Say itquietly but it’s unfortunately a fact: long-servingChancellor and prime minister-in-waiting, GordonBrown, is wrong, on one point at least. Speaking atthe NCVO annual conference in February 2000, hesaid “In the USA, around 1 per cent of companyprofits are given to charity. But in Britain it is only0.2 per cent of company profits.” He went on to say“It is time for a new start here too….. we wantBritain to start a new chapter in corporate giving.”

LBG members know they contribute significantlymore. Business as a whole – small firms, unlistedcompanies, international subsidiaries – do too, andcould show it if they measured it. And of course,LBG would say that the message could be infinitelystronger if we made the case in terms of resultsachieved, not just a fraction of profits donated.

The prize available to us all, if we rise to meet thiscall to arms, is huge. Our communities will bestronger and better resourced. Our companies willbe more sustainable and increasingly successful.And the UK will be well placed to lead the world ina new understanding of the role of companies incommunities.

Today, at the end of the LBG’s first decade, theglobal village feels a smaller and more fragile placethan in the early nineties, when optimism was stillhigh after the fall of the Berlin Wall and the releaseof Nelson Mandela. Whatever the challenges of thenext decade, companies will be centre stage, forgood or ill. I believe that effective communityinvolvement has a small but vitally important part toplay in building that more hopeful future. �

Where do we go from here?CLOSING THOUGHTS FROM MIKE TUFFREY


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For more information about:

LBG or LBG membership, pleasecontact:The Corporate Citizenship CompanyCottons Centre (Ground floor south)London Bridge CityLondon SE1 2QGTel: 020 7940 5610Fax: 020 7940 5619Email: [email protected]

LBG in the USA, please contact:Charles MooreCommittee to Encourage CorporatePhilanthropy10 Wall Street, Suite 2-1New York, NY 10005Tel: 001 212 825 1000Email: [email protected]

LBG in France, please contact:Jean Christophe CarrauCap Juby266 bd St Germain75007 ParisFranceTel: 00 33 1 45 50 29 53Email: [email protected]

LBG in Australia, please contact:Louise RedmondPositive Outcomes524-532 Parramatta Rd, PetershamNew South Wales 2049AustraliaTel: 00 61 2 9004 6452Email: [email protected]

CAF, please contact:Jenny Byers Charities Aid Foundation114/118 Southampton RowLondon WC1B 5AATel: 020 7400 2300www.ccinet.org

The PerCent Club, please contact:Caroline PeatBusiness in the Community137 Shepherdess Walk, London N1 7RQTel: 0870 600 2482www.bitc.org.uk

Among companies using the LBG model around the world:

Aetna

Altria Group

Applied Materials

Arthur J. Gallagher & Co.

Australia Post

Bank of America

BankOne

BHP Billiton

BMC Software

Bradford & Bingley

Bristol-Myers Squibb

British Airways

British American Tobacco

British Nuclear Fuels

BSkyB

BT

BUPA

Cable & Wireless

Cadbury Schweppes

Camelot Group

Carlson Companies

Centrica

Cheshire Building Society

ChevronTexaco

Cisco Systems

Citigroup

CMS Cameron McKenna

Colgate-Palmolive Company

Computer Associates

Consolidated Edison

Co-operative FinancialServices

Co-operative Group

Deloitte

Deloitte & Touche

Deutsche Bank

Diageo

Dover Corporation

Dresdner KleinwortWasserstein

DuPont

EDF Energy

Eli Lilly and Company

EMI Group

Ergon Energy

Ernst & Young

ExxonMobil

FleetBoston Financial

Freehills

Freshfields BruckhausDeringer

Friends Provident

Gap

General Electric

GlaxoSmithKline

Goldman Sachs

Halliburton

Hasbro

HBOS

Herbert Smith

HSBC

IBM Corporation

John Lewis Partnership

Johnson & Johnson

JPMorganChase

Kellogg's

KPMG

Levi Strauss

Lloyds TSB

Marks & Spencer

Marsh

McDonald’s

Merrill Lynch

mmO2

Morgan Stanley

National Australia Bank

Nestlé

Newmont Australia

NFU Mutual Insurance

Northern Rock

NRMA Insurance

Office Depot

Pearson

Pfizer

Powergen

PricewaterhouseCoopers

Procter & Gamble UK

Prudential

Reed Elsevier

Rio Tinto

Rolls-Royce

Royal & Sun Alliance

Royal Bank of ScotlandGroup

Royal Mail

RWE npower

SABMiller

SAFECO Corporation

J Sainsbury

Schering-Plough Corporation

Scottish & Newcastle

ScottishPower

Serco

Shell International

Standard Life

Starwood Hotels & ResortsWorldwide

Target Corporation

Telecom Italia

Tesco

Thames Water

The Body Shop

The Coca-Cola Company

The Home Depot

The McGraw-Hill Companies

The MONY Group

Thiess

Time Warner

Toyota Motor North America

Toys “R” Us

UBS

Unilever

United Technologies

United Utilities

UnumProvident

Verizon Communications

Vodafone Group andfoundations

Wachovia WashingtonMutual

Wells Fargo & Company

Whitbread

Woolworths Group

Wyeth Pharmaceuticals

Yell Group

Zurich Financial Services


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The LBG is a group of companieswho have developed, tested andnow implement the LBG model.The Group is managed on behalfof its members by The CorporateCitizenship Company.

www.lbg-online.net

We gratefully acknowledge the generous support of the sponsors ofthe LBG’s tenth anniversary celebration:

design www.redletterdesign.co.uk

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This report is printed on Look! paper,manufactured from wood fibre obtained fromsustainable forests. It is totally chlorine freeand fully recyclable and biodegradable. It isproduced to ISO 14001 certification.


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