3i has arguably one of the most evolved approaches to corporate social responsibility of any European private equity firm, partially reflecting its listed status, but also its roots in post-war community regeneration: 'Given our history, local community involvement has always been a natural part of the 3i culture,' says Patrick Dunne. 3i won the Investor Relations Society Best Practice Award in April 2007 and is listed as one of the 'Top 100 Companies that Count', which is Business In the Community's Corporate Responsibility Index. The BitC award recognised the firm's integration of CSR principals and related risk management processes into its core business.
The group's Corporate Responsibility Committee considers and reviews environmental, ethical and social issues relevant to the business and reports regularly to the board. The committee identifies and assesses the risks presented by social, ethical and environmental issues, using a risk-matrix methodology. The findings are recorded in a group-wide 'risk log', which monitors the management and mitigation of the risks identified, with significant issues reported at the Operational Risk Committee. In 2008, 3i also launched a dedicated CSR website to provide information on its processes and approach in this area (www.3icr.com).
The group's commitment to CSR extends beyond the 3i organisation to its 451-strong portfolio, with environmental, social and ethical matters considered during the investment decision-making process: 'Our investment papers have a CSR section, where we check off whether there are any social, ethical or environmental issues with the company. Where there are issues, we undertake full due diligence to investigate them. These days, it is commercially imperative for a business to address issues relating to CSR. When it comes to exit, if a business has some horrible governance, environmental or ethical issues, then it can't be sold. It is the commercial interest of the investment that these issues are addressed. CSR is simply good business practice,' says Patrick Dunne.
In terms of environmental sustainability, 3i measures the energy and resource used across its worldwide office network, setting targets for improvement. The group achieved a reduction in CO2 emissions associated with its office accommodation of 26.6% in the two years to March 2007, and aims to become carbon neutral over the next three years, to March 2010. The group's procurement policies also favour suppliers that can demonstrate clear environmental advantages. Its performance in the area of sustainability is measured against the Dow Jones Sustainability World Index, which tracks the financial performance of leading companies in terms of corporate sustainability and of which 3i is a constituent.
3i's charitable activities reflect the group's community-based culture, backing initiatives such as Bridges Community Ventures (see case study, page 55), The Passage, a homeless charity operating in the vicinity of the Group's Victoria Office, and Business in the Community, which is a group of 800 UK companies that are committed to improving their positive impact on society. 3i has sought to institute its charitable programme across all levels of the organisation through its Give As You Earn scheme, which matches the donations given by UK staff and the proceeds of staff fundraising efforts.
As a founding sponsor of the European Venture Philanthropy Association, 3i's approach to its charity work shares many of the principles associated with the venture philanthropy model. It takes a longer-term commitment providing resource and skills, alongside capital, and supports the building of strong management capabilities in the charities it works with. It is over 30 years ago that 3i founded 'Business Dynamics', which is part of 'The Enterprise Education Trust', and seeks to introduce young people to the opportunities and challenges of business and improve their skills. Today almost 100,000 school children go through its programmes. "On top of providing funding every year since formation, we have helped with branding and networking; a number of 3i people were involved." says Patrick Dunne. Similarly, the group is involved with 'In Kind Direct' which re-distributes products donated by manufacturers and retailers to third sector organisation; according to Patrick Dunne, 3i's involvement is far from arms-length, "'we have a guy from 3i on the fundraising committee; we helped them build their website and we provide support and strategic input."
Finally, many of 3i's team are trustees or chairman of charities. Dunne for example is Chairman of Leap Confronting conflict, the UK's leading organisation in helping young people deal with conflict. "Working with CEO's to grow their organisations is natural for us and Leap's CEO has recently gained a tremendous amount from taking part in 'INSEAD Social Entrepreneurship Programme': 'There is a strong investment mentality in the private equity industry, and this includes backing talented individuals. So investing in leadership and backing vision and ambition forms part of this." Patrick Dunne.
