Guest post by Kasper Nielsen, Executive Partner, Reputation Institute…
Companies spend millions of dollars every year on Corporate Social Responsibility. They invest in programs to support local communities. They give away products to support people in need. They invest in clean technology to lower their environmental footprint. They do cause marketing and donate money from sales. They engage their employees in non-profit work. Why? Because being part of the solution and taking on responsibility in society builds trust with key stakeholders. And trust is what is needed to create support from these stakeholders in the reputation economy. And CSR drives this trust. 42% of reputation is driven by perceptions of Citizenship, Governance, and Workplace.
Dimensions which fall into the CSR category. So CSR is not dead. It’s well alive as a business driver. But companies are not getting the return on investment they should.
Results from the 2012 CSR RepTrak™ 100 study show that only 35% of consumers across the 15 largest
economies in the world say that companies are “good corporate citizens that supports good causes and protects the environment.” And this is even a rating of the 100 best reputed companies in the world. Each of these RepTrak™ 100 companies spend millions every year on CSR activities. Yet 4% of consumers say that they are absolutely not to be trusted as good corporate citizens, and 60% are not sure. Only 6 of the RepTrak 100 companies are seen as strong and good corporate citizens.
Governance is another key element of CSR. Being perceived as open, honest and fair in the way they do business is a key contributor to trust and support. And here companies are also struggling. On the question of whether or not each one of the RepTrak™ 100 companies is “a responsibly-run company that behaves ethically and is open and transparent in its business dealings” only 40% say absolutely. No company is seen as excellent on this critical dimension and 78 out of 100 are seen as average.
And when it comes being seen as a company that is “an appealing place to work that treats its employees well” we see the same average results. Only 14 of the 100 companies has a strong position on Workplace and a full 61% say that they are not certain that these 100 companies delivers on expectations when it comes to treating their employees well.
Pretty depressing results when you spend millions of dollars a year on CSR programs and large scale campaigns telling how much you care and can be trusted as a friend of the family. So what is the problem?
According to Phil Mirvis a global expert on CSR companies still do not fully understand the real value from CSR. “Companies need to be more open and transparent about their citizenship, governance, and workplace activities. Smarter communication and reputation management are needed if they want to capitalize on their investments. Some of the largest companies still reply on a marketing approach. The last few Super Bowls, as an example, featured a new version of the Coke versus Pepsi challenge where they squared off about who could do a better job in raising funds for charity. Naturally, the adverts didn’t mention sugar, obesity, or environmental impact. It would only leave a bad taste. But that’s exactly the problem. Companies do not take on the core issues. And that leaves the impression of “green washing” which has left many to say that CSR is dead. I don’t think it is but companies need to step up and make CSR a strategic driver of business to make it work.”
Companies are mismanaging their CSR investments. It’s that simple. They do not apply the same rigor on these investments as they do on other core business priorities. They do not link it to their business strategy. But treat it like a separate initiative and investment. Companies need to reassess how to spend their money if they want to improve their return on investment. You don’t do CSR for the sake of CSR. You do CSR as part of your reputation management strategy to drive business growth, customer loyalty, and employee alignment. Only a few companies get it right. But those who do see the results.
Microsoft has the best perception for CSR in the world according to the 2012 CSR RepTrak™ 100 published by Forbes. It’s the company in the world that consumers across the 15 largest markers in the world see as best delivering within Citizenship, Workplace, and Governance. A remarkable result for a company that in the early 2000 was under attack for using its large market share to increase prices on consumes, pressuring out new competitors through unfair business practices. So how did Microsoft turn this perception around?
Dan Bross, Senior Director of Corporate Citizenship, Microsoft explains; “We recognize that public trust in corporations depends in large part on the basic aspects of business character: integrity, accountability, values, responsibility and transparency. A strong and steady core is the bedrock of both right action and good business. Over the past 15 years we have increased our engagement in public policy discussions that relate to our business, and now publish our public policy agenda every year to let everyone see what issues we are working on and how they impact our business. We regularly file reports that detail our advocacy activities in compliance with regulations and our commitment to transparency. Public disclosures on our political engagement are easily accessible on our Citizenship website, and include details on consultant fees, lobbying expenses and trade-association dues related to advocacy. Bottom line – we enhanced our commitment to accountability, strong corporate governance and transparency.”
So the conclusion is clear. CSR is not dead. It’s a valuable component in building trust and support from stakeholders. But companies need to take this more serious if they don’t want to waste their shareholders money. What are you doing to capitalize on your CSR investments?