Companies Failing to Communicate CSR Leadership
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Holmes Report

Companies Failing to Communicate CSR Leadership

Many companies continue to regard corporate social responsibility primarily as a way of defending themselves against external attacks. But if they do, they are missing an opportunity to position themselves as industry leaders and gain competitive advantage.

Paul Holmes

Many companies continue to regard corporate social responsibility primarily as a way of defending themselves against external attacks. But if they do, they are missing an opportunity to position themselves as industry leaders and gain competitive advantage, according to a new study conducted by international public affairs firm APCO Worldwide.

The survey also suggests that companies are failing to communicate their CSR activities with sufficient zeal, and failing to forge the alliances with third parties that could add much-needed credibility to their CSR initiatives.

APCO conducted the survey using a 10-country “opinion elite” panel, including a representative sample of individuals from among the top 10 percent of the population in each country terms of their media consumption, interest in public policy, and civic participation.

One of the most interesting findings was that positive CSR news has a greater impact on the behavior of these opinion elites than negative news. Three-quarters of the respondents to the survey said they had been motivated to by a company’s products or services in response to positive news about the company’s social responsibility.

The survey indicates CSR information is more likely to affect consumer decisions than investment decisions. Still, 14 percent of opinion elites say they have purchased shares of a company’s stock in response to positive CSR information, and a similar proportion (12 percent) have sold shares in response to negative news.

While 60 percent of opinion elites say they have boycotted products or services in response to negative news about a company’s social responsibility, the potential for positive benefits from social responsibility clearly suggests that companies should approach CSR proactively and strive for leadership, rather than reacting defensively to pressure from outside organizations.

Further evidence for the power of proactivity was provided when opinion leaders were asked whether companies could call themselves socially responsible if they complied with laws and regulations, or whether they had to do more than the law required in order to be considered genuinely responsible. Only 25 percent felt that compliance was sufficient.

Companies also need to be more proactive in communicating their CSR activities. While some companies still find it unseemly to brag about their good deeds, there’s evidence that opinion leaders are listening for and receptive to information about corporate social responsibility, and currently do not feel particularly well informed. Only 9 percent said they knew “a lot” about corporate social responsibility activities, while 56 percent knew “some,” 31 percent knew “not much” and 3 percent knew “nothing at all.”

Further evidence that companies need to do more can be found in the answers to a question about whether companies have become more socially responsible in recent years. Only 4 percent felt companies were much more responsible, while 45 percent felt they were somewhat more responsible. But 27 percent felt companies had become somewhat less responsible, and 16 percent felt companies were now much less responsible than they were a few years ago. The remaining 9 percent saw no change.

To raise visibility and gain credibility, companies would do well to partner with independent third-party organizations. More than a third (35 percent) of respondents felt that third-party verification of CSR activities made those activities much more credible, and another 56 percent felt third-party involvement made CST initiatives somewhat more credible. Only 10 percent felt an NGO or government endorsement made no difference or made CSR less credible.

When asked how companies could make their CSR more credible, 90 percent said partnering with NGOs or local government agencies would help demonstrate a serious commitment to CSR and 86 percent felt third-party verification of environmental or social reporting was important, compared to 81 percent who cited awards and 77 percent who felt it was important to be included in socially responsible investment listings.

Finally, opinion leaders clearly believe there is a business case for social responsibility. Opinion elites believe companies act in a socially responsible way because it is a business interest, not simply a reaction to stakeholder pressure. Sixty percent of respondents said CSR is in a company’s own interest, while 40 percent felt CSR was needed primarily to address stakeholder concerns. (Not surprisingly, opinion elites in North America are more inclined than opinion elites in other regions to credit external stakeholder pressure as the impetus for CSR.)

The greatest forces perceived to drive positive change in the social responsibility of companies tend to be external, and punitive: media, government regulations and lawsuits. But internal stakeholders also make important contributions to encouraging positive change in social responsibility. While 85 percent say the media have played an important role in encouraging companies to become more responsible, almost as many (79 percent) cite the importance of employees. Other major motivators include government (cited by 78 percent of respondents); lawsuits (77 percent); business partners (76 percent); and NGOs and activist groups (71 percent).

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