Despite the global economic downturn, a higher percentage of executives believe large corporations make a positive contribution to the public good, according to the fourth annual McKinsey survey on the role of business in society. Those executives also believe the financial crisis has increased the public’s expectations of business’s role in society.
Executives think environmental issues still command the most public attention but as a result of the crisis they expect executive compensation and companies’ political influence and involvement to gain increased prominence. However, the crisis has not changed their own long-term views on which issues will affect shareholder value the most: the environment (including climate change), companies’ political influence, healthcare and other employee benefits, executive compensation, and privacy and data security.
In last year’s survey, executives for the first time were more likely to view addressing social and political issues as an opportunity than as a risk. The 2009 survey supports their views: at companies with clear criteria about the business goals of their sociopolitical agendas, executives report a variety of business benefits, including access to new markets and improved operational and workforce efficiency.
The specific benefits depend on which issue is being addressed. Among the 87 percent of respondents whose companies are addressing environmental issues, for example, executives report an improvement in operational efficiency (cited by 53 percent), brand loyalty (48 percent), and access to new markets (39 percent). In contrast, among the 85 percent of executives who say their companies are addressing privacy and data security, the proportions reporting business benefits are much lower.
Improving reputation has long been the main business goal of engaging with sociopolitical issues. For the fourth year in a row, executives say the number one most effective action for improving their reputations is increasing transparency of business practices, at 50 percent of respondents this year.
However, executives seem increasingly dubious about the effectiveness of most practices. Compared with last year, a smaller proportion of respondents rated every practice—except limiting the growth of executive pay—as effective for improving reputation. The company says those responses may reflect the public’s overall reduced trust in businesses.
The crisis has also intensified traditional reasons to engage, such as meeting public expectations: 72 percent of executives say the public’s expectations of business have increased as a result of the crisis. Most report that their companies have maintained or increased engagement in social and political issues as a result of the financial crisis and the accompanying pressure from government and other stakeholders.