Corporate Reputation Findings Show CSR Isn't Dead, Just Mismanaged

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The Reputation Institute held a webinar early December on its 2012 Global RepTrak 100 poll to announce which global companies earned “The Best CSR Reputation in the World.” While this was surely a celebratory event—featuring a nice holiday gift for the winners!—the topic under discussion was a potential downer: “Is CSR dead or just mismanaged?”

Why the gloom? There was evidence aplenty in the RepTrak poll that it has been a bad CSR year for the world’s 100 best-known global companies.[1]  Here are some of the depressing findings (based on consumer ratings of individual companies):

  • Only 35% believe these companies are good corporate citizens that support good causes and protect the environment
  • Only 36% believe these companies are appealing places to work that treat employees well
  • Only 40% believe these are responsibly run companies that behave ethically and are open and transparent in their business dealings

Moreover, the majority of consumers in each of 15 countries sampled are neutral or not sure if the rated companies can be trusted to deliver on their Citizenship, Governance, and Workplace responsibilities. 

So, is CSR dead or just mismanaged? Cheer up; these aren’t the only two options….

The Best CSR Reputations in 2012

Mirvis joined Kasper Ulf Neilsen, Reputation Institute’s Executive Partner, and Dan Bross, Senior Director of Corporate Citizenship at the global winner, Microsoft, to reflect on the findings and opine on CSR’s death versus mismanagement.     

First off, why is Microsoft is #1 around the world? Our blog raised questions back in 2010 about whether or not this was a Bill Gates “halo effect” when the former “Evil Empire” came out tops in CSR among the US public. But we have learned since that Microsoft deploys an array of technology, training programs, and talented employees to educate youth and reduce the digital divide around the world. It is now also a global leader in responsible corporate governance and publishes employee survey data in its annual social report along with details on the diversity of its workforce overall and in executive ranks. This kind of self-disclosure models transparency and lets the public judge whether or not Microsoft treats its employees fairly and well. Why don’t other companies share this inside look?

Who else has a great CSR reputation with the world’s public? Google, Disney, and the German car makers BMW, Daimler, and VW.  Frankly, a close look at these companies’ websites reveals that there’s nothing truly eye-popping about their CSR performance. The public seems to be thinking like smart investors: Well-managed companies treat their employees well, run their operations responsibly, and care about communities and the planet.  They treat CSR as good business and they run their businesses well!

And then there’s Apple which remains a leader but dropped two points this year in the global CSR rankings.  As noted in a prior blog, there is no halo-effect surrounding the late-Steve Jobs as a philanthropist (he shut down Apple’s corporate foundation) and in the past year the firm has been rocked by evidence of employee exploitation in its Foxconn supplier plant in China. However, new Apple CEO Tim Cook has seemingly made it a top priority to clean things up in the supply chain and the company remains a great place to work. 

Dead or Mismanaged?

When you look beyond the winners, however, the vast majority of companies are rated as “average” by the world’s public on their Citizenship, Governance, and Workplace performance. Does this really matter?  Here the RepTrak poll finds that consumers are far more likely to buy products from top CSR performers versus average ones (64% versus 41%), to welcome them into their communities (50% to 39%), and also to want to work for and invest in them. Woe to the “below average” performers on these counts.

How about claims that CSR is dead? The panelists found two factors killing CSR. On the one side, CSR is being given a “bad reputation” by companies that claim to be socially responsible by ballyhooing their charity, trumpeting their cause-marketing and engaging in greenwashing— all the while performing “average” or worse in how they run their businesses. On these counts, RI finds that only 16.6% of the public definitely trusts what companies promise in their advertising and marketing.  

On the other side, company executives admit that they are not delivering on the promise of CSR inside their companies. Studies find that upwards of 60% of CEOs worldwide say that there is a significant “gap” between what their companies say versus do about CSR. The reasons for the gap? Other priorities compete; business units are not aligned behind CSR objectives; and there’s no real financial payoff to CSR anyway. 

Stated another way, mismanagement is also killing CSR.

To Win with CSR:  Add Product Passion and Innovation

Nearly everyone, everywhere who writes or talks about CSR says that leaders should do more to “embed” CSR in their companies. Who could disagree?  This reduces “gaps” and delivers better performance. But what does embedding mean? Typically it translates into getting CSR into company strategy, goal setting, measurement, accountability, and such—to the point where CSR is “managed” just like every other business process or practice.

Sorry, that’s now how you win a great reputation for CSR. 

Companies like Microsoft, Google, Disney, the leading German car makers, and the like don’t just “manage” their businesses.  They have passion about their products and they excel at innovation.  A key takeaway from the RepTrak 2012 poll is that companies that earn “The Best CSR Reputation in the World” also stand out with top marks for their products and for their innovation.  The message is that if you want to earn the world’s best reputation for CSR, you also have to embed it in product design, development, and delivery and surely in how, where, and what you innovate.

If CSR takes this shape in companies in 2013, our then year-end blog will likely be “CSR is Dead, Long Live CSR.”

 


[1] Reputation Institute’s RepTrack poll measures how the general public in 15 countries rates well-known global businesses.  The annual poll measures three distinct aspects of CSR: citizenship (the company acts responsibly, supports causes, and protects the environment), workplace (creates appealing environment and treats employees well), and governance (practices ethics, openness and transparency). 

  

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