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Hughes blog post: Corporate social responsibility – Does it matter?

19 March 2014    

Yes – it matters.

How an organisation treats its employees, how it engages with local communities, and how ethical it is can make a big difference in how prospects and clients view that organisation.  It can often play a determining role in conducting business with that organisation or recommending the organisation to others in your network.

The CSR RepTrak® study released by the Reputation Institute suggests that there is a strong business case when it comes to Corporate Social Responsibility (CSR). Seventy-three per cent of consumers across the 15 largest markets in the world were willing to recommend companies that are perceived to be delivering on Corporate Social Responsibility. The problem is that only five per cent of companies are seen as delivering on these promises.

CSR initiatives globally are limited due to poor internal communication processes and external communication practices.

Professor CB Bhattacharya, from the European School of Management and Technology said “unfortunately, corporate responsibility is still equated to philanthropy in many organisations and hence, given short shrift when it comes to strategic formulation and implementation”.

Bruce Rogers from Forbes provided further context – “The problem lies in the lack of strategic integration. The biggest challenge is to integrate CSR practices into the strategy of the company and not treat it as an add-on.  To accomplish this, CSR officers need to have their voice heard, particularly in the C-suite and at the Board level”.

Many companies don’t have a solid communications management and implementation framework to tie their CSR actions to their strategy.  Without this internal communications framework, it can become very difficult to maintain a strong investment in CSR activities.

One company that has its CSR internal practices and external communications tied firmly to its strategy is Google. Google has been successful in building a perception of caring around the world.

“They are seen as a company that treats their people well. It ranks number one in the world in this dimension. The logic is that if you treat your own people well, you are an open, honest, and caring company,” Kasper Ulf Nielsen, executive partner at Reputation Institute said.

Director of Google Giving, Jacquelline Fuller, said Google believed in the power of technology.

“Giving back is a huge part of what motivates us as a company, and as individuals,” she said.

“We invest in social entrepreneurs who are using technology to crack the code on the world’s toughest problems. Last year we invested in tech-based efforts to expand access to clean water, stop wildlife poaching, prevent the horrible practice of human trafficking and reduce poverty worldwide.”

Between 2010 and 2013, Google donated more than $353 million in grants worldwide, and approximately $3 billion in free ads, apps and products.

There is a strong business case for CSR for any organisation, regardless of the size of their budget. It can have a direct impact on business performance. According to the CSR RepTrak® research, for every five points you improve your CSR perception on a 100 point scale, buyer recommendations will increase by nine per cent. This data should make even the biggest CSR sceptic take notice.

In a world where word-of-mouth is fast becoming the number one marketing tool, CSR is a key business driver that organisations should embrace. More effective internal communications practices aligning CSR to overarching corporate strategies, combined with a renewed focus in leveraging these activities, will see a major increase in the positive business outcomes being achieved.

View the 10 companies with the best CSR ranking.

- Jamie Hershman