The Coming-of-Age of Corporate Citizenship—A Practical Perspective

By Wendy Salomon, VP, Reputation Management & Public Affairs

The world and the marketplace have long moved beyond evaluating companies based solely on the quality of their products or the services they provide. Equally important to protecting and growing reputation are the relationships a company has with its environment, communities, employees, etc. The most successful companies have led the way in understanding that corporate reputation is a business asset that requires proactive management. Corporate citizenship and corporate social responsibility (CSR) are often at the heart of reputational equity and risk.

A strong corporate reputation clears the way for positive product brand stories to be heard. By contrast, no matter how pitch-perfect a brand value proposition may be, if there are reputational frictions in conversations about the company (if, that is, some call into question aspects of how the company engages with the world), that brand message will have a hard time cutting through the noise. Investment in initiatives that demonstrate, deliver and communicate corporate citizenship activities will unlock business value. A social responsibility strategy isn’t the only way to manage corporate reputation, but it is increasingly becoming a critical piece of the puzzle.

So, with corporate citizenship now a common phrase in America’s c-suites, on colorful posters in employee breakrooms, in podcasts sent off to investors and on websites studied by prospective hires, what next?

As we work across our client base, we see the evolution of corporate citizenship activities from “programs d’jour” to truly becoming part of a company’s DNA. Certainly, there are consumers everywhere who will question the authenticity of these activities, it seems to us that the skeptics are slowly dwindling. Here are the clues that suggest that CSR is maturing, and the indications that it will continue to be integrated into corporate priorities and behaviors.

• Companies invest in measuring what matters.
•     Corporations have moved beyond simply putting programs in place to drive corporate character. They need to take the logical next step of measuring the business impact of these programs. Lacking such measurement CSR programs will be seen as line-item expenses instead of drivers of business value. But as we see more and more companies actively measuring success, it becomes more straightforward to make the case that CSR activities protect reputation and shape the business landscape in a supportive way. We will continue to see increasing utilization and sophistication when it comes to measuring citizenship strategies—providing real metrics on reputational lift and risk mitigation.
•     Programs resonate with employees. For employees, these activities are often a critical piece of how they connect with the company. It fulfils fulfilled, offers them a chance to serve with colleagues in a new way and build their skills, and plays an important role in their function as brand ambassadors out in the world. We know that younger talent around the world—and therefore future executives—regard it as a priority that the company they work for is socially responsible. The importance of this can’t be overstated. There are many who seek to work in an exciting technology or start-up environment; fewer are excited to work in many “traditional” industries that desperately need creative talent to remain innovative. CSR activities are paving the way to attract and retain high potential hires, and provide a meaningful connection with current employees.
•     The stories are getting louder. You’d be surprised at how many companies used to opt not to talk about the impressive steps they take to be socially and environmentally responsible. There was a concern that it would be seen as opportunistic rather than sincere, or perhaps boastful. Today, however, it is more and more recognized by corporate communicators is that people make a proactive effort to learn about the way a company engages with the world before they decide to support it – whether that support be in the form of buying its products, working for it, or welcoming its expansion into their local community. Companies, therefore, are increasingly comfortable telling their citizenship stories more loudly.
•     We’ve moved beyond green. Over the past decade, CSR went through a period during which social responsibility was dominated by environmental issues. More recently, we have seen a broader mandate for corporate citizenship. This is fertile soil for companies of all shapes and sizes that do business in all different environments and industries. Looking ahead, we think this “bigger tent” of what it means to be a responsible company will continue to expand. So, we’re likely to hear more about economic impact, transparency and employee well-being as proof points for being a responsible company.
•     Org charts are evolving accordingly. When it comes to where CSR activities are driven within a company, is there a “sustainability” team, or “global citizenship” department? Is it primarily a marketing function charged with creating a glossy sustainability report? Or are responsible business imperatives decentralized and woven in across the company, giving it a voice in R&D, community outreach and hiring practices? Companies are all across the board right now, but we expect that a framework for responsible behavior will become a systemic presence. We’re likely to see fewer occasions in which companies opt to relegate CSR to a silo, fewer instances where it is an appendage on the org chart separate from where the ‘real work’ happens. We’ll see more and deeper integration.

Corporate social responsibility is not a “nice to have.” It has a real impact on corporate reputation and on risk mitigation, and can affect the company’s “license to operate.” There is a very clear business case for strategically-developed CSR activities, and companies that are not behaving accordingly are missing out on the degree to which being socially responsible builds reputational equity and real business value.