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  • August-8-2019

Why CSR's Future Matters to Your Company

More and more, companies are developing long-term commitments to corporate social responsibility (CSR). In 2012 the rise in consumer activism and movement, the Occupy movement, 24-hour accountability (thanks to social media), and global resource reduction will force every enterprise, large and small, to make CSR a focal point. Four distinct areas stand out among many.

Employee Engagement: There will be a continued hike in employee-engagement programs. If the economy continues to falter, we will see more businesses supporting NGOs and nonprofits via employee missionary programs, rather than just writing checks. A recent sustainability study by Green Research found that 80% of larger corporations are preparing to spend significantly in employee engagement in 2012. According to Gallup, 86% of involved employees say they very often feel happy at work, compared to 11% of the disengaged. Additionally, companies with the highest levels of employee commitment saw increases in their bottom line: On average they increased 19.2% in operating income, while companies with lower levels decreased by 32.7% (Towers Watson). Engaged organizations also accumulated profits as much as three times faster than their competitors. The Corporate Leadership Council reports that deeply engaged organizations have the potential to decrease staff turnover by 87% and improve performance by 20%.

Cause-Marketing: Cause-marketing programs will double. These programs are designed when a for-profit and nonprofit partner to drive revenues, exposure, and fundraising dollars to the non-profit's cause. Why will these plans continue to appeal to corporations this year? Cause-marketing provides businesses with legitimacy, along with a partner that has subject expertise. If done authentically, such plans can enhance a firm's reputation in the eyes of stakeholders, driving to the public good, the viral dissemination of information and potentially increased revenues. Marketing experts agree. According to a PRWeek/Barkley PR Cause Survey in 2010, two-thirds of brands now interlock in cause marketing, up from 58% in 2009. The same survey found that 97% of marketing executives believe this to be a strong business strategy.

The Skeptical Consumer: As social media stages proceed to grow beyond their pre-teen years (Twitter was only being used by 12-14 per cent of the population in early 2011), consumers will demand more clarity from corporations and nonprofits. My firm, Fenton, along with GlobeScan carried a survey this year, and one of the most telling insights was the call for nonprofits and NGOs to contract immediately with their donors and stakeholders. Additionally, smarter customers now have online tools (BrandKarma, GoodGuide, Positive Luxury, and more) to assist them to interact instantly with businesses, track corporate practices, and give their demands in real-time with marketers. Those companies and nonprofits that invest in involving such customers will reap benefits.

Board-Level Involvement: With regards to board oversight in CSR, the informed investor assesses risk, return potential and financial performance while incorporating environmental, social and governance into his/her review. According to Fay Feeney, CEO of Risk for Good, "Boardrooms will see CSR concerns presented to them in many forms: reputations risks, ESG proxy, political spending, hydraulic fracturing, natural resource supervision, supply chain, board diversity and many more. Those boards that close the focus gap on CSR will bring vital insights to their CEOs."

In 2011, The National Association of Corporate Directors (NACD) Public Company Governance Survey asked about the most important priorities for the board. The most essential priority at 72% was strategic planning and preparation and amongst the lowest was CSR at 2%. The data implies that boards will be playing catch up in 2012 on CSR as it is integrated into strategic planning.

Also, 2012 will see some CSR problems that became part of the mainstream conversation in 2011 escalate in interest. For example, we'll see an enhanced focus on conflict minerals, as global smart phone sales continue to grow exponentially and the expected passing of the Dodd-Frank Act, which demands publicly-traded companies to disclose where their minerals come from. Additionally, given the complexity of global supply chains, we'll witness continued discussion around the prevention of human trafficking and slavery intersection. There will surely be further discussion, debate and action on these contentious topics.

Twenty years ago, CSR was confined to corporate philanthropy and for some businesses, the adherence to environmental law. What we see today is a far more complex picture and an ever-widening stakeholder world. I predict that within the next few years, CSR will be a must for all businesses and will positively affect their bottom lines. A good market will be the norm.

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