Corporate social responsibility is a good thing, not just for the environment, society, and the world at large, but for your company’s reputation. Companies that practice good corporate social responsibility stand to gain great value in reputation, including trust, more willing recommendations, a buffer against scandals and other reputation busters, as well as a greater likelihood for consumers to use their products and services. And as consumers, employees, and other stakeholders continue to place more importance on social and environmental causes, it will only become more important to develop a good corporate social responsibility reputation.
What Corporate Social Responsibility Is — And What it Isn’t
When companies go above and beyond what they’re expected to do environmentally or socially, they’re engaging in corporate social responsibility. While companies may be required by regulations to limit pollution or engage in certain human resources standards, companies that go the extra mile in this regard are practicing corporate social responsibility.
Examples of effective corporate social responsibility include:
- Reducing corporate carbon footprint
- Improving labor policies such as vacation time, parental leave, and/or working conditions
- Donating to or volunteering with charities
- Charitable giving, such as giving products to the needy
- Providing services to charitable causes
- Participating in environmental cleanups
- Changing corporate policies to develop greater efficiency and environmental savings
- Making investments that are socially and/or environmentally conscious
And while many corporations participate in corporate social responsibility to genuinely give back and use their considerable resources to have a positive impact on the world, there are some that engage in corporate social responsibility simply for the marketing benefits.
This disingenuous brand of “giving back” is what’s known as greenwashing. Rather than actually engaging in social or environmental improvements, corporations may simply spin their advertising and marketing to make it seem as if they’re doing a good thing.
Greenwashing takes many forms, but it could be, for example, a bank that’s “green” because they offer online banking (even though that’s been an industry standard for years), or an energy company touting its new clean technology — when 98% of their fuel is still dirty.
Greenwashing may fool some consumers, even temporarily, but ultimately, it’s a bad idea from a reputation standpoint. Authenticity is essential to building trust, and consumers who feel they’ve been misled by a company’s advertising will not trust or think highly of the organization.
Why Corporate Social Responsibility Matters
Corporate social responsibility matters to the world because companies typically have great resources to enact positive change. But beyond the satisfaction of knowing they’re making a positive impact, what’s in it for the companies? Quite a bit — and a lot of it has to do with building a great reputation.
An excellent corporate responsibility offers a number of benefits, but the most important of these is trust. Simply put, if a company does the right thing (environmentally, socially), then consumers feel they can trust them to do the right thing in all situations.
That’s why the Reputation Institute has found that with a higher corporate social responsibility ranking, more supportive consumer behaviors are delivered. With an excellent corporate social responsibility reputation, companies enjoy these benefits:
- 89% would recommend the company to others
- 91% would say something positive about the company
- 90% would trust the company to do the right thing
- 89% would buy the company’s products and/or services
These benefits require a serious commitment to corporate social responsibility, however. It’s clear that being average is simply not enough. For companies with an average corporate social responsibility score, less than half of consumers would take the same positive actions that most wouldn’t hesitate to take with companies that have an excellent corporate social responsibility score:
- 36% would recommend the company to others
- 38% would say something positive about the company
- 36% would trust the company to do the right thing
- 41% would buy the company’s products and/or services
Corporate Social Responsibility Offers Protection Against Most Scandals — And Builds Reliability
While building trust and positive recommendations from consumers, companies with good corporate social responsibility will also offer protection for their overall reputation. Research indicates that with strong corporate social responsibility comes a buffer against scandals and better resilience against negative actions or information. But perhaps more importantly, it creates a reputation of a reliable and honest company, which is valuable whether you’re facing scandals or not.
Research from the University of Dayton and Virginia Tech indicates that a good reputation for corporate social responsibility will give companies a buffer from scandal revelations.
The research looked at the reactions to firm choices in a stock option backdating scandal, and found that corporate social responsibility initiatives can serve as a buffer for companies against general wrong doings. However, there is one important caveat: any violations that occur specifically pertaining to governance elicit a more harsh reaction and are more harshly sanctioned, as they may be considered hypocritical.
Research from Boston University and Baruch College suggests that with good corporate social responsibility, companies can build a “reservoir of goodwill.” This goodwill will increase customer motivations to minimize any negative information they may be presented with.
Further research from the University of California, Berkeley finds that corporate social responsibility can essentially serve as reputation insurance, protecting firms against lost reputation even following adverse events.
The Berkeley team performed an analysis of stock price responses for S&P 500 companies after product recalls. The research found that firms with better corporate social responsibility ratings maintained better stock prices than firms that did not have a more positive corporate social responsibility rating. And ultimately, companies that are able to do good in an exceptional manner, as well as avoid harm, will suffer virtually no reputational damage following adverse events.
A Good Corporate Social Responsibility Reputation is Essential to Attracting the Best New Talent
Need another reason to develop a good reputation for corporate social responsibility? Think of your human resources department. Many employees will value a company with a good reputation, and especially one with a reputation for corporate social responsibility. Millenials in particular find it to be very important.
Giving back is good not just for making an impact and improving reputation and trust: it’s essential for recruitment and retention of top talent. Good corporate citizens often find that they are able to attract top talent, raise productivity, and keep employees engaged.
The Corporate Social Responsibility Rankings
In corporate social responsibility, it’s a good idea to look to the leaders to see who is doing well, as well as what they’re doing. The Reputation Institute publishes a number of annual rankings for reputation, including the Most Reputable Companies in the United States as well as the Corporate Social Responsibility RepTrak rankings. These rankings highlight the companies who are leading the pack with not just their reputation, but a reputation for doing good.
These companies top the list of the 2015 Most Reputable Companies in the United States:
- Fruit of the Loom
- Levi Strauss & Co
- Panera Bread
- Briggs & Statton
Citizenship, which means the company is a good corporate citizen, supporting good causes and protecting the environment, accounts for 14% of the Reputation Institute’s scoring in this ranking. Other factors including governance, workplace, innovation, performance, leadership, and products/services.
The leader of this ranking, Amazon, earned a reputation for good citizenship with a number of initiatives:
- Environmentally friendly packaging and packaging fedback
- Amazon Web Services research grants for climate change
- The Amazon Kaizen program, which encourages employees to implement environmental and energy initiatives to the company
- Sustainable building design at the Amazon corporate headquarters and selected other properties
These companies led the way on the Corporate Social Responsibility RepTrak rankings:
- The Walt Disney Company
According to the Reputation Institute, 89% of consumers are willing to recommend companies with excellent CSR RepTrak scores — but only 6% would recommend companies with poor scores.
Google earned the Reputation Institute’s highest CSR score, 72.7, by implementing the following reductions in environmental impact:
- Google data centers use less power, with 50% less energy than other comparable data centers
- Google contributes to renewable energy, committing more than $1 billion to renewable energy projects
- Google enables businesses to decrease their own environmental impact by using Gmail
Maximizing the Benefits of Corporate Social Responsibility
Many companies are doing a great job of realizing the benefits and maintaining a good repuation for corporate social responsibility and environmental support, but they could be doing more. Namely, many companies need to better communicate their performance to the general public. The Reputation Institute found that 51% of companies in the United States struggle to communicate their corporate social responsibility performance.
Sharing your company’s corporate social responsibility isn’t just a marketing ploy: it can have a positive ripple effect. Advertising your company’s good deeds can encourage consumers to see your corporate reputation in a more positive light while also sparking interest in social and environmental causes. Consider these ideas when choosing and marketing your efforts for corporate social responsibility:
- Align your efforts with your brand: When choosing initiatives for corporate social responsibility, consider those that work authentically with your established brand. For example, a health care company that provides medical care to children in need.
- Take a local focus: Global initiatives are needed, but don’t neglect what’s right in your backyard. Focusing on local initiatives can help to increase the relevance of your efforts for customers.
- Work on the long term: Take on initiatives that can make a difference not just for months, but for years.
- Be more interactive: Encourage word of mouth sharing with activities that are easy to interact with on social media. Activities that can be photographed and posted online, or video announcements that can be shared will be more readily accepted.
- Encourage further giving: You don’t have to do it alone. Ask consumers and other stakeholders to join you in your missing for giving. Allow them to contribute their time, money, and other resources to the causes and initiatives that you highlight.