And they’re doing so for good reason: Data on consumer
preferences, corporate
reputation and revenue
generation shows
that businesses with strong CSR programs can build deeper connections with
customers, employees and other key stakeholders.
Doing good is no longer the exception; it’s the expectation. But how companies
bring to bear their resources, and communicate and report CSR activities, is
constantly evolving. Here are some key trends we’ve seen in the last five years
(although some have earlier roots) as we’ve counseled our clients — from Fortune
10 to small B2B companies — on their CSR initiatives.
Focusing on purpose
US consumers are making decisions on where to shop, what to buy, where to work
and how to invest by looking at more than just financial performance. More and
more, these decisions are being made based on a company’s values and the actions
it takes to impact society. To be authentic, a company’s values and societal
impact must be purpose-driven. “Purpose” is the foundational motivation for why
a company exists. According to recent Accenture research, 42 percent of
consumers say they would stop using a
brand if they
disagreed with its words or actions on a social issue. That is a hit no brand
wants to take.
The rise of investor interest in ESG
In 2018, Larry Fink, CEO of
BlackRock
— the world’s largest asset manager — wrote, once again, about the importance of
CSR in his annual letter to
CEOs:
“To prosper over time, every company must not only deliver financial
performance, but also show how it makes a positive contribution to society.”
More and more investors are using not just financial data to assess companies.
They are turning to environmental, social and governance (ESG)
information
to decide which businesses to invest in. Driven by demand from pension funds
and
millennials,
a total of $12 trillion in professionally managed
assets in
the US are now invested according to ESG criteria — an increase of 38 percent
since 2016.
The business case for creating shared value
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The concept of shared
value, first
introduced in 2011, continues to be embraced by the business community. Prior to
this, it was bad form to integrate social and environmental considerations into
core business strategy. Businesses made money and then gave some away through
traditional philanthropy. Today, it’s understood that strategies and products
rooted in social consciousness can drive revenue growth and cost
savings. Fortune, one of the oldest names in business journalism, now
recognizes the top companies that simultaneously deliver for shareholders and
society on its Change the World list.
Taking a stance on social causes
Traditionally, companies and their leaders kept their distance from social
issues. In recent years, however, stakeholders have come to expect them to have
a point of view on contentious social topics. This growing trend of companies
and C-suite executives weighing in on social issues is unlikely to end anytime
soon;
consumers
and
employees
will continue to demand this kind of action. But in an age of political
polarization, speaking out can carry
risk.
Research has
shown that different issues evoke different degrees of controversy among the US
public. Every company needs to have a process in place to ensure that if and
when it weighs in, it stays true to its values.
Filling the government void
Increasingly, companies are not only speaking out on political issues but are
also acting to fill voids in government policy action on issues such as
climate change. When the current President announced in 2017 that the US
would withdraw from the Paris climate
accord,
more than 1,800 businesses of all sizes joined the We Are Still In
coalition. Similarly, a group of companies known
as the We Mean Business
coalition attended COP24 in
Poland last December to push for stronger international action on climate
change. We’ve also seen various other examples of companies taking on jobs that
government agencies typically do, such as Domino’s working to repair
roads and Kraft
feeding federal government
employees during
the most recent shutdown.
CSR will continue to evolve as societal needs and stakeholder expectations
change. America’s corporate leaders should keep a close eye on these trends to
ensure their companies are leading with purpose today, tomorrow and for years to
come.
Jessica Abensour and Alex Hahn co-lead the Corporate Responsibility and
Reputation Practice at VOX Global, a strategic
communications firm that supports CSR strategy, program development, reporting
and ESG risk management. This month, VOX Global was named to PRWeek’s CSR Agency
A-List for the fifth year in a row.
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Partner & Senior Vice President
Jessica is a Partner and SVP at Vox Global, a strategic communications firm.
Alex Hahn is a Senior Partner at Vox Global, a strategic communications firm.
Published Mar 15, 2019 7am EDT / 4am PDT / 11am GMT / 12pm CET