Whether it’s in Super Bowl ads or annual financial reports, employee communications or job interviews, companies big and small are talking about how they’re working to address societal challenges.
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
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.