Optimizing Corporate Social Responsibility Efforts

Today, few large companies have the luxury of going about their business without regard to how the local, national or international communities feel about them.  As a result of globalization, the rise of non-governmental organizations (NGOs) and the growing awareness around environmental and political issues,  the public eye is now focused on how corporations, regardless of domicile, impact society and supports its values.  In response to this activism, a growing number of independent stakeholders, from NGOs to investment research firms, now formally measure firms in terms of how they impact their communities – aka Corporate Social Responsibility – on a list of social, governance, financial, environmental and political dimensions. Poor rankings, whether deserved or not, can often lead to bad publicity, falling share prices, employee discontent, poor recruiting or government intervention.   Clearly, how firms perform with regards to CSR has a bottom line impact.  

Not surprisingly, managing CSR has become a corporate priority for many companies, especially in “sensitive” sectors like Oil & Gas, Retail, Pharmaceuticals and Financial Services.  For example, many CSR budgets are in the millions of dollars as firms look to generate goodwill by supporting charities; audit their supply chains to ensure child labor law compliance or; reduce their carbon footprint through proactive “green” initiatives. In addition, many firms support significant CSR initiatives by encouraging employee involvement during work time. Finally, many employees and executives are naturally interested in CSR activities, seeing it as a tangible and important corporate manifestation of their own core values.

In many circles, however, corporate CSR efforts have gotten a bad wrap, tracing to:  a lack of integration with corporate strategy; a short term, public relations bias and; poor execution.  Moreover, there is a cynical perception that CSR programs are a nefarious form of corporate meddling or as a sop to interest groups, vocal employees and government. Fortunately, there are now best practices that can improve the effectiveness and efficiency of CSR efforts.

Like any major initiatives that cut across departments and stakeholder groups, astute firms have established clear CSR strategies to plan and manage their efforts.  Some of these steps include:

  1. Understand your CSR impact – Analyze and rank the dimension(s) of CSR that have the biggest negative (business & brand risk) and positive (brand-building, revenue) impact on your business.  Prioritize your CSR efforts against the most significant risk areas while leveraging CSR successes through marketing messages.
  2. Know where you stand – Benchmark your organization against key competitors and related firms across your relevant CSR dimensions.
  3. Develop a company-wide CSR strategy and message – Be clear, transparent and truthful about what you stand for, while ensuring all employees and functional groups are aligned. 
  4. Identify and communicate with key stakeholder groups – Maintaining honest and regular dialogue with the key research firms, NGOs, customers, suppliers and media contacts is critical to be seen as a proactive and supportive member of the community.
  5. Institutionalize CSR within the planning process – Consider CSR issues as part of the evaluation criteria for major initiatives and investments.
  6. Take a long view – Many CSR initiatives (e.g., increasing diversity in senior ranks) may take years to implement and should not be evaluated on the same time horizons or ROI criteria as other programs.

For more information on our services and work, please visit www.quantaconsulting.com


1 comment so far

  1. euandus on

    JPMorgan and Goldman bonuses and risk-taking (i.e., ignoring the society’s criticism regarding the financial crisis) may be a counterexample to the importance of CSR in business. I just posted on this example, in case you are interested.

    Nice post!

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