In the mid-1990s, a financial technology executive I knew told me that he couldn’t see how the worldwide web would be anything more than a marketing tool. He was, of course, dead wrong. No need to go into all the ways in which the internet has changed our lives and the trillions of dollars in commerce it has created or enabled.
Now hear this—and hear it loud: in 2019 corporate social responsibility (CSR) is like the worldwide web in the 1990s. It is much more than a marketing program, and it is sparking a revolution. Smart companies will get on board now.
CSR is More Than another Box to Check
CSR is the umbrella under which companies enact sustainable practices, whether environmental, social, or governance-related (ESG). To some, CSR has indeed been little more than a marketing moniker used to appeal to those who want to do good in the world — a box checked for good corporate citizenship. But social responsibility should be more than just hanging out a sign, or checking a box. Done right it goes deep into operations, supply chains, partnerships, and management policies. It engenders sophisticated strategies and welcomes collaborations. It is within these depths where the CSR gold is buried, and progressive business leaders know there is a treasure trove of it.
Larry Fink, the chief executive of the world’s largest asset manager, Blackrock, with more than $6 trillion under management, proclaims, “Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.” He says ESG investment will comprise the majority of Blackrock’s holdings in the future.
The largest pension funds in the world are likewise demanding more of the companies in which they invest. Banks are being leaned on to incorporate climate change risk in their lending and underwriting processes. Individual investors and consumers are also putting their purchasing power to work and are interacting more with sustainable brands that share their values.
In sum, there is a lot of pressure on companies across nearly all sectors to do the right thing to produce both financial and social returns.
Meeting the Challenge
To be sure, many companies are stepping up to the challenge. More than 12,000 companies have become members of the United Nations Global Compact, pledging to commit to universal sustainability principles and to take steps to support UN goals. More than 1,800 investment managers are signatories of the Principles for Responsible Investment that incorporate ESG values into investment practices. The majority of companies in the S&P 500 now issue regular CSR reports. And there are designations such as Benefit Corporations (B Corps.) that require members to enact sustainable business policies, as well hundreds of other, separate protocols that attest to environmental and ethical mandates.
Navigating these standards is no easy feat. For example, in the fashion and apparel sector, there are more than 600 eco labels that could be adopted, running the gamut from signifying the use of fair trade textiles to fair labor working conditions. So which labels are worthwhile and which are useless? Which principles mitigate risk? Which protocols breed partnerships and position a company for success?
Put Names to the Numbers
There are many fine CSR executives who can weed through the details and undertake programs that produce more loyal customers, happier employees, more productive managers, accelerate revenues, increase stock alpha, and lower beta. Still, capturing good data, performing stringent analysis and generally doing the right thing often ends up in a black hole. All too often CSR messaging is high on numbers and falls short on stories and proper, targeted dissemination. CSR programs can serve marketing and public relations campaigns with unique fodder: there are names behind the numbers—exhilarating stories of hope and change. Corporate accomplishments of this nature ought to celebrated, every step of the way. This isn’t a purely self-serving PR exercise for companies. There is a giant need for role model examples and experiences that others can look to for inspiration and guidance. By celebrating successes, others can join in and achieve more, too. (And seriously prosperous partnerships are born.) Communicating CSR in the right way fosters the type of impact that is needed to effect true change. A communication strategy that addresses internal and external issues and brings more people and companies into relationships, is something that should be embedded into every serious CSR program.
In future posts, I will delve into the proven, driving factors for success and share examples and case studies. Meanwhile, if any of the above has sparked questions or piqued interest, please comment below or drop me a line at firstname.lastname@example.org. I’d welcome connecting directly.