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Corporate Philanthropy & Volunteering Blog

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How Corporate Social Responsibility Alleviates Public Distrust

 

Corporate distrust is why CSR mattersWhile the Occupy Wall Street movement has cooled a bit, one thing hasn’t changed: public distrust of corporations is at an all-time high.  According to a poll taken last year by GfK Custom Research, a majority of Americans (64 percent) say it’s harder to trust corporations now than a few years ago.  Over half (55 percent) say that it will be tough for corporations to gain their trust in the future.  And among so-called “influencers,” corporate distrust stands at a whopping 74 percent.

This dismal impression is in keeping with the popular (more like unpopular) view of CEOs, the public face of corporations.  According to Edelman's most recent Trust Barometer, 2012 saw a massive decline in trust of CEOs.  On the other hand, trust in peers (regular folks like employees) dramatically increased, and for the fifth year in a row, NGOs are the most trusted institution in the world. 

Given this set of facts, what's a corporation to do? How can a perceived bully go from being hated to loved...or at least liked?

The answer, my dear Corp.: show you care about something besides yourself.  Get emotional, get involved, get responsible.

There's a name for this: corporate social responsibility, or CSR.  Of course this concept is nothing new, but given the stench that's fairly or unfairly associated with most companies these days, I thought that it was worthwhile to revisit the basics.

So here's your refresher, my business friends, in case you've been losing sight of it amidst the stormy economic weather.  Also known as sustainable responsible business, social performance and corporate citizenship, the basic idea is always the same. Corporations must act as contributing members of the community, with their responsibility to do so written right into their business plans. The concept of CSR recognizes what most of us already believe: a company's obligations aren’t only to its shareholders.

CSR takes many forms.  Corporate philanthropy, whether in the form of cash donations or corporate volunteering - especially pro-bono, skills-based work - is one excellent way of creating goodwill in a community.  The preponderance over the last few years of goods distributed via Fair Trade -- a market-driven movement promoting sustainability and aiding farmers in developing countries -- has become another way to demonstrate good corporate citizenship.  Creating Shared Value (CSV) is an approach to CSR that doesn’t view business and the community as separate entities at all; rather, this concept purports that the success of one’s business and the success of its community are interdependent.  Indeed, it’s hard to imagine a corporation that could thrive on a deserted island, isolated from any type of community. 

Lest we forget, CSR has bottom-line benefits for corporations.  Good corporate citizenship creates a corporate culture where altruism is just business as usual. This in turn creates a brand identity strongly associated with doing the right thing, which customers respond to with increased loyalty. Think about how Patagonia, The Body Shop and Ben & Jerry’s have carved their entire brand identities from their principled positions around ethical business and good corporate citizenship...and the dedicated following that has resulted.  And in the cutthroat race to hire top talent (even amidst a down economy), CSR is crucial; amongst Millenials, 92% want to work for a socially responsible company.   

Concrete economic benefits of CSR have been well documented.  A 2004 study, for example, found that companies with a brand reputation of corporate social responsibility were more profitable and able to mitigate public relations disasters better than companies that didn’t have strong CSR brands.  Average revenues and assets were higher amongst strong CSR brands, market capitalization was almost doubled, and stock portfolios increased almost twice as much.  Other studies show that 80% of the 250 most profitable companies globally filed CSR reports in 2008. A 2009 study showed that CSR was associated with an increase in return on assets of between 1.8 and 2.5%.  This lends credence to the idea that what is good for the community is good for the corporation.  

Some view CSR as anathema to the role of business in society - believing that profits themselves are a form of social responsibility.  I respectfully disagree.  At a time when corporate distrust is at an all time high, actions most definitely speak louder than words (and unmitigated greed).  Corporations can - and should, for their own sake if nothing else - choose to be a part of the solution rather than the problem.  In doing so, companies might find themselves more accepted, trusted and, in the best of all worlds, even admired.

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Comments

Great stuff. And the best way to do CSR is when you connect your philanthropy to your heart or your employees hearts. That way, you get great buy-in. Once employees buy-in, a company can do great things!
Posted @ Monday, July 23, 2012 8:13 AM by Susanne Dupes
That's very true Susanne... This is why the best corporate volunteering and workplace philanthropy programs are employee-driven. The company should feature nonprofits or causes that are aligned with its mission and areas they wish to focus on but the employees should play an active role in where the company spends its time and money. 
 
The best brand ambassadors are the employees and if you engage with them with what they care about, they'll be far more likely to engage with the corporation. That translates into public trust as the employees will spread the message to their friends and family. 
 
Posted @ Monday, July 23, 2012 10:53 AM by Ryan Scott
You are so right. 
Corporate fortune and good fortune for more , if not quite yet for all, are so interconnected that it strains credibility to maintain otherwise. In this electronic age, one’s view must be impractically narrow, geographically, and short, temporally, for corporate self-interest to recommend an approach which is counter to doing business doing good. Corporate self-interest, at least in the context of ecological sustainability, is moving toward consensus. Who still doubts that waste stream reduction equates to profit increase. Now, we need to do the same, but in the context of human sustainability, for communities and those who live in them. For companies that wish to persist, what’s good for the community is good for the bottom line and share price. We consumers have the power to make it so. With each consuming decision we reward the professional or company to which we give our business. We should make a conscious effort to give our business only to professionals and companies that are “doing business, doing good”.  
 
The conventional wisdom has been that it’s only “natural” for companies to think first about commerce and second about communities. After all, they are not humans. It’s our responsibility, as consumers, to help ourselves by helping those for-profit entities, large and small, to do the right thing. 
 
Fortunately, the internet and social media make it increasingly difficult to do great business and not also great things for the community. 
 
The wonderful lines from Best Marigold Hotel seem apt, in analogy – something like “Everything will be alright in the end. If it is not yet alright, it is not yet the end.” 
 
If we think that a community to which we do not directly belong has no meaning to us, we need to slightly adjust (improve) our perspective to discover otherwise, by either stepping back or waiting a while. The inter-relatedness will become evident. Chances are, if that community suffers, so too will ours. And, as they improve, it can not possibly be adverse to our more immediate concern. We are surprisingly interconnected – our communities to one another, and companies to our communities.  
Isn’t it great! 
Posted @ Sunday, August 05, 2012 6:50 PM by Michael Pink
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