By David Ortiz
Most major companies are increasingly focusing resources on their social responsibilities as corporate citizens. But many still lack active strategies to develop business opportunities that may arise from meeting these citizenship and sustainability needs.
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That was the message of a report The Conference Board recently published to help senior executives seize opportunities and avert risks stemming from corporate social responsibility issues.
“Reward Trumps Risk: How Business Perspectives on Corporate Citizenship and Sustainability Are Changing” makes the case that corporations can improve their long-term financial performance by tackling the environmental and social issues that will increasingly threaten their businesses in coming years.
“The market economy cannot be sustained in the 21st century unless its practitioners behave in a responsible way,” Reuters Chairman Niall FitzGerald said in a Nov. 9 panel discussion and debate of the topic, hosted in New York City by Reuters, in conjunction with The Conference Board and the Corporate Social Responsibility Initiative at Harvard University.
Protecting the environment, reducing harmful emissions, ensuring human rights and labor rights, and taking on the challenges posed by HIV/AIDS and the diminishing global supply of clean water are all necessary to ensure a healthy global market economy, FitzGerald said.
As an example, he recounted an initiative he spearheaded in the 1990s, when he was chairman and CEO of Unilever. The multinational corporation – then the world’s largest seller of frozen fish products – formed and funded the Marine Stewardship Council, an independent organization that certifies sustainable fisheries.
“As I put it at the time, ‘No fish, no fish fingers,’ ” Fitzgerald said. “And that was something which was critical to us as a business.
“Was it being responsible? Yes. But we wouldn’t have been able to get the leverage within our business for people to support that, unless they understood that it was part of our business being successful and sustainable.”
Consumers are increasingly aware of the role that corporations play as environmental and social stewards in an increasingly global economy, and increasingly are holding them accountable, Hasbro Inc. spokesman Wayne Charness said.
“The businesses of today and tomorrow are going to be judged by not only what they sell, but also how socially responsible they are,” Charness said.
But even though most chief executives and corporate directors do grasp the concept, integrating social responsibility into their businesses is a challenge for many, the report found.
Two-thirds of the 198 medium to large multinational companies surveyed said that corporate citizenship and sustainability issues are of growing importance to their businesses.
But 75 percent said the greatest challenge to their citizenship programs was measuring results; 58 percent said it was limited financial and staffing resources; and 57 percent said they couldn’t align such initiatives with their primary business objectives.
“If you’re making these decisions on purely a financial calculus, then sometimes it makes sense and sometimes it doesn’t,” said Lynda St. Clair, a management professor at Bryant University and co-editor of a 1997 book, “Corporate Global Citizenship: Doing Business in the Public Eye.”
“The problem you’re going to run into when you don’t have a company that has such a big chunk of the market,” St. Clair continued, “is what is referred to in economic terms as ‘the tragic of the common.’ Everybody would be better off if we would do these things, but nobody is willing to be the first person to step up and say, ‘We’re over-grazing this land’ or ‘I’m going to stop over-fishing this ocean,’ because you’re afraid your competitors won’t go along.”
In many cases, companies are increasing their citizenship efforts in response to external demands from consumers, their communities, governments and shareholders, according to the report.
Ninety-two percent of companies surveyed said that enhancing their corporate reputation and brand was an extremely important or very important internal driver of their corporate citizenship programs. Twenty-six percent counted managing corporate reputation and brand among their top three challenges.
Seventy-percent of those surveyed said their citizenship programs were most heavily influenced by their local communities, followed by customers and consumers at 65 percent, shareholders at 52 percent and governments at 51 percent.
Non-governmental organizations and the media – once important forces in spurring and shaping corporate social responsibility policies – ranked last, at 37 percent and 27 percent, respectively.
Blue Cross & Blue Shield of Rhode Island began a continuing effort to increase its corporate citizenship programs about two years ago, after a financial investigation of the insurer resulted in government intervention.
Blue Cross CEO James Purcell and his senior leadership team are currently developing a social responsibility strategy they hope to integrate into every aspect of the business, said Linda Newton, vice president of community relations for BCBSRI.
“It actually is good business for us, as a local nonprofit insurer, to not only do things that will maintain our financial stability,” Newton said. “But by our service to the community, we’re also ensuring our financial stability.”
