Jul 292010

By Scott Henderson

Several months have passed since we gathered at the Smith School for the 2010 Social Enterprise Symposium and feasted on a variety of perspectives and ideas shared by presenters, panelist, and audience members alike.  One particularly profound perspective deserves further reflection and consideration.

In recent weeks, two separate op-eds ran in the Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2010/07/16/AR2010071604070.html) and Wall Street Journal deriding corporate social responsibility initiatives.  Both commentators framed their arguments around the maxim that corporations must place the creation of value for shareholders as its primary objective.  While Matthew Bishop and Michael Green (http://www.philanthrocapitalism.net/2010/07/is-csr-evil/) offered a solid rebuttal to the two critiques, something we learned at the Symposium needs to be included in this debate.

Stanley Litow’s keynote address about IBM’s decision to center their core strategy on corporate citizenship provided substantial proof on the prudence of corporate citizenship.  What was most compelling was his statement that IBM reaps a 3:1 return on investment for their corporate citizenship efforts.

By devoting their best and brightest minds to tackling some of the world’s most vexing issues, Litow claimed IBM can trace its ROI to five sources:

Talent – recruitment and retention of their knowledge-based workforce.

Investments – IBM has seen sizeable investments in its stock from Socially Responsible Investment Funds (SRIs) that account for $1 trillion in assets and must invest in socially responsible organizations.

Technology innovation – the world’s biggest problems require new solutions and breakthroughs, many of which IBM can use to solve similar problems for their paying clients and generating revenues from licenses and patents in the broader marketplace.

Brand – the major emphasis of their advertising and marketing campaigns center around their corporate citizenship efforts and helps them stand out from their competitors

New market entry – they have found much greater success in gaining entry into new countries and regions by leading with their corporate citizenship initiatives

The ability to generate $3 for every dollar invested in corporate citizenship initiatives is important and noteworthy.  Because it is IBM making the claim, we social entrepreneurs can take great comfort in their validation of the notion that doing good can translate into doing well.

What do you think? Is this noteworthy or not worthy?

Scott Henderson is managing principal of CauseShift, a team of strategists who help clients provoke, connect, and market. He has led shifts for a variety of organizations, including P&G, UNICEF, and wecanendthis.com, a yearlong, multi-partner initiative to spark innovation and engage more people in the cause of ending hunger in America. Scott is a regular keynote speaker and publisher of rallythecause.com.

Jul 012010

Yesterday I had the pleasure of “attending” (from the comforts of my desk) Engage CSR 2010: The Growth of Corporate Social Responsibility in a Socially Connected World, hosted by PR Newswire.  Bravo to the organizers for putting together a truly fantastic event!  The content was great, as were the conversations in the ‘exhibit hall’ and ‘networking lounge’ areas.  If you missed out, I highly recommend you check out the archived content, available for the next 90 days.

The conference centered around how companies are using digital media to communicate their corporate social responsibility to their myriad stakeholders.  Several panels looked at social media specifically as an accelerator of social change and its role in positioning brands as socially responsible.  One of the highlights for me, though, was a panel discussion on CSR and sustainability reporting that featured the viewpoints of Mike Wallace of GRI, Michael Muyot of CRD Analytics, Elaine Cohen of Beyond Business, Maggie Kohn of Merck, and Kevin Moss of BT.

Elaine Cohen shared her three keys to successful sustainability reporting, and what I’d like to focus on are the benefits to a company, both internal and external, shared by fellow panelist Maggie Kohn.  Why should a company–large or small–adopt a more rigorous approach to reporting?  What’s in it for them?

Internal Benefits of Reporting

You manage what you measure.  Simply put, if you know the results will be made public and you’ll be held accountable, you’re more likely to focus your attention on those areas.

It is a catalyst for internal evaluation and goal-setting.  There are so many areas that a company can report on, but the key is to focus on those that have the biggest impacts on society and the business.  The reporting process makes it easier to see what these key priorities should be.

It raises internal awareness for corporate responsibility.  For CSR to be truly embedded into a company, it needs the support of all business units.  Everyone needs to be on board with the concept of “creating long-term value for society and shareholders” — and no, these are not mutually exclusive.  Reporting (and the process behind it) can go a long way toward creating broad understanding inside a company.

It fosters a culture of transparency.  The pharmaceutical industry is built on trade secrets, Kohn said, so there was a lot of fear initially when the company began disclosing things like political contributions and payments made to physicians.  But ultimately, the increased transparency has in turn increased things like trust and credibility–which has reversed some of the negative public perceptions of the industry as a whole.

External Benefits of Reporting

It is a launching pad for dialogue. Merck can initiate conversations with stakeholders around the challenges they face.  Reporting provides that starting point.

It increases trust.  What happens after the conversations occur with stakeholders? Relationships develop, and over time, deepen.

It illustrates a company’s good work.  OK, finally–here it is…the public relations rationale for reporting.  Kohn said reports are a comprehensive repository of all the good works that a company is doing throughout the year, and this can be mined regularly by corporate communications for nuggets to share with stakeholders via different channels.

It reduces outside requests for information.  On a very tactical level, reporting reduces the number of surveys and questionnaires that companies must fill out, as the data is readily available on websites and in publications.

The Continuing Evolution

Sustainability/CSR reports have truly evolved since their early iterations, which were basically corporate communications’ literature that shed light only on the good being done.  Today’s reports are scrutinized by a much large variety of stakeholders (including investors, employees, shareholders, consumers and more).  The increasing adoption of GRI standards allow them to be easily compared and contrasted from company to company.  Companies like Merck and BT are now using the reporting process more as a performance management tool–engaging external advisory boards, providing more neutral assessments, and aligning sustainability reports more closely with annual reports.

It is now, as Cohen put it, “a delicate balance of transparency, process and PR.”