November 25th, 2009

In CSR, Dialogue and Substance Each Inform the Other

Just read an outstanding article on corporate social responsibility at Forbes.com.  C. B. Bhattacharya, a distinguished professor at the European School of Management and Technology and Boston University, really hits some important CSR insights spot on.

Despite CSR’s increasing importance in board rooms and among C-level executives, they often “don’t understand the most effective ways to design and implement sustainability programs,” Bhattacharya says.  As a result, “they can’t fully capitalize on the potential [CSR] has for creating business value, and they are achieving little with it despite all their interest,” he adds.

So far, most businesses have focused on the “low-hanging fruit” of CSR.  They have focused on easy-win strategies or activities with direct commercial benefits, such as energy-efficiency initiatives.  This misses the bigger picture.

What Bhattacharya says he is slowly starting to see is a “second wave of corporate responsibility behavior marked by a clearer focus on the total business value such policies can bring.”  “To fully benefit from corporate responsibility, businesses . . . must start by seeing where and how key stakeholders react to a firm’s corporate responsibility initiatives,” which “involves moving away from a top-down strategy determined by the board to a richer process of bottom-up co-creation with stakeholders.” [emphasis added]

Bhattacharya then talks about using focus groups and “other marketing research techniques to understand the deeper psychological needs that corporate responsibility can answer for stakeholders, such as the self-esteem and pride that a consumer can draw from affiliating with a socially responsible company.”  I’m surprised he doesn’t mention social media in this regard, which my firm now considers one of the most powerful such tools for understanding and learning from target audiences.

Bhattacharya cites research involving Procter & Gamble, General Mills and Timberland (without specifying a source) that revealed that many of their stakeholders had no idea of the companies’ corporate responsibility initiatives, or had a very limited understanding.  This is consistent with another recent study by Grail Research that we describe in our last blog post.

Now, he says, those companies have been able to build stronger connections with their stakeholders by including active participation and engagement in their initiatives. This “stakeholder-centric approach has brought them observable improvements in corporate responsibility return, such as increased customer and employee loyalty.”

This fits in precisely with an approach I’m outlining in a white paper we’ll be releasing soon, which lists the most effective ways to design and implement sustainability programs in order of priority, starting with stakeholder engagement.  We believe that the dialogue with stakeholders and the substance of the CSR program each informs the other.

The approach Bhattacharya describes in his article and our forthcoming white paper both look at CSR as a more systemic process for creating business value over time.  We believe, as does he apparently, that this process best starts by co-creating solutions with all stakeholders.  We see sustainability as so broad and complex in scope that crowd sourcing is a must in solving our most intractable problems, while remaining prosperous.

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November 21st, 2009

CSR stakeholder differences cited in new report

The BCCC blog recently described a new Global Education Research Network (GERN) report that reveals how stakeholder groups differ around the world, and the need to balance the variation at the local level with interests shared globally. The GERN is a network of 12 global institutions, including the Boston College Center, focused on responsible business working together.

Key findings include:

• Many stakeholders — especially employees and consumers — are “on the fence” due to a lack of awareness about corporate citizenship and weak social movements advancing these issues.
• Government is the most powerful and positive force for corporate citizenship globally.
• Mainstream investors do not yet appreciate or understand the financial value of corporate citizenship.
• Developing countries differ from developed countries in the influence of certain stakeholder groups such as socially responsible investors and ethical consumers.

The nine countries examined are: Chile, China, Germany, Italy, Mexico, the Philippines, South Africa, United Kingdom and United States.  The report provides country-specific analysis of the levers of influence used by groups as diverse as government, investors, nongovernmental organizations, labor, media and consumers.

You can download the report for free (registration required).

Posted by perry
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