CFO perspectives on CSR

As I mentioned in my last post, I have CSR on my mind because of a conference I am speaking at in Berlin in a few weeks. In recent years, when people ask me if companies in the U.S. were CSR-mindful, I would often say absolutely yes. It seemed to me that American corporations had fully embraced the need for CSR initiatives and reporting in the same way that European companies had years earlier. As proof, I would cite research such as this: In 2013, 72% of S&P companies published sustainability reports compared to 53% in 2012 and 20% in 2011 (Governance & Accountability Institute). However, I do have to add that I had started to notice that the topic of corporate sustainability seemed to be plateauing -- still important but essentially table stakes at this point for most companies. I was not sure if I was right or if I was just noticing the tail end effect of the great recession here in the U.S. With this in mind, I came across an article in The Wall Street Journal that provided some missing clues to what I was sensing.

The WSJ article notes that if you ask European CFOs about investors' interest in sustainability issues, they would most likely say that they absolutely shape their company's communications around ESG (environmental, social and governance) strategies. They would add that European investors believe that if a company has solid ESG goals and actions in place, its financial results will also outperform over the long-term.  And to underscore the seriousness of CSR in the European Union, 500+ employee companies in Europe will be required to publish annual non-financial reports by 2017 that disclose company progress on sustainability, human rights, diversity in management and suppliers. "The planet typically trumps short-term profits."

The article also makes its point by highlighting a study done by Duke University's Fuqua School of Business that found that American CFOs were indeed less interested in CSR than their European counterparts. "Nearly half of U.S. chief financial officers rate CSR and sustainability as moderately important or very important items in their business strategies. By contrast, the rating in Europe is 63 percent, 67 percent in Asia, 76 percent in Latin America and 83 percent in Africa." Clearly, investors in the U.S. are not demanding that U.S. CFOs articulate their sustainability targets for the next 10 years or more American CFOs would be digging deep into their CSR storytelling. Instead, we can presume that U.S. investors are merely asking about quarterly results and not much else. 

Interesting counterpoints. 

Reputation drives corporate-NGO partnerships

A few interesting notes here on corporate responsibility perspectives that I came across this week:

1. When it comes to the reasoning behind corporate-NGO (non-governmental organization) partnerships, reputation and credibility leads the list for corporations while access to funds tops the list for NGOs as driving factors. For corporations, the second most important factor in what makes these partnerships work is achieving long-term stability and impact that while for NGOs, access to people and contacts is ranked second in importance. The two partners seem at odds when it comes to what they consider their ROI from these partnerships which surprised me. Understandably, each is getting something out of the partnership that the other dearly needs and which is nearly priceless. A jolt to your reputation is worth its weight in gold and access to funds is critical to NGOs who only thrive when they have support. However, despite these opposite points of views, the two organizations are quite confident that their strategic partnerships are meeting their objectives -- 93% of NGOs say they are very or quite confident in these unions and 89% of corporations say the same.  Another interesting fact from this study by C&E Advisory was that corporations are better at regular evaluations than NGOs. Nearly two-thirds of corporates (63%) measure their collaborations every year compared with only 40% of NGOs who say the same. 

2. An article in Ad Age this week by Paul Klein (founder of Impakt) says that CSR reports produce no value. "Why is something that is so inconsequential so well-resourced?" he asks. He suggests some ways to improve this deeply embedded trend in most corporations around the world. Who doesn't have a CSR report these days? He suggest that communities themselves become the authors of CSR reports and are given a chance to rate the companies themselves. Second, let advocacy groups have their say in company CSR reports since they seem to be the only ones reading them (his quote). And third, create an interactive portal where there is real time reporting and real time response. Sounds like CSR reports need their reputations tweaked.

3. I have reputation and CSR on my mind this weekend because I am getting ready to speak at a well-esteemed conference on Reputation and CSR at Humboldt University in Berlin. It is the sixth annual conference on corporate sustainability and responsibility. Looks like a terrific event.



Reputation recovery, an inch at a time

Thought that this comment summed up reputation recovery. In an article on the whole NFL issue and the Commissioner's press conference last week, someone said: "Football is a game of inches. And that is how the NFL can restore its reputation – one hard fought inch at a time."

Absolutely the truth. Reputation recovery is all about incremental steps to restoration.

Reading to lead

In a review of the McKinsey article on Management for the Next 50 Years, The Economist Schumpeter column had something particularly smart to say (as always).  Although they concede that machines can do a better job of data analysis and synthesis, they point out that executives can do some things better than machines. First, they can inspire and motivate employees and second, they can create "game-changing" ideas or valuable thought leadership. Then they quote Tom Peters, the author of In Search of Excellence and management guru, on the future of leadership. Peters said that the best future leaders will "spend half their time reading books." Hold that thought. It's a powerful idea. With all the data and information targeting us, no one can remember which way is up. The best way to learn and lead by reading is powerful. Because it is so hard to do and hard to find the time, it will be the answer to truly leading companies in the future. Machines can not do that for us.

Social Blogging for Fortune 500 Companies

There has been a lot lately about social CEOs and I have recently posted about the topic. Last night, I just had a chance to review the annual University of Massachusetts Dartmouth Center for Marketing Research study about how the Fortune 500 is using this not so new but ubiquitous medium and blogging, in particular. As the authors say, and I agree, "studying their adoption and use of social media blogs offers important insights into the future of commerce." The key findings are that Fortune 500 blogs are alive and well and serving as a means to promote thought leadership:

  • In 2014, 31% of the studied companies had corporate blogs, showing a slight decrease of 3% in use of this tool in the past year
  • In the 2011 Fortune 500 study, it called attention to the decline of blogging with only 23% hosting a public-facing corporate blog.  In 2012, there was a sizable increase to 28%. That surge surfaced again in 2013 showing 34% of these corporate behemoths creating and sharing content through blogs
  • The top 200 of the Fortune 500 are out-blogging the bottom 200  
  • These Fortune 500 blogs are for the most part (78%) are interactive, up-to-date, taking comments, offering RSS feeds and subscriptions. 

What is particularly interesting here is that corporate blogging is here to stay and has become a relevant means of content-sharing and thought leadership. It provides a smart delivery vehicle to talk about what a company stands for, what's on the minds of its customers, what its products and services can do and what's new and innovative in the field. And the authors agree that we might view this steadiness of corporate blogging as a signal to the marketplace that the time is ripe for thought leadership and in-depth content instead of short missives and pure promotional content that is less memorable. At Weber Shandwick, we see this in the high demand for Mediaco, a platform that helps companies publish and be their own media companies.

I see a surge in thought leadership being tied to the ongoing effectiveness of corporate blogging where ideas and insights can now be more easily shared with the general populace. And I believe that when companies blog on their websites or elsewhere, it leads to greater control over communications and their reputation. Companies can now join the conversation instead of just reacting to the conversation. Reputations have a better chance of stabilizing themselves when they have a hand in the dialogue. A good thing.