CSR & Brand Value: A more valuable brand is a by-product of CSR not its raison d’être

CSR & Brand Value: A more valuable brand is a by-product of CSR not its raison d’être

Without a doubt, the past decade has seen an increased private sector commitment to Corporate Social Responsibility (CSR) activities.  According to KPMG’s latest Corporate Sustainability report, 95% of the world’s 250 largest companies currently report on their sustainability initiatives.  The reasons why so many companies have stepped-up their CSR programs range from marketing incentives, to a moral rationale, to business leaders who have identified a strong business case for CSR. 

As a whole, the financial crisis further intensified the sustainability momentum also evident in the upsurge of CSR consulting firms, associations, reporting networks, and academic programs. For some businesses, the economic downturn of 2008 meant that budgets were tight and resources for CSR were the first to feel the economic slump. For many business leaders with an eye on long term growth and a grasp of the rapidly changing business environment, CSR became more relevant than ever.

 

From the Arab Spring To Occupy Wall Street

 As a result of the ongoing crisis, any previously existing public trust in the “market” has been badly damaged.  As we have seen from the Arab Spring protests, the Occupy Wall Street movement, and rallies across Europe and China, citizens around the world are standing up against what they see as political and economic injustices, issues closely linked with the private sector.  With the advent of social media tools and a world that is paying attention, the actions of private sector actors are up for scrutiny.
For many industries, this environment has enhanced the already lengthy portfolio of social risks, including environmental concerns, human rights, and public perception of hot button issues such as job security and transparency. In this day and age company CEOs are under pressure to deliver high profits, while complying with more government regulation, and increasing CSR activities.

 

 In the Eye of the Storm

One field which continues to be in the eye of the storm and will remain under close examination for years to come is the financial services industry. From hedge funds, to rating agencies, retail and investment banks, and the government bodies responsible for setting regulation and reporting requirements, hardly a day goes by without media coverage on the role of the financial industry in both the causes and recovery from the world’s economic woes. In an effort to protect their brand value, many of the world’s finance companies have allocated increased resources towards CSR-related branding. While this attention to sustainability issues is welcomed, companies must be cautious of substituting marketing campaigns for tangible CSR programs that are closely aligned with business objectives and the socio-economic reality of their operational environments. A more valuable brand should be a by-product of CSR activity, not its raison d’être.

 

In the Right Direction

Some examples of a shift in the right direction are small-business and microfinance programs, through which banks and other financial companies aim to support economic recovery by empowering local innovation and entrepreneurship.  Additionally, voluntary reporting bodies such as The Equator Principles Association, headed by some of the world’s largest banks, are under pressure to go further in disclosing social and environmental risk information pertaining to large scale investment projects.

One of the most important developments in this area is the newly launched International Integrated Reporting Council, which is developing a global Integrated Reporting (IR) framework that in essence combines the traditionally distinct annual and corporate sustainability reports. Once the framework is adopted, companies will measure and analyze social and environmental impacts on par with the financial data typically used by shareholders to evaluate company performance. While still in its testing phase, the initiative which recently announced the participation of 60+ industry giants from HSBC to Coca-Cola, is a significant development for the way businesses perceive their sustainability; financial, social, and environmental.

 "While attention To sustainability Is welcomed, companies must be cautious of substituting marketing campaigns for tangible CSR programs and strategies"

 

The hope is that as businesses begin to apply the same rigorous methodology for analyzing social and environmental impacts as they do for their financials, the resulting conclusions will be used to guide CSR goals from the starting point of business strategy. Likewise, CSR outputs will be measured using the same methodology used to asses all other business performance. As the nucleus of CSR initiatives moves away from communications departments and into the business development and accounting divisions, we will begin to see more economic activity where social and environmental progress is intertwined with a company’s brand and economic value.

 

SourceResponsible Business Magazine

 

 

Related

Tags

Categories

All, 2012

Share