CSR: Good for Business

Many organizations have treated CSR as a public-relations exercise or an easy way to attract positive attention with customers or the general public. However, when done thoughtfully, CSR becomes an essential part of a company’s reputation strategy and goes well beyond the tactics of public relations or marketing. For example, a Reputation Institute study suggests the public’s willingness to buy, recommend, work for and ...
CSR: Good for Business
Greg Draper, MNP LLP

Many organizations have treated CSR as a public-relations exercise or an easy way to attract positive attention with customers or the general public. However, when done thoughtfully, CSR becomes an essential part of a company’s reputation strategy and goes well beyond the tactics of public relations or marketing.

For example, a Reputation Institute study suggests the public’s willingness to buy, recommend, work for and invest in a company is driven 60 per cent by perceptions of the company or its reputation and only 40 per cent by perceptions of the products or services that the organization sells. While quality is obviously important, it’s no longer the biggest driver to the public
or investors. Furthermore, 59 per cent of consumers would go out of their way to communicate something positive about a company when they are seen as being good corporate citizens compared to only 23 per cent of companies perceived to be weak in this area.

Once thought by many to be a passing trend, CSR has become an essential part of companies’ internal and external policies in the face of shifting public and business opinion. According to a
2013 Cone Communications / Echo Global CSR Study, nearly 60 per cent of people polled said companies and organizations needed to go beyond economic value and invest in broader social gains.

Today, companies that avoid having a CSR policy in place risk serious damage to their reputation. A damaged reputation becomes a metric that matters on the balance sheet, and therefore it’s a metric that gets in the way of companies sustaining themselves as enterprises into the future. This is a sign that having and acting on a CSR policy is no longer an option, but a requirement for business.

Transparency Is Key
Companies that are transparent, open and honest will have an enhanced reputation. This is an important distinction for companies that think reputation is strictly based on how good their products are, how strong their leadership team is or how economically successful they have been in the marketplace. As social mores and media evolve, businesses must create better dialogue with customers, partners and employees. In fact, transparency and dialogue are critical to the foundation of a company’s reputation with both internal and external audiences.

Taking time to understand and determine how stakeholders want to be informed and engaged is worth the investment. When a company is transparent, engages stakeholders and establishes trust through good stewardship, it is more likely to have earned the longstanding reputation and brand equity to help weather a tough issue, company misstep or a crisis when and if it happens.

Examples of transparency can be found in both significant corporate decisions and extraordinary events. In mergers and acquisitions, a fairness opinion is evidence that the board and management have entered into a transaction to the benefit of the organization as a whole, and not select insiders and friends. When issues of fraud, corruption, or regulatory investigations arise, an independent investigation and timely communications plan will demonstrate that the problems are isolated to a few individuals, and not indicative of the broader corporate culture.

Reporting is crucial. It’s one thing to “look like you’re doing good” and another to actually spend the time, effort and resources to exercise good citizenship. When you’re transparent in your reporting, you’re showing the public, stakeholders and customers the sincerity of your CSR work.

Are We There Yet?
While the benefits of putting in place CSR initiatives might seem obvious, there can still be some reluctance throughout your organization and even from the executive level. The pressures to perform economically and generate profits are of real concern when finding ways to scale CSR initiatives during difficult economic times. Some companies are blinded by the costs associated with CSR and fail to recognize its long-term benefits, such as stronger financial performance and profitability by gaining social licence, enhanced relations with investors, better corporate citizenship and a stronger reputation.

There is no doubt a CSR program comes at a cost as it entails a commitment to time, resources and energy. In the long run, though, all organizations can benefit to some degree or another. It’s just a matter of taking the time to find the CSR initiatives that best suit your organization.

Greg Draper, MBA, FCPA, FCGA, ICD.D, is a partner and Vice President of MNP’s Valuations, Forensics and Litigation Services team. He can be reached at [email protected].