The Big C and the C-suite

No, we are not talking about that Big C—cancer!  We are talking about the C word that may have the biggest effect on the C-Suite—Competition.

The C-Suite cares about budgets, quarterly results, and cash flow. But they also track and worry about how their company is performing against its competitors. As CSR thinking gradually permeates society, the occupants of the C-Suite are being asked how their company compares to other companies on employee engagement, community involvement, the quality of its corporate governance, and how it treats the environment. These issues affect a company’s brand and may enhance or limit it strategic options. Communities may welcome a new facility from a “good” company and make demands or put limits on the expansion of a “bad” company. A company may have trouble acquiring another company if the acquired company management doesn’t feel that its “values” match those of the acquirer. A “progressive” employer has an advantage over an employer that is seen as “old fashioned,” when it competes for top talent.

Using a tool like CSRHUB, it is now relatively easy for C-level folks to benchmark their social performance against that of their major competitors. They can quickly drill down to find areas of weakness in their company and see how their competitors have burnished their social credentials. For instance, we recently found that companies who use the Global Reporting Initiative (GRI) system for organizing their social reporting get a 10 point benefit on their Environment Policy & Reporting score.

Many studies have tried to prove that companies that perform better on social issues and sustainability earn higher profits or get a lift in their stock price. However, data on these areas has not been consistently reported, not all companies report all data items, and social issues have been tracked for a relatively short time (less than twenty years). Therefore, these performance claims seem premature.

C-Suite managers have a burning interest in winning. If we can’t cajole them to change and if their calculations of ROI lead them to believe sustainability isn’t high return, we may still be able to get their attention by showing them what their competitors are doing. In truth, we should probably use all three means to get company C-Suites to “tip” to a view that sustainable and socially responsible policies will bring them valuable benefits.