CSRHub Blog Research on ESG metrics and comments on sustainability best practice

By Carol Pierson Holding

This week, Cynthia Figge, Co-founder and COO of CSRHub (full disclosure: CSRHub is my sponsor), reported at Sustainable Brands that the correlation between CSR and brand strength has reached .28. (A perfect correlation is 1.0)

This number is truly remarkable!

First, look at it in absolute terms. In 2006, I organized the first study that proved a relationship between CSR and brand existed at all.  That study was considered such a breakthrough that I was invited to present the results at all the major sustainability conferences, from the Conference Board to SRI (Socially Responsible Investing) in the Rockies to the Wharton Sustainability Conference. All that excitement over a small, but significant relationship – a .05 correlation.

That 2006 study – conducted just six years before the CSRHub study – barely qualified for statistical significance. So the fact that the CSR/brand correlation reached .28 so fast is a very big deal. Of course, we used different databases back then. CSR outside the US wasn’t being tracked by US firms so our numbers were domestic only. The CSRHub study combined global data from Brand Finance, the UK brand value company, and CSRHub’s aggregated global information. Still, the rise was extraordinary.

In fact, so unbelievable that CSRHub’s CEO Bahar Gidwani, a self-admitted geek with degrees in physics and astronomy and a Harvard MBA, tested every permutation of statistical error. The numbers hold.

Look at the above chart again. 2012 jumps one and one half times over 2011. This is after years of languishing. Was 2012 the tipping point? If so, why?

After waffling around during the grim days of recession and climate change denying, something pushed us into a new age of CSR.

Maybe it’s just that CSR has finally traversed the natural path of innovation. The numbers from 2006 to 2012 form an almost perfect hockey stick-shaped graph of innovation adoption, starting from the 20 years or so before 2006 with consistently low level of “innovators,” increasing over five years through the “early adopter” phase and now blasting into the “mainstream.” But why now?

Figge reported on the subcategories that carried the higher correlation. As expected, environmental factors had robust correlation due to the ubiquity of sustainability reports and environmental crises. But employee issues exerted an even stronger influence. Social media accelerated the impact of greater employee engagement and the accompanying word-of-mouth.

The relationship between social media and the growing influence of CSR on brand is underscored in a recent study from Cone Communications titled “Social: Where CSR Brand Leadership Is Won Or Lost” which says —

“Social media is transforming the CSR landscape… Citizens are universally taking to social channels to learn more about issues, share positive and negative information and influence their personal networks.”

They call this conversion of CSR and social media “The Era of CSR.”

I would argue that something else is also at play: a shift in culture from one tilted towards competition and force to one based on co-operation and kindness. Thanks to the environmental movement, our perspective is becoming longer-term and focused on preserving the commons, or the natural resources that we all share, rather than competing for them.

Evidence of the shift is most apparent in the younger cohort. We’ve seen acts of violence drop by half since 1994 among 10-24 year olds. GenY is showing a preference for the “sharing economy” in industries from cars to hotels to homes. David Brooks wrote last week about a young hedge fund trader who lives on a grad school budget and sends the rest off to Africa to find a cure for malaria.

Shifts in older cohort culture are also becoming apparent. In a much-praised book called “The Athena Doctrine: How Women (and the Men Who Think Like Them) Will Rule the Future,” author John Gerzema concludes that “…the only way to succeed when everyone knows your business is to act in an empathetic, patient, humane, and scrupulously ethical way” — traits he ascribes to being “like women.”

Even Apple, once the poster child for a winner-take-all American corporation and the one activists loved to hate, has undergone a dramatic shift. As reported in this week’s Fortune, “Ma Jun, the noted Chinese environmental activist, says Apple has gone in a short period of time from being the most uncooperative of electronics companies to ‘one of the most proactive IT suppliers’ of all.”

[csrhubwidget company="Apple-Inc" size="650x100" hash="c9c0f7"]

Surely “The Era of CSR” is upon us.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 7,300 companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 7,300+ companies from 135 industries in 93 countries. By aggregating and normalizing the information from 230 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

The following post is part of a CSRHub series focusing on 10 trends that are driving corporate transparency and disclosure in the coming year. To follow the discussion of each trend, watch for posts on the CSRHub blog every Wednesday.

By Karen Dam

Do you want to work for a socially responsible company? Do you care if your employer’s social and environmental performance is consistent with your values? Insisting on a job that respects your moral commitments as well as your paycheck is a prominent trend in today’s workforce, especially with younger workers. As companies assess the challenges and benefits of effective sustainability and/or CSR efforts, employee preference, retention, and engagement is an increasingly important element.

According to a 2011 PriceWaterhouseCoopers (PwC) study, 88 percent of graduate students and young professionals factor an employer’s CSR position into their job decision. And 86 percent would consider leaving a job if their employer’s CSR performance no longer held up.

Similarly, the 2010 Corporate Social Responsibility Branding Survey revealed that almost half of respondents between the ages of 18 to 24 would choose a position with a socially responsible company, even if they had to take a pay cut.

People simply want to work in a good company – a company they can believe in. Apparently, when employees believe in their employer’s stance on important social and environmental issues, a study by Hewitt Associates’ 2010 Best Employers in Canada showed that employees are more engaged.

A highly engaged workforce gives you employees who are committed to your vision and your success. It also gets you employees who fight to get in your door and who want to stay. It means higher productivity, ingenuity, and innovation – all of which drive business growth and profitability. In fact, companies with high levels of employee engagement generate total shareholder returns that are 29 percent above average, while companies with moderate levels of engagement produce returns that are only 1 percent above average (Hewitt Associates study).

Business leaders are well aware of these benefits. “Higher or sustained employee engagement” is ranked as one of the top three benefits of investing in CSR activities and policies (Hewitt Associates study). That may be why companies with well-established employee engagement programs such as those at Adobe Systems, Enbridge, and the Campbell Soup Company, also rank relatively well on CSRHub.

Of course, a business must be able to track employee engagement to measure and promote its benefits. Fortunately, new tools are being introduced that do this. For instance, Gallup’s employee survey helps organizations measure engagement levels, as well as design and implement employee engagement strategies. Happiily’s app tracks and anonymously aggregates employee reactions and morale, so that managers can address employee dissatisfaction in real time. AngelPoints’ integrated sustainability tool motivates and educates employees to set goals and track their progress in the workplace and at home.

A company may benefit from a committed and engaged workforce not just on key business metrics, but also in its longer-term reputation as an employer. A strong track record of employee engagement and CSR not only retains the most committed talent, but also entices new recruits. That is why at CSRHub we have incorporated “best places to work” lists, such as Glassdoor.com Top 50 Best Places To Work, Computer World 100 Best Places to Work in IT, and Working Multicultural Women 2011, into our ratings.

A company’s ranking as a top employer and caretaker of its employees is an important part of the umbrella of social benefits they provide their workers. Employees are powerful drivers of a company’s CSR performance. This power will likely increase as the highly engaged workforce of tomorrow comes of age and demands its companies to be CSR leaders.

Karen Dam is a data analyst at CSRHub. Karen completed her Bachelor of Science in Environmental Sciences at the University of Guelph, and a Master of Environmental Science at the University of Toronto Scarborough. She has enthusiastically filled research roles in the public sector. Karen has experiences in project management and research, including data collection and data management, analysis and synthesis. Karen actively volunteers with NGOs, including conservation authorities, to contribute to ecosystem protection, advocate environmental sustainability and of science literacy. Her hobbies include cycling, reading, and painting.  

By Cynthia Figge

Fast Company recently named Apple #1 in its ranking of the world’s most innovative companies. But when it comes to corporate social responsibility, Apple falls short of its innovative reputation.  (Full disclosure: I own an iPhone and also have iPad 2 envy.) Yet despite Apple’s lack of a corporate level sustainability report (they do offer environmental information on selected products), transparency of social actions, despite their non-reported charitable contributions – nothing available on their website or reported to The Chronicle of Philanthropy-- and despite their below average corporate social responsibility (CSR) rating, millions of us keep buying their products.

When one thinks about product companies that consistently delight their customers, certainly Apple comes to mind. Assuming many Apple customers care about sustainability, is it realistic to think that they (we) could influence the company by demanding greater corporate responsibility beyond the economic benefits to Apple and other companies in their ecosystem? Of course they have an obligation to be continually financially successfully, but do they also have an obligation to improve their CSR performance, and be more open about their progress?  How might customers exert influence?  This is an open question that I will leave to the marketplace.

However, there is another potential source of powerful influence – Apple’s thousands of employees. It is hard to know as an outside observer how employees value sustainability at Apple and whether they could or would influence policy.

Microsoft, on the other hand, seems to have more integration of employees and CSR policy. At a Net Impact Seattle event on February 17^th, I heard Dan Bross, VP of Citizenship at Apple’s competitor in Redmond, discuss Microsoft’s corporate social responsibility work. Yes, it’s an uphill battle, but they are making progress. Dan said that Microsoft’s annual employee survey covers a range of issues, including the question: “Are you aware of and do you agree with Microsoft’s work in CSR?” A staggering 93% of employees are aware of and agree with Microsoft’s CSR work, the highest rating of any question in the survey.

Here are Apple and Microsoft ratings on CSRHUB:

If Microsoft employees have anything to say about it, and I believe they do, it is likely that Microsoft’s sustainability performance will continue to improve. Dan Bross defines CSR as a set of corporate activities that add business value while addressing social issues. This bodes well for us all.  Perhaps Apple’s internal stakeholders can help exert similar influence to improve company sustainability performance. When employees get involved in driving CSR, they provide leverage not only internally, but impact customers through a virtuous circle.