LOS ANGELES and HONG KONG: Two new studies suggest in two different ways that CSR is less important to some key stakeholders than many thought.
A study by Burson-Marsteller found that less than half of all CSR and "triple bottom-line" reports are considered believable by influential nongovernmental organizations (NGOs). CSR reports are detailed and sometime self-critical assessments produced by large multinational corporations on issues such as overseas labor practices or impact on the environment in a given year.
NGOs such as Amnesty International and Human Rights Watch have become increasingly powerful in recent years in affecting corporate reputations through media outreach and the internet. Companies from Nike to Coca-Cola have found themselves at odds with the organizations, leading to the need for reputation management and even crisis communications.
A second study, conducted by Edelman and Wirthlin Worldwide in eight Asia-Pacific markets, found that tangible business measures, such as management strength, brand quality, and profitability, matter more than the generic concept of corporate citizenship.
"The majority of people in the majority of markets have a general trust in business, and they are linking that trust to something very tangible, which is the amount of investment businesses are making in their own markets," said Edelman SVP Chris Deri. The Edelman study had 330 respondents, representing five stakeholder groups: senior business executives, government officials, media representatives, NGOs, and upscale consumers.
Burson's survey of 56 NGOs found that while 79% of respondents listed CSR reports "very" or "fairly" useful, only 44% considered them to be believable. Using such reports to acknowledge noncompliance, poor performance, and other significant problems faced by a company was the tactic cited as most useful in inspiring trust. Use of performance metrics, third-party certification, standardization of reporting, case studies, and independent research were also found helpful.
"Today, social responsibility is no longer a matter of corporate discretion, due in large part to the NGO community's growing influence," said Bennett Freeman, MD of corporate responsibility at Burson. "NGOs and other stakeholders are more likely to acknowledge progress and success if companies are candid about problems and even mistakes. Corporations need to focus on the implementation of substantive policy commitments, even if that process is uneven or incomplete."