Corporate Social Responsibility (CSR) – The Facts

You Should Know

November 2013

• Introduction

• CSR: What is it?

• Public Perceptions of Companies CSR Activities

• Business Leaders Views on CSR

o Consumers: Interested but Conflicted

o Investors: Growing Engagement

o Accelerating Progress: Towards Transformation

• Employees Opinions on CSR

• Graduate Perceptions of CSR

• Risk of Weak CSR

• CSR: Where's the Value?

• References

Contents

• Corporate Social Responsibility (CSR) has

come a long way in the last couple of

decades. From being on the periphery of

business strategy in the 80’s and 90’s to

now becoming an essential value

generating strategy for all forward looking

businesses.

• Upwards of 85% of FTSE100 companies

now report on their CSR activities.

• But how do we demonstrate the importance

and value of CSR today? This slide show

highlights some of the most recent facts

and figures in answer to this question.

Introduction

Introduction; What is CSR?

Effective CSR is about business acknowledging the social and

environmental impacts of its operations and the related expectations of it’s

wider stakeholder groups; implementing strategies to deliver on these

expectations in a way that generates positive social and environmental

benefits whilst simultaneously delivering value (whether financial or

reputational) for the business itself.

The general public and the media are increasingly focusing on the

social and environmental performance of companies. This focus can

have a direct impact on reputation, share price and ultimately sales.

• 83% of people will trust a company more if it is seen as being

socially and environmentally responsible;

• 68% of people agree that large companies should be actively

involved in solving social/environmental problems;

• 70% of people in UK believe companies and brands should play a

role in improving our quality of life and well-being.D.Woods (2011)

Public Perceptions of CSR Activities

Regardless of industry, companies not proactively focusing on

their social and environmental impacts are risking reputation and

as a result value

A recent survey by the UN Global Compact and Accenture has

given a unique insight into business leaders‘ views on the

pathway towards a sustainable economy. The survey included

1,000 CEOs across 103 countries and 27 industries. Some of

the most notable results are highlighted on the following pages.

Business Leaders Views on CSR

• Only 32% of CEOs believe that the global economy is on track to

meet the demands of a growing population;

• Only 33% believe that business is making sufficient efforts to address

global sustainability challenges;

• 84% believe that business should lead efforts to define and deliver

sustainable development goals;

• 37% see the lack of a link to business value as a barrier to

accelerating progress.P.Lacy and R.Hayward (2013)

Business Leaders Views on CSR

Moving forwards leading businesses will continue to focus on CSR

as a core business strategy. Though there may currently be

questions over the link between business value and CSR, recent

research shows that companies committed to CSR generate on

average 18% higher profits than those without.

• 81% of CEOs believe that the CSR/Sustainability reputation of their

company is important in consumers' purchasing decisions;

• 64% of companies see the consumer as a key stakeholder in

influencing their approach to CSR/Sustainability;

• 46% believe that CSR/Sustainability issues will always be

secondary to traditional factors of price, quality and availability;

• Only 28% report that to date they have secured a price premium

with consumers through their reputation on CSR/Sustainability.

P.Lacy and R.Hayward (2013)

Consumers: Interested but conflicted

Though to date though consumers may not necessarily willing to pay

a price premium, the importance that consumers are starting to

place on the CSR reputation of companies indicates that it is likely

only a matter of time before this becomes a key differentiator

between products of similar price, quality and availability.

• Only 12% of CEOs currently regard investor pressure as among their

chief motivators on CSR/Sustainability;

• 23% see investors as an important stakeholder in guiding their

approach;

• 31% believe that their company's share price currently includes value

directly attributable to CSR/Sustainability initiatives;

• 69% believe that investor interest will become an increasingly

important factor.P.Lacy and R.Hayward (2013)

Investors: Growing engagement

Though currently investors may not be heavily influential in terms of a

companies CSR practices, CEO’s are expecting this to increase in the

coming years, in particular as they become more educated about the

value CSR can generate for their investments, as well as risk

mitigation.

Leading companies are charting a path towards transformation and competitive

advantage but sound a warning to policy makers on the need to align market

incentives with sustainable development.

• 93% of CEOs see CSR/Sustainability as important to the future success of

their business;

• 78% see CSR/Sustainability as an opportunity for growth and innovation;

• 80% see these issues as a route to competitive advantage in their

industry;

• 83% of CEOs believe that governments should step up their efforts to

provide an enabling environment for business efforts on

CSR/Sustainability. P.Lacy and R.Hayward (2013)

Accelerating Progress: Towards transformation

Implemented strategically CSR can deliver real sustainable value for

a business. Ultimately those company's not engaging will be left

behind.

• Companies with more engaged employees perform better financially,

with productivity increasing on average by 18% and operating

margins up by 27%;

• 57% of employees want their company to do more in relation to CSR;

• 63% of employees believe that having time off during working hours

to commit to charitable causes would significantly increase employee

engagement;

• 49% of employees are more likely to stay with an employer that

encourages charitable giving;GALLUP (2013) & D.Woods (2011)

Employees’ Opinions on CSR

Employee engagement is crucial to long-term

business success and productivity. An effective

CSR strategy incorporates this as a core focus of

its activities

• 80% of young professionals are interested in securing a job that

has a positive impact on the environment and society;

• 90% of young professionals would prefer to work for an

environmentally friendly employer;

• 50% of young professionals would turn away from an employer that

lacked good CSR policies.

D.Woods (2011)

Graduate Perceptions of CSR

Businesses that attract the best graduates have a competitive

advantage over their rivals. Ensuring your business is seen as

being an attractive place to work is an essential part of attracting

the brightest graduates.

Risks of weak CSR practices

Demonstration of strong CSR activities can generate significantly

positive reputational impacts for business. Similarly poor / weak CSR

practices can be extremely damaging to reputation.

• Investors, have in the past, been hesitant when investing in

CSR/Sustainability initiatives. This is predominantly due to a lack of

evidence proving that CSR/Sustainability strategies can have a

material effect on a company's reported financial performance.

• There have recently however been new efforts to communicate the

value of sustainability. This communication has shown that these

strategies have the potential to drive revenue growth through

attracting like minded clients / customers, improve employee

productivity, reduce operational costs (through environmental

efficiencies) and measurably reduce key CSR-related risks to

revenue and reputation.

• Companies with a public commitment to CSR on average perform

better on 3 out of 4 financial measures than those without. These

companies also have over 18% higher profits on average Institute of Business Ethics

CSR – Where’s the Value?

• Unilever - reduced its overall environmental footprint:

$395 million cost savings since 2008.

• Marks & Spencer - Plan A: $296 million in combined

economic benefits since its inception in 2007.

• Walmart - Packaging reduction: $200 million in initial

costs savings in 2009.

• Intel - Energy reduction: $23 million in annual costs

savings since 2001.

• Knight Frank – Estimate savings of £500 million /

year due to increased employee engagement

CSR – Where’s the Value?

• Clorox - Green Works Product Line: 40% share of natural

cleaners market, $200 million annual revenue during

2008.

• Pirelli - green performance products: 45% of 2012

revenue.

• Philips - green products: 45% of $24 billion annual

revenue in 2012 (with goal of converting 100% of product

line).

• GM - recycling & reusing manufacturing waste: $1 billion

annual revenue, 2012.

CSR – Where’s the Value?

C.Krosinsky & D.Lubin (2013)

4Front Consulting – What we do

• 4Front Consulting is a specialist CSR and Sustainability

consultancy.

• We work alongside companies to help them develop,

enhance and implement CSR and Sustainability strategies

that deliver real value to their business whilst also

minimising potential risks.

• If you would like to learn more about how CSR/

Sustainability can drive value for your business, please feel

free to contact us by either emailing

kate@4frontconsulting.com or calling +44 (0)20 8332 3912.

• C.Krosinsky and D.Lubin (2013) theguardian.com,

http://links.sharedby.co/share/PZ4mdj, 04/10/13.

• C.Carson (2013) GreenBiz.com, Why firms fall short on touting their

sustainability work, 04/10/13.

• P.Lacy and R.Hayward (2013) The UN Global Compact – Accenture

CEO Study on Sustainability 2013, 04/10/13.

• D.Woods (2011) CSR could be the key to boosting engagement and

productivity, 04/10/13.

• GALLUP - http://www.gallup.com/strategicconsulting/en-

us/employeeengagement.aspx

References