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December 12, 2012

Companies Are Wasting Millions on CSR Initiatives, New Reputation Institute Study Shows - Most Citizens Are Unsure Whether World's Largest Companies are Good Corporate Citizens

The results of Reputation Institute's 2012 CSR RepTrak 100 Study uncover that many of the world's 100 most reputable companies have little to show for the millions of dollars they spend on Corporate Social Responsibility initiatives.

"For companies to win in the reputation economy, they need customers and stakeholders to trust and support them. CSR is a major driver of trust and reputation. So CSR is not dead. But with 50-60% of consumers unsure if the largest companies in the world are good corporate citizens, open and transparent, and are good places to work, it is clear that CSR investments are being mismanaged," said Kasper Nielsen, executive partner of Reputation Institute, in a news release.

Sixty percent of the 47,000 respondents across the fifteen markets in the study were unsure if companies are good corporate citizens that support good causes and protect the environment. Four percent believe that companies could absolutely not be trusted.

The study clearly confirms that companies that make reputation management and hence, CSR, a driving force in their business strategy realize results … a five-point increase in a CSR rating would result in a 9.1% rise in the number of people who would definitely recommend a company. There is real money in improving reputation through CSR, but companies are failing to leverage this.

"Companies are mismanaging their CSR investments — it's that simple. They are not applying the same rigor to these investments as they do to their other core business priorities. They are not linking CSR to their business strategy but instead, treating it as a separate initiative and investment. You don't do CSR for the sake of CSR. You do CSR as part of your reputation management strategy to drive business growth, customer loyalty, and employee alignment" said Nielsen.

Microsoft Named Most Socially Responsible Company in the World

Microsoft has the best reputation for CSR in the world according to the 2012 CSR RepTrak 100. It is the company in the world that is seen as delivering best on Citizenship, Workplace, and Governance. A remarkable result when you consider that the company in the early 2000s was under attack for using its market dominance to drive up consumer prices and put pressure on the competition with unfair business practices. So how did Microsoft turn this perception around?

"We recognize that public trust in corporations depends in large part on the basic aspects of business character: integrity, accountability, values, responsibility and transparency," said Dan Bross, senior director of corporate citizenship at Microsoft, in the release. "A strong and steady core is the bedrock of both right action and good business. Over the past fifteen years we have increased our engagement in public policy discussions that relate to our business, and now publish our public policy agenda every year to let everyone see what issues we are working on and how they impact our business. Bottom line — we enhanced our commitment to accountability, strong corporate governance and transparency."

Microsoft is joined in the top 10 by Google, The Walt Disney Company, BMW, Apple, Daimler, VW, SONY, LEGO, and Colgate-Palmolive.

Overall, Microsoft placed first in terms of governance and second in both workplace and citizenship behind Google and Walt Disney Company, respectively. Of the one hundred companies evaluated, only twenty two were considered ethically strong, with the remaining seventy eight deemed average in terms of transparency and openness.

Top Trends

  • Only six percent of respondents perceive the Top 100 companies as good corporate citizens
  • Only seventeen percent of respondents definitely trust what companies promise in their advertising and marketing
  • Only nineteen percent of respondents trust what companies say in official reports
  • Fifty four percent of respondents definitely agree that Microsoft is a responsibly run company earning it the top spot for Governance
  • The Walt Disney Company wins Citizenship with fifty percent of respondents definitely agreeing that The Walt Disney Company is a good corporate citizen
  • Google takes first place in Workplace with fifty percent of respondents definitely agreeing that Google is an appealing place to work and that it treats its employees well
  • No company has a top CSR perception across all fifteen markets proving the difficulties companies have in exporting their reputation

Download RepTrak reports here.

Comments

Kasper is Missing the Point - So does study

Kasper makes a good point that companies are mismanaging their CSR investments, but that is not the core problem. The core problem is that CSR was created largely to appease the segment of the population that sees the world through the global warming lens. That same segment, influenced by President Obama and his allies the past four years, has rallied behind the idea that "corporate greed" is the cause of all the world's problems. There is nothing major corporations could have done in an environment where it becamed popular in the media and academia to demonize major companies. This will go on for at least the next four years. CSR is good money after bad in such a "climate." As for the environmental pillar of CSR, that's been overshadowed by the corporate greed narrative and will not return. Had Kasper considered this context, he might still disagree, but he'd be wrong.

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