Beyond the CR Report: Tell Your Corporate Responsibility Story To Build Trust and Shared Value
Corporate Responsibility (CR) reporting (also known as CSR or Sustainability reporting) is now a widely embraced practice, with 71 percent of 4,100 companies surveyed (the top 100 companies in 41 countries) reporting on sustainability. Yet despite the huge corporate resources committed to publishing a CR report, it’s only the first step for companies wanting to win hard-earned trust and advocacy from their audiences.
That’s partly because CR reports are not designed to build relationships. Infrequent annual publishing, data-heavy long-form content, historical information and technical language geared toward GRI guidelines lack emotional connection. But it’s also because stakeholders – from advocacy groups to customers and investors – now demand much more from companies in terms of demonstrating responsible operations.
Here are six reasons to broadly communicate your corporate responsibility story well beyond your CR report.
Understandably, companies are often fearful of communicating on controversial issues or promoting initiatives for fear of becoming a target. Ironically the reverse is often true. In many cases the “opposing entities” most feared are a collection of individuals seeking a conversation around challenges faced, an intent to improve, and resource allocated to a plan of action. A commitment to transparency can appease even the sharpest of critics and help build long-term relationships. Increased disclosure around a practice – even one that needs improvement – can prevent contentious shareholder resolutions at Annual Meetings and enable a company to own its narrative on a particular issue before it’s hijacked for the agenda of a third-party.
2. Validation from experts and third parties builds trust and credibility.
The 2015 Edelman Trust Barometer identifies today’s most trusted sources of company information as academic or industry experts (70 percent) and company technical experts (67 percent). This compares to a worryingly low 43 percent of trust in the CEO as messenger, and shows that a new group of trusted story tellers need to be harnessed to provide credibility.
Why is this important? The Trust Barometer shows that audience behaviors are significantly influenced by the level of trust they have in an organization. In a study of actions taken in relation to businesses over the past months, respondents cited the following for distrusted companies: 63 percent refused to buy products or services; 58 percent criticized the company to friends or colleagues; 37 percent shared negative opinions online and 18 percent actually sold shares.
Conversely, trusted companies saw 80 percent of respondents choose to buy products or services, 68 percent recommend to friends or colleagues, 54 percent pay more for products and services, 40 percent defend the company and a significant 28 percent buy shares.
These audiences are varied (general population data from 27 countries) and the range of outcomes are diverse enough to prove that stakeholders for CR information are no longer limited to policy experts, NGOs and investors.
Science has proven that we need both our rational and emotional brain to make a decision or form a view on an issue. Neuroscientist Antonio Damasio, Golden Circle author Simon Sinek and futurist Edie Weiner tell us that our unconscious, non-verbal perceptions including images, actions and feelings can be more impactful than conscious verbal reasoning. CR communication that speaks to both brain functions, as opposed to the historical bias towards the rational brain, will be critical to building trust and belief.
4. What the consumer data says
Recent Nielsen research shows that 55 percent of global consumers are willing to pay more for products that are socially and environmentally responsible. Brands that are clear about their purpose and transparent about what they stand for typically see a 5 percent lift in sales.
In fact, CR is now equal to product quality in defining the reputation of a company. But it gets even more specific than that. Audiences are more likely to listen to companies who align with the same issues they care about as opposed to issues the company itself believes to be important. CR strategies need to be based not only in business operations but also to causes that are important to the stakeholder base, (evidencing a pivot in focus from “We” the company to “Me” the individual).
5. Changing demographics mean changing expectations
Millennials show a far greater propensity to search for a purchase from a sustainable brand and pay a premium for it (almost double that of Gen X-ers) and this group will grow to comprise the majority of spending power over next 40 or 50 years. Another important future CR demographic will be the emerging middle class in developing markets. These are the consumers that directly experience the consequences of poorly managed sustainability risks and are increasingly interested in issues impacting their own communities. This group will become its own economy and together with Millennials will form new, specific audiences to reach for companies looking to build trust and differentiation in the market place.
6. Environmental, Social and Governance investment criteria go mainstream
What started as Socially Responsible Investment (SRI) has now entered the mainstream of investment practices, taking shape as Environmental, Social and Governance (ESG) criteria. The United Nations-supported Principles for Responsible Investment (PRI) now have 1,385 global signatories including asset owners and investment managers committing to integrate ESG considerations into their investment practices and ownership policies. Recent research by U.S. Trust reveals that 75 percent of high net worth investors now consider social and environmental impact an important part of investment decision-making.
And the market is responding. New investment products are springing up including ESG-related equity funds as well as increased fixed income offerings of social impact and green bonds which are quickly becoming oversubscribed.
Here the correlation to shareholder value (with linkages to both share price and cost of debt) is undeniable and arguably the strongest mandate Chief Communications Officers have ever had to support widespread company communications and engagement on Corporate Responsibility issues.
The bottom line is that enfranchised stakeholders create value. Strong, improving or even aspirational CR performance is important to earn trust, but it’s not enough if no-one knows about it. Communicating what you are doing beyond the annual CR report, in a way that’s connected to the issues your audience cares about, is the next big step for companies that want to build trust and advocacy to create shared value.