The Link Between CSR and Reputation

The Link Between CSR and Reputation Worldwide views on the local impact of corporate responsibility Philip Mirvis, Center for Corporate Citizenship For UNGC Lead Webinar, May, 2009

Reputation and CSR Reputation is an “intangible” asset: •Accounts for ±10% of market value of corporations CSR is a major influencer of Reputation: •40% of reputation is driven by Citizenship, Governance, and Workplace perceptions Positive CSR perception leads to recommendation: •65% of the General Public will “Definitely Recommend” the top 20 CSR US companies vs only 26% recommendation for bottom 20 CSR companies Key Reputational Benefits •Recruit and Retain Employees, Sales, Market Entry, License to Operate •“Bad Behavior” = Reputation Killer 3

Paradox for Business in a Downturn….. Around the world... 60-70% 10-20% 4

Reputation is based on feelings 5

Reputation is driven by 7 dimensions 6

Citizenship, Governance and Workplace Account for Over 40% of Reputation Globally 11.6 17.6 % % 11.8 13.6 % % CSR Index 14.6 Weight 16.3 % = 45.4% % 14.5 % Adjusted R-squared = 0.774 n = 27,000 Note: Based on random sample of 1,000 rating Source: 2008 Global Pulse, Reputation Institute per country Copyright © Reputation Institute. All rights reserved. 7

The Corporate Social Responsibility Index - 3 Dimensions Citizenship (Community and the Environment) 1. Expectation that Business will contribute to community 2. Environment #1 Issue for Public/Business globally Governance (Ethics and Transparency) 1. License to Operate, Wall Street Crisis 2. Key Reputational Driver today Workplace (Good place to work and Treats Employees well) 1. USA: #1 Criteria for Corporate Citizen 2. High Priority: Millennial Generation, EU and D&E markets 8

Company Weights in Select Countries Where will CSR give you the highest ROR (Return on Reputation)? ________France ________USA ________China ________Brazil ________ South Korea 9

Company Weights in Select Countries Where will CSR give you the highest ROR: 1 France 2 South Korea 3 Brazil 4 USA 5 China 10

Importance of Citizenship, Governance and Workplace Varies by Country Note: Weights are derived from the Driver Analysis. Each weight represents unique contribution of given dimension to explaining companies’ reputation. The CSR Index weight is a sum of weights for citizenship, governance and workplace dimension weights. Source: 2008 Global Pulse, Reputation Institute Copyright © Reputation Institute. All rights reserved. 11

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2008 Country Ratings of CSR Index Note: Ratings are a mean of company scores collected in each country. All scores are globally adjusted. The CSR Index is a mean of the Global Pulse, Reputationand workplace dimension scores per country. Source: 2008 citizenship, governance Institute Copyright © Reputation Institute. All rights reserved. 13

The Corporate Social Responsibility Index CSR has a major impact on business performance The question is: How do you leverage Corporate Social Responsibility this? Index 45.4% of reputation Social Responsibility Index Questions Q: Workplace: 'Company' is an appealing place to work -- it treats its employees well Q: Citizenship: 'Company' is a good corporate citizen -- it supports good causes & does not harm the environment Q: Governance: 'Company' is a responsibly-run company -- it behaves ethically and is open & transparent in its business dealings 16

How are Corporate Reputations Created? Stakeholder Experiences Products Investments Customer Employment Service Corporate Perceptions Messaging Corporate Corporate Branding Marketing Trust Admiration Reputation Reputation Public Social Respect Good Feeling Relations Responsibility Media Conversation Print Broadcast Internet 17

Using CSR to Drive Improvements in Reputation Analyze & Improve Measure how your Identify your key stakeholders 7 1 activities are increasing support Engage stakeholders on what’s relevant to them; 2 Understand what they Communicate with want from you and the stakeholders and the 6 industry public Identify how your 3 company vision and values can play Take strategic actions to 5 together with what ‘close the gap’ the stakeholders want 4 Identify gaps between what you are doing, communicating and what creates stakeholder support 18

The Link Between CSR and Reputation

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