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  1. 1. A Service of SRI World Group, Inc. 74 Cotton Mill Hill A-255 Brattleboro, VT 05301 (802) 251-0110 Printed on recycled paper
  2. 2. Introduction Would you want to invest in this company? T oday, forward-thinking companies understand that balancing the needs of their stakeholders is an essential component of sustaining business success. Many of these companies are engaging in socially and environmentally responsible business practices and working to develop new communication strategies that speak to investors, consumers, and employees. As a result, stakeholders are rewarding these companies for Financial performance Emlpoyee satisfaction Customer loyalty their transparent business practices. This guide provides important in- formation to help companies begin the process of communicating their positive and innovative corporate responsibility initiatives. will face more challenges to success than a Companies are evolving to company with a high-quality product and a meet the demands placed good reputation. Maintaining a strong cor- upon them as the market porate reputation goes beyond regulatory evolves. Recognizing that Corporate Social Responsibility (CSR) compliance. The companies that exceed stakeholders desire social and environmental information, legal requirements and respond to the pub- communication is good business lic’s expectations of acceptable business companies are transforming their cultures and communi- practices are the ones who maintain and cation styles to disseminate S everal recent studies suggest that it is critical for companies to not only develop CSR initiatives but to effectively communicate them as well. The days of not communicating CSR developments are numbered enhance their admirable reputations. The new global marketplace is crowded, this data. It has been shown that it is in a company’s best interest to provide substantive because the marketplace is steadily demanding greater transparency. A competitive, and cluttered with messages information about its responsi- free market relies on the flow of information so that investors, con- and information. A company needs to not ble initiatives while demon- sumers, and employees can make educated decisions. As an added only identify what makes it unique but also strating efforts to address benefit, communicating socially and environmentally responsible communicate those differences to inter- vulnerabilities and challenges. practices and policies can improve a company’s reputation and com- ested audiences. Research conducted by It is also important for a com- petitive advantage, which can increase a company’s success. MORI (Market & Opinion Research Inter- pany to carefully consider the national), the largest independently-owned tone of a message, because it Some consumer analysts argue that reputation is everything. A com- market research company in the United can considerably impact how a company is perceived by its pany with a high-quality product but a poor social performance record Kingdom, shows that initiating sustainable, stakeholders.2 3
  3. 3. progressive, and socially responsible practices helps companies im- ment, media coverage of CSR issues in prove brand identity and be more competitive. Stakeholders are willing the 1990’s was most prevalent in Eu- Hill and Knowlton’s 2001 to support companies whose policies and management practices rope, but overall media attention was Corporate Citizen Watch survey match their own personal values. minimal. Many companies are missing found that 79 percent of respon- opportunities to use the media as a re- dents consider corporate citizen- According to the 2000 Cone/Roper Executive Study, companies that source to increase their reputations and ship in their decisions to communicate their cause initiatives are significantly more likely to be- exposure. purchase a company’s product or lieve they are achieving their cause-related objectives. In particular, service, and 61 percent consider corporate citizenship when de- these companies are 129 percent more likely to feel they enhance their Ketchum, one of the largest public ciding to buy a particular com- reputation and 190 percent more likely to feel they develop consumer relations firms in the world and the PR pany’s stock. Almost three out of trust. firm perhaps most associated with CSR, four respondents indicated that reports that companies that manage most companies are doing a less Fortunately, the opportunities for their reputations by communicating than adequate job in the area of companies to highlight their social their corporate responsibility endeavors good corporate citizenship. These and environmental achievements realize the following benefits: findings show that companies are increasing. New Internet and can do more to position them- 80 print resources provide outlets for Improved consumer trust – Consumers selves as good corporate citizens 70 companies to publicize their posi- are loyal to products and change brands and to better communicate their 60 tive initiatives to interested in- infrequently. However, more and more social initiatives to the public.% of Success 50 vestors, consumers, employees, consumers are considering the environ- 40 and the media. Similarly, the Inter- mental and social impacts of companies 30 net allows for the instant exchange when they make purchasing decisions. If a company communicates its 20 of information, making online rep- positive practices to the public, consumers will be more likely to remain 10 utation management a necessity loyal customers. 0 Enhance Gain Develop Enhance for companies. reputation community consumer employee Increased employee loyalty – When a company communicates its pos- support trust loyalty According to a report from Lon- itive attributes to employees, the company often experiences higher Business Results Achieved don-based SustainAbility, enti- productivity, better employee retention, and decreased turnover and Widely Communicated Programs Not Widely Communicated Programs tled Good News & Bad: The training costs. This is due to better employee morale and an increased Media, Corporate Social Respon- trust in the company’s commitment to treating employees fairly. Like- sibility and Sustainable Develop- wise, companies that communicate their favorable employee practices 4 5
  4. 4. to the general public may experience decreased hiring and training Cause branding vs. CSR communication costs by attracting and retaining qualified candidates. More engaged investors – Socially responsible investing has grown as more individual and institutional investors have chosen to align their C ause branding or cause-related marketing is sometimes thought to be synonymous with CSR communication. Although cause branding can be an element of CSR communication, the two are investments with their values. But as mounting evidence supports the actually quite separate and distinct from each other. Cause branding assertion that financial performance is linked with social and environ- refers to a short-term business strategy that usually consists of adver- mental performance, increasingly more “traditional” investors may tisements that connect a social or environmental issue with a com- adopt social investing strategies as well. Therefore, companies that pany’s brand name and organizational identity. communicate their social and environmental initiatives will be more likely to attract investors of all kinds. Cause branding is intended to reinforce or improve a company’s image by demonstrating the company’s support for a particular issue. A criti- Better community relations – Being a successful international com- cal element of an effective cause branding campaign is to associate pany begins at the local level. Companies that have a solid reputation with a cause that generates customer interest and that is consistent with in the communities in which they operate can benefit from stable local the company’s product or service. Companies engaging in cause relations and strong community support. branding will often form a partnership with a nonprofit organization associated with the chosen issue. Environmental sustainability – Companies find that being environ- mentally responsible, in addition to positioning a company above its CSR communication, on the other hand, is the process a company competitors, can lead to a significant reduction in operating costs and undergoes in order to inform its stakeholders of its commitment to on- risks. Materials and processes that are more environmentally friendly going corporate social responsibility. CSR communication publicizes a are often more cost effective. Therefore, incorporating environmentally company’s dedication to functioning above and beyond government responsible products and processes into business operations can con- regulation minimums and standard business ethics. It highlights com- tribute to a higher profit margin. pany practices that have a positive social or environmental impact. A comprehensive CSR communication plan may include a cause brand- The benefits companies reap from communicating their positive initia- ing strategy, but it is actually a multifaceted, integrated aspect of busi- tives can have a clear and positive impact on profitability. No matter ness operations. what the motivation, the companies that make valuable contributions to society and the environment, and then publicize those efforts, can A successful CSR communication plan will involve multiple depart- benefit financially from those contributions. ments, including Human Resources, Publicity, Marketing, Investor Relations, and Internal Communications. Many companies establish6 7
  5. 5. CSR advisory committees within each of these departments to ensure company values will be truly reflected in all business functions. Some Cause Branding: companies have even created dedicated, high-level CSR staff posi- • Short term tions such as Vice President of Corporate Responsibility. • One issue • Aligned with a cause CSR Communication: • Often includes partnerships An example: • Strengthens brand identity • Interdisciplinary • Consistent with product • Often includes cause branding Cause branding – A clothing company that produces high quality out- • Ongoing, long-term goals door sports gear for a target audience of young and middle-aged adults • Emphasizes social and environ- may engage in a cause branding initiative to help preserve old growth mental practices • Serves as a precursor to forests. This cause is likely to be of particular concern to the company’s dialogue with stakeholders customers. By supporting this cause, the company demonstrates its • Communications match actions commitment to the environment, positions itself to stand out among its competitors, and potentially gains customer and employee loyalty. The company using the cause branding communication strategy may use a variety of methods to inform the public of the company’s support Every company has weaknesses that can be turned into opportunities to of old growth forest preservation. Likely strategies include regular press improve the company as a whole; therefore, identifying weaknesses releases, sponsorship of high-profile events, special announcement should not deter a company from communicating its strengths. tags on products, and philanthropic contributions. One of the critical aspects of implementing a successful CSR commu- CSR communication – The outdoor sports company that embraces the nication program is to gain support from top-level management. Man- preservation of old growth forests through a cause branding initiative agement needs to then be able to articulate the company’s may also make a commitment to employing socially and environmen- commitment and strategies to the staff. Next, the company may decide tally responsible practices. These practices might include progressive to identify a communications firm that has expertise in developing CSR workplace policies, waste reduction programs, and volunteering in the communication strategies. The company then works with the firm to community. The company might also decide to publicize these prac- develop messages and strategies that articulate the company’s inten- tices through a comprehensive CSR communication program. The tions and its commitment to its stakeholders. Companies need to con- company’s first step in implementing such a program would be to as- sider the desired outcome associated with their efforts and utilize sess its corporate policies and identify its strengths and weaknesses. communication mediums appropriately.8 9
  6. 6. Transitioning from cause branding Successful CSR communication campaigns: to CSR communication 1Highlight factual information A s companies become more sophisticated in their approach to CSR, their communication efforts will likely evolve from a cause brand- ing strategy to a broader, more encompassing CSR communication plan. 2 Involve several departments within the company Companies should consider working with experienced communications 3 Address various stakeholder groups firms and move deliberately and thoughtfully through this process of in- tegrating CSR communication strategies into their overall operations. 4 Include long-term goals It is essential for companies that have made a commitment to environ- 5 Encompass several strategies mentally and socially responsible practices to communicate these prac- tices. Effective communication with stakeholders is the seminal step in engaging investors, consumers, and employees. Companies that com- municate with their stakeholders often can gain a better understanding of the market, increase their customer loyalty, and help to raise the stan- dard of business. Tips for developing an effective CSR Increasing transparency is one of the most important aspects of CSR communication. However, company management needs to consider communication strategy two issues when they decide to share information with the public. First, communication may involve all aspects of business operations except 1 Be genuine in your efforts. Communication is a powerful tool. any confidential personnel information or any specific data that might If you are authentic in your CSR efforts and in how you com- sacrifice competitive advantage. Secondly, the company will use com- municate them, your initiatives can become a competitive ad- munication to its best advantage when it understands the cultural vantage. norms of the area where it will disseminate publicity. For example, Edelman Public Relations Worldwide, one of the world’s largest PR 2 Internal assessment. Be open to working with a communica- firms with expertise in cause branding, suggests that because U.S. citi- tions or consulting firm to examine your company’s current zens seem to pay more attention than Europeans to company contribu- policies and practices. Becoming aware of your strengths and tions to community, a campaign based in Europe should have a weaknesses is the first step in developing a CSR communica- different focal point, one that reflects the concerns of that market. tion strategy.10 11
  7. 7. 3 Identify your message. Evaluate your current initiatives to de- 8 Trust the firm you hire. Be open to their suggestions. Remember termine which would be the best to publicize. The most pro- that they are the communications experts, and you have hired ductive CSR campaigns are multifaceted and highlight more them because of their CSR communication experience. than one initiative. Assess which of your present efforts will draw the most stakeholder interest and loyalty. 4 Solicit internal support. Make sure that all employees are aware of the company’s initiatives. Employee support is impor- tant not just because it prevents conflict; employees who are The Power of Reputation aware of positive company efforts can help publicize these ef- 80 forts by word of mouth. 70 5 Know the target market. While it is important to communicate 60 Good Reputation/Salary That Meets Needs with all of your stakeholders, it is important to identify which 50 groups you want to reach with a particular CSR communication. 78% Poor Reputation/Higher 40 Salary It is a good idea to then convey your message in a way that is tailored to that audience. 30 20 6 Develop clear expectations. What do you imagine the results 10 17% of your communications to be? Most communications firms will help you with this, but it is best to consider this as a com- 0 Adults 18 + pany before you meet with the communications firm. 7 Select the appropriate communications firm for your needs. Firms vary drastically in size and expertise. Some are best at cause branding strategies, some at investor relations, and some According to a poll released by the Cherenson Group, almost 80 at CSR communication. Do some research and select a firm percent of adults say they would rather work for a company with that best matches your goals and your values. an excellent reputation than for a company with a poor reputa- tion, even if the company with the poor reputation offered a higher salary.12 13
  8. 8. 9 Use the firm as a liaison for consistent dialogue between par- Public Relations Worldwide, one of A major food company ties. Whether you are working with a nonprofit organization or the largest PR firms in the world, ac- increased sales by 13% other parties, let the firm serve as the intermediary to ensure ef- knowledges the most successful com- by offering to donate a ficient exchanges. One of the firm’s functions is to ensure that panies are those that, in addition to percentage of sales to a all parties understand and agree with the status of the project. employing socially responsible prac- national nonprofit organi- tices, also communicate them to their zation addressing issues of 10 Develop an integrated, consistent strategy. Your CSR program stakeholders. Communication is an in- current public concern. will have the most profound impact when you incorporate sev- tegral part of any effective CSR strat- – New York Times eral creative strategies to disseminate your message. egy. The advantages of a company’s CSR policies are maximized when stakeholders are aware of the com- Frequently Asked Questions pany’s efforts. If stakeholders are unaware of a company’s so- cially and environmentally responsible policies, there are 1 Do stakeholders perceive CSR communication as self-serv- fewer rewards for the company and fewer reasons for the com- ing? Stakeholders are well informed and know that it is impor- pany to maintain the policies. tant for companies to increase transparency and communicate their policies. Like public relations and marketing campaigns, 3 Should we wait until our CSR programs are fully developed CSR communication is an avenue for communicating with and integrated before we start communicating about them? stakeholders and the general public that is meant to increase Investors, consumers, and employees are better informed and long-term financial success. While it is ad- more sophisticated than ever before. They understand that A successful physical mirable to engage in socially responsible when a company publicizes its socially responsible initiatives, rehabilitation service practices simply because it is the “right it is not claiming to be the embodiment of social responsibility. reduced annual staff thing to do,” most stakeholders are also in- Companies that communicate their CSR endeavors experience turnover by 30% after terested in a company’s financial success. positive feedback through an improvement in their bottom establishing and com- Communicating company CSR initiatives line. Rather than waiting until a CSR program is fully devel- municating their orga- contributes to the company’s success, oped before publicizing company efforts, it is a good idea to nizational purpose, which ultimately benefits the stakeholders. communicate with stakeholders throughout each stage of the beliefs, and principles implementation process. statement. 2 Shouldn’t we devote our resources to – Financial Times being socially responsible and not allo- 4 Why do we need to publicize our message in places other cate resources to talking about it? Ogilvy than on our website? It is true that a website is an essential tool14 15
  9. 9. for communicating with stakeholders. Many companies have Trends in the economy found that a designated CSR area of the company website pro- vides investors, consumers, and employees with important ac- cess to this information. However, announcements posted to websites will not necessarily reach the public. Companies need O ur economy is increasingly characterized by easier access to in- formation, speedier communication, greater demand for trans- parency, and the globalization of corporations. These factors support to also consider press release distribution, reports, advertising, the assertion that corporate social responsibility is a critical element of sponsorships, and speaking engagements as tools for dissemi- business stability in the 21st century. Now more than ever, investors, nating their positive messages. consumers, and employees take into account a company’s corporate citizenship record when deciding whether or not to support the com- 5 How do we make our positive messages newsworthy? There is pany. And like never before, the general public is better informed and never a guarantee that even the best-written press release will able to shape the success of multinational companies. garner media attention, but there are some guidelines that can help your announcement stand out: KPMG Consulting, one of the world’s largest consulting firms, advises clients that the speed with which information is disseminated via the • Talk truthfully about your company’s positive Internet can quickly influence a company’s reputation. And a com- aspects and highlight specific people, initiatives, pany’s reputation is largely determined by its communication. Suc- awards, or events cessful companies are aware of this dynamic and openly communicate their social, environmental, and financial practices. In doing so, they • Make your excitement for the story evident to the build and protect their corporate value by enhancing their reputation, audience improving consumer trust, and increasing employee loyalty. • Always make your message simple, specific, and timely • Provide a broader social context for your an- nouncement in order to illustrate to the general public the relevance of your efforts and your over- all corporate commitment16 17