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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
12
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
Performance vs. Importance
   - By Country

                       PERFORMANCE




Source: 2008 Global Pulse, Reputation Institute
Copyright © Reputation Institute. All rights reserved.
                                                         IMPORTANCE
                                                                      14
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

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The Link Between CSR and Reputation

  • 1.
  • 2. 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
  • 3. 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
  • 4. Paradox for Business in a Downturn….. Around the world... 60-70% 10-20% 4
  • 5. Reputation is based on feelings 5
  • 6. Reputation is driven by 7 dimensions 6
  • 7. 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
  • 8. 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
  • 9. Company Weights in Select Countries Where will CSR give you the highest ROR (Return on Reputation)? ________France ________USA ________China ________Brazil ________ South Korea 9
  • 10. 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
  • 11. 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
  • 12. 12
  • 13. 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
  • 14. Performance vs. Importance - By Country PERFORMANCE Source: 2008 Global Pulse, Reputation Institute Copyright © Reputation Institute. All rights reserved. IMPORTANCE 14
  • 15.
  • 16. 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
  • 17. 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
  • 18. 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