From racial equality to voting rights, US corporations are facing mounting pressure to take stands on a growing list of social issues. A new report by The Conference Board, titled “From Business as Usual To Public Role: Managing Civic Engagement With Stakeholders,” helps companies decide whether and how to address such topics.
Is Social Responsibility Really a Company’s Place?
At the corporate level, publicly taking positions on controversial social issues—think racial equality and voting rights—”is largely uncharted territory,” says Larence Msall, president of The Conference Board.
But companies that don’t engage for fear of alienating customers or shareholders may be missing out on valuable opportunities to strengthen their brands and improve their public perception and employer sentiment.
The stakes have risen for companies, and they must decide whether to take a stand on social issues. The challenges of navigating the phenomenon are challenging and there seems to be no end in sight.
Concerns about social and environmental issues are growing more important to people as they spend money, so companies that make it easier for consumers and others to support societal causes will stand out—and possibly see shifts in market share.
The insights from the report come primarily from a roundtable discussion hosted by The Conference Board ESG Center. More than 100 executives participated in a discussion on how their company decides whether, when, and how to take a stand on social issues. The discussion generated several topics regarding corporate social responsibility and branding.
The Brand Impact of the Exec or CEO’s Views vs Company Stance
It is the responsibility of CEOs to act as a spokesperson for their company– but there is also a real risk that this can come off as biased. This becomes especially troublesome when it’s seen that most decisions are being made on behalf of one particular view. Companies should set up an internal team separate from the CEO to vet issues in order to mitigate this risk.
Companies must ensure that their messaging is consistent across social media, product packaging, advertising, and so on. If the company’s Twitter handle talks about environmental issues but its advertisements do not, there could be a backlash.
A Multimedia Approach to Corporate Social Responsibility
In true social fashion, consumers are increasingly turning to video for content—and companies will have to keep up. Companies should consider using video as it’s more engaging and requires less scrolling—two important considerations on social media sites.
CEOs Skilled in PR?
More executives are seeing the need for leaders with a more specific skill set, such as public relations or environmental expertise. CEOs no longer have the luxury of not engaging on social issues.
They must balance these pressures with their duties to shareholders and wider stakeholder communities—including employees, customers, suppliers, and others who are affected by company decisions.
Company Values and CSR
A company’s stance on social issues should reflect company values, but as the population is so diverse an issue such as racial equality will not always be partisan and in some cases may conflict with a party’s views.Is social responsibility really your company’s place to speak out? The short answer is yes! Let’s discuss it more in depth here: Click To Tweet
What are Other Companies Doing in Regards to Social Issues?
The discussion also identified how companies currently approach social issues, with a few strategies standing out. Most companies are currently engaging in at least some level of social issue-related activity, but many have not fully made the evolution to real strategic decision making on these matters.
- Companies need to be transparent about the criteria they use in determining which issues to address and what their approach should be. Doing so avoids creating both support and opposition among various stakeholders.
- Social and environmental issues are not just sound bites, they can also help grow the brand. For example, focusing on gender equality, the environment, or diversity may seem like social issues to some executives, but they’re actually all part of a company’s sustainability strategy that has an impact on its bottom line.
- Managing the individual brand and corporate brand: In many instances, individual brands are on the frontline for social problems and this exposure needs addressing. Companies may want to establish internal guidelines on the role that corporate headquarters and the business units play; guardrails for statements brands can make, and a required heads-up before taking a stance.
- Companies and their leaders should establish a framework to understand which issues are important for them to address. It is critical that they seek input from everyone in the organization – including consumers, shareholders, employees and other stakeholders – in order to create an appropriate strategy.
And it is equally as crucial that they react quickly when needed, by making real-time decisions that are much quicker than the slow, bureaucratic processes most companies follow.
How Should Corporations Take a Stance on Social Issues?
When faced with the decision to participate in a corporation’s philanthropic and sustainability efforts, many companies consider the following factors: alignment with their core values; how much of an impact they can have on the issue; relationship between the company’s business and philanthropy programs.
The term “corporate citizenship” describes how a company carries out its duties to employees, customers, and the community both locally and globally. Corporate citizenship includes when corporations take social responsibility for actions that can impact their consumers or communities.
Defining What Corporate Citizenship Means to Your Company
Companies should define what corporate citizenship means to them: There is not a clear definition of corporate citizenship, so companies must define what corporate citizenship means to them.
When companies create a definition of corporate citizenship, they can identify which areas of citizenship are most important for them.
These effects include political activity, lobbying, and media relations: Companies that engage in social issues usually focus on three different categories: political advocacy; public affairs (lobbying); and public relations. Corporate involvement in social issues can be highly controversial and can include backlash from customers, media coverage, or even government intervention.
What About the Employees and Social Issues?
In choosing a workplace culture, key factors to consider include the company’s previous track record in diversity and their ability to put these words into action.
Companies should not abandon their principles, but they should involve their employees in understanding the company’s position and how to phrase it as well. A localized approach can help multinational companies address global issues.How should company’s take a stance on social issues? Learn how here: Click To Tweet
CSR Globalization vs Localization
In some cases, a company may decide to focus on addressing social issues through its own workforce and operations rather than changing its character entirely for one region of the world.
Companies should not abandon their principles, but they should involve their employees in understanding the company’s position and how to phrase it as well. A localized approach can help multinational companies address global issues. For example, Amazon has created an LGBT Employment Equality Index to give customers a better idea of how equal or diverse their policies are in terms of hiring members of the LGBT community.
Social Issues and Company Backlash
In the recent past, many companies have found themselves in the middle of a political controversy: From January 2017 to July 2018, there were at least 1,189 corporate- or brand-related controversies reported by mainstream media. Of those incidents, over 72% occurred on social media platforms. And of those incidents that happened on social media platforms, 70% of the companies involved were likely to be a familiar brand, such as Coca-Cola, Amazon or Kylie Cosmetics.
Many companies have found themselves in hot water with their customers and stockholders over their actions: In 2016, retailer Nordstrom faced backlash from conservatives when they decided to stop selling Ivanka Trump’s fashion line, for example.
Mitigating Risk from Social Issues and Stances
Companies are increasingly stepping in to oversee corporate involvement with society, but management boards have yet to decide what position the company should take on social issues. Boards can play an effective oversight role given the convergence of social and political issues, as well as any reputational risks involved.
Management should brief directors on principles, standards, and guidelines the company uses before taking a stand during decision-making processes. The board should also be fully aware of how to mitigate both reputational and other types of risk.
Companies are often engaged simply because they control the levers of power and valuable resources. This involves managing legal risks, articulating a strategy to address these political realities, and ensuring that company employees have an opportunity to voice their opinions on social topics. The best approach is for a company to be an equal partner.
Measuring the Total Impact of Corporate Social Responsibility
As companies weigh in more on social issues, they can use surveys and data-based analyses to measure the impact they are having.CEOs can measure the degree to which they are improving various aspects of their company with such measurements as stock price, public perception, and customer satisfaction.
Corporate citizenship is a broad term and encompasses many different areas of action. Companies should focus their corporate social responsibility activities on the areas where they have the greatest impact or desire to make an impact.
These areas can include responsibilities related to community, employees, governance, environment, health and safety, investor relations/financial stewardship, supply chain practices, and working with labor organizations.
Many companies have also discovered that corporate social responsibility is more than just a one-off activity; it can be part of an ongoing program to build trust in the marketplace, improve employee morale, promote customer loyalty, establish new markets, and identify business opportunities.
Management and CSR
Many management boards are still defining their role as it relates to corporate social responsibility.
The management board of a company has the responsibility to oversee all operations and ensure that any company policies and practices comply with applicable laws. Often put in place to safeguard an organization’s assets, management boards also have a mission-oriented focus. As companies become more involved in corporate social responsibilities, it is important for management boards to understand how their company’s efforts are being received by its stakeholders, including investors and customers.
Management should consider the following three steps when deciding whether or not to take a stand on issues:
- Are you prepared to address potential risks?
- Are you prepared to address potential opportunities?
- How should the company respond if it doesn’t want to take a stand on an issue?
Several factors can make taking a stance difficult, including industry-specific risks, political and social issues, regulatory requirements across jurisdictions, and domestic or international market trends toward human rights abuses. Companies can use surveys and data-based analysis to measure the impact of their efforts.
What are some specific strategies that companies can use regarding their approach to corporate social responsibility?