* By Jeff Hittner From JustMeans
August 05, 2008
It's not secret that companies are coming under increasing pressure from governments, advocacy groups, investors, prospective employees, and consumers to make their operations, products and services more socially responsible, particularly regarding the environment but also on a range of issues from labor practices to financial transparency to product safety.
In addition, constraints and costs of energy and water usage are rising at an accelerating rate, which can have significant impact on a company’s business operations and financial performance.
It's becoming clear that business leaders understand the growing business and social requirements for addressing CSR concerns, and the rising penalties for failing to do so. In fact, many are starting to understand that there is an advantage to doing so aggressively, strategically and proactively -- those that do will have a significant advantage in attracting customers, investors and talent, as reducing costs and improving efficiency and meeting regulatory requirements.
This is confirmed in a study my company conducted of more than 250 c-suite executives from around the world, which showed the following key findings:
* Sixty-eight percent of businesses surveyed are already focusing on corporate social responsibility activities to create new revenue streams, and 54% believe it's giving them a competitive advantage;
* Customers are the chief stakeholders driving corporate social responsibility, yet 76% of businesses surveyed admit they don't understand their customers' CSR concerns and only 17% of businesses are even asking them;
* Three-quarters said that the amount of information being collected about them by advocacy groups and others has increased in the last three years. The same number said they had increased the amount of information they're making available about their businesses;
Additionally, another study we conducted with more than 1,100 CEOs showed that the majority of them plan to increase their investments in CSR by 25 percent over the next three years.
Consumers play a large and growing role in propelling this issue, as they demand products and services produced, packaged and distributed in a way that's consistent with their personal values. They're using the Web to communicate, organize and share information in ways not previously possible to decide what products and services they’ll buy, who they will work for and also to influence media coverage and government regulation.
Our CSR study identified three major issues regarding how companies should treat CSR and address customers and other key stakeholders:
* First, it has to align these corporate social responsibility values of its customers with its business strategy, treating CSR as an investment instead of an expense. Linking them with core product and services can enhance the value proposition and create a new level of differentiation with consumers. An offering that meets consumer needs and matches their values is much more attractive.
* Second, the company must take the wraps off information it once considered private or proprietary. With relentless pressure from consumers and advocacy groups, restrictions need to fall away, and visibility is best met with transparency. But what seems like an insatiable thirst for information is in reality a drive for relevant information that can reduce complexity and increase consumers’ comfort level.
* And finally, the need for transparency leads to the need to engage consumers and advocates. True communication requires not just context, but interaction among the parties. Companies need to not only talk to these stakeholders but also listen. If they do, they’re likely to gain valuable information that can help them improve their products and services, uncover new market opportunities, and head off problems before they occur.
Company's that follow these three principles can expect to benefit from improved relationships with all of its key constituents, more loyal customers, lower costs, higher revenues and an overall improvement of the business’ standing in society.
