Heightened interest of the role of businesses in society has created a strong place for corporate social responsibility (CSR) in many businesses. Companies have allocated huge budgets towards social impact initiatives, encouraged employees to volunteer for charitable causes and even established foundations to make a positive impact on communities or offset the environmental impact caused by the products and services they bring to market.
According to The Society for Human Resource Management’s new international study, more than four out of five organisations in seven countries are participating in CSR practices, ranging from donating to local charities to monitoring global fair labour standards. For consumer-facing brands, though, what impact does CSR have on brands?
During December 2006 and January 2007, Millward Brown interviewed 20,307 consumers in the UK and US about who they trust, issues that are of concern to them and their attitudes to more than 100 key corporates. WPP Group’s ReputationZ study reveals some interesting findings about people’s attitudes to CSR.
First, it is important to understand what a company’s corporation reputation is. To do this we look at the three key factors of business success from the perspective of a consumer: public responsibility, consumer fairness, and leadership and success. By combining these factors, it is possible for companies to gain an understanding of how consumers perceive them and how this perception might impact on sales.
In fact, the study can provide some indication of a company’s future success, because it includes the vital link to how and whether consumers purchase the products and services that the corporation owns. This is possible through using Millward Brown’s BrandZ study, produced by WPP Group, which measures the brand equity of 39,000 brands globally.
Interestingly, the corporate reputation model shows that public responsibility is the least influential factor on its own, accounting for just 11% of any sales effect compared with leadership and success (47%) and consumer fairness (42%).
In the same way that a brand has to live up to what it promises, consumers are often sceptical of CSR as merely “window dressing”. And clearly the window dressing alone does not work.
But although consumer buying behaviour might not be as directly influenced by the corporation’s public responsibility programme as might have been expected – given the amount of money spent on CSR by companies – they are still moved by ethical issues. Indeed, British people say they are more likely to buy products and services from a company that is active in the community (48%), carbon neutral (27%) labelled fair trade (26%) and involved in the RED charity fundraising scheme (11%).
These results suggest that even though the window dressing does not work, the way a company behaves is still important to consumers. Corporations that score positively overall also have a better than average public responsibility rating – and vice versa.
Having said that, people do not always behave as they would like to think they do. While the majority of respondents felt companies should behave in a responsible manner (87% in the UK and 89 % in the US), only a third of respondents (32% in the UK and 39% in the US) think about responsibility when shopping and less than 4% would actually not buy a product because of the corporation’s ethical policy.
This is further highlighted when we asked what issues people had heard a lot about recently. Obesity was cited by the vast majority (84% in the UK and 77% in the US) of respondents. However, only 21% (UK) and 14% (US) said they would reduce consumption of products made by the relevant companies.
Other issues concerning Britons were: irresponsible drinking (84%); risks of smoking (81%); crime rates (74%); personal debt (67%); heart disease (61%); fair trade (61%) advertising to children (59%); dieting (58%) and making poverty history (58%).
Interestingly, consumers had a low reaction to companies that move jobs overseas – only 7% of British people and 9% of Americans said they would definitely stop buying products and services from companies that have moved jobs overseas.
It seems that despite the huge amount of money pumped into CSR by companies around the world, it does not always have the desired effect on consumers. That is not to say that having a CSR policy isn’t important. Indeed, the Government has a website (www.csr.gov.uk) promoting CSR in British business. And last year the European Commission launched the European Alliance for CSR, as part of its strategy to give a new impulse to “make Europe a pole of excellence on CSR”. CSR is clearly part of a corporation’s reputation.
But the way that CSR policy is promoted to consumers needs to be rethought, as it clearly is not the whole picture. The results suggest that CSR is better being part of internal communications and business strategy rather than an isolated external communications policy.
Peter Walshe, global brand director at brand, media and communications specialist market research company Millward Brown contributed to this week’s Trends Insight