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No Medals for the USA in CSR
Bradley K. Googins and Phil Mirvis

April, 2010

America is justly proud of its athletes in the 2010 Olympic Winter Games.  Thirty-seven medals topped the field, and showed the USA's commitment and its athletes' dedication in a global competition traditionally dominated by other nations.  Hey, Hey, USA!

Now let's look at another global competition that determines which nations have the most socially responsible companies.  Here you might expect US companies with their wealth, traditions of community support and charitable giving, and increasing emphasis on the broader dimensions of CSR (e.g., good governance, sustainability) to take home the gold. 

The Medal Results:  Corporations based in India win the gold; in Ireland, the silver; and in Norway, the bronze.  How about the USA?  We're #9 out of 32 nations competing.

Before getting riled up, you should rightly ask:  What's the competition about?  And, how do you win?

Rating Corporate Social Responsibility

These rankings come from The Reputation Institute, a global research and advisory firm that measures the reputations of the largest 600 companies annually through over 70,000 online interviews with the general public in thirty-two countries.  The Global Reputation Pulse results are published by Forbes.com. 

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Here's how the study works:  interviewees are shown a list of companies in their country and asked to rate a few with which they are most familiar.  Four overall reputation questions ask to what extent people like, trust and admire the company.  Then people rate the firm across seven dimensions - its leadership, products and services, financial performance, innovation, citizenship, workplace, and governance.  

The CSR Index is comprised of the three questions that ask about a company's citizenship (support for causes and the environment), workplace (treatment of employees), and governance (ethics, openness and transparency).  Let's look at how the USA performs in each category. 

Performance by Category

In the arena of corporate citizenship, US companies overall rank 12th.  This initially surprised us because our nation more or less invented the idea of corporate support for communities and causes.  Nowadays lots of US companies connect themselves and their products to good deeds.  American firms lead the world in philanthropic giving and employee volunteerism, too.  That sounds like a winning proposition.

But the other part of performing in this category requires care for the natural environment.   There is evidence aplenty that European firms lead those in the US in the green category (witness corporate leadership on climate change). On their combined environmental and social performance, companies based in Scandinavia score the best.

A second CSR category centers on the workplace; and when you ask Americans what's their #1 criteria of a socially responsible company, it's how it treats its employees.  Sure, popular images of work in America come from The Office or Dilbert, but on this measure US companies rank 5th versus the rest of the world (the USA's top score). 

Finally, there's the category of governance—a company's openness, transparency, and ethics.  Naturally, US firms have been tarred by the banking scandals and bailouts.  (Ratings of the financial sector in this category have plummeted versus prior years.)  But, overall, US companies score 9th on good corporate governance. 

Add the three scores together and US companies rank ahead of those based, for instance, in Germany, Japan, China, Brazil, and the United Kingdom, but behind firms in Sweden, Singapore, Italy, Taiwan, and the medal winners.

Are the Judges Biased?!

Ok, maybe the USA didn't win, but are the judges biased?   If you want to see how American companies (or your own) are doing on objective measures of CSR, consult the Dow Jones Sustainability Index or other rating schemes that calculate a company's carbon footprint, the independence of its board membership, the actual amount given to charities, and so on.

The Reputation Institute rankings reflect subjective judgments of the public about specific companies based in their nations.  Staying with the analogy of the Olympics, this makes CSR more like figure skating than speed staking when it comes to the scoring.   To win, you both have to do well and be seen to do well by the judges.

Of course, many factors influence the judges.  Do Americans expect more from their companies when it comes to CSR?  High expectations, after all, could pull scores down.  Here the research team finds that the public worldwide (over 85%) expects companies to be ethical, take care of their employees, and provide assistance to communities.  In fact, the US public's expectations are slightly lower than the global average in these regards.

Well, then, perhaps Americans are tougher graders when it comes to corporate conduct.  Again, not so:  The publics in Korea, Germany, Australia and the UK are much more likely to suspect CSR = PR and grade companies more harshly on their citizenship, workplace, and governance.  

Does CSR Matter to Reputation?

Given the subjectivity, should companies care about how they rate on CSR?  Only to the extent that how your customers, employees, and the generally public see you matters to your company's success!  Two factors to consider:  On the upside, surveys show that Americans, even in the midst of economic recession, want to work for, buy from, and do business with companies that are green and support worthy causes (all things being equal--wages, prices, quality, etc.); plus they have more trust in companies that do business ethically and responsibly. On the downside, we are now in an era of CSR 2.0 where corporate misdeeds, real or perceived, get magnified and go viral through social networks and media and can pull a company's reputation down overnight.

The research team examined to what extent CSR factors into company reputation ratings, in comparison to the other attributes.  Perceptions of products and services are the top predictor of a company's reputation.  These the public can see, read about, and purchase. But the next most important predictors are ratings on the CSR Index.  Knowledge here comes from direct experience, corporate communications, social media postings and conversation, and word-of-mouth.

Going for the Gold

The US figured out how to win in the Winter Olympics; how about in the CSR Games?  First challenge: US companies will have to improve their CSR performance.  In our estimation, US companies have made substantial progress on CSR the past several years. (Take a look at annual corporate social reports, particularly audited ones, to verify this claim).  But the bar is being raised by top performing companies around the world. 

Second, US companies have to educate the public (and their managers and employees) about how CSR contributes to a better society and economy.  There remains too much spin and too little credible communication about what CSR is all about– Ask your mom; Ask your kids, or Ask your boss!  To many, CSR is a "nice thing" companies do after taking care of their shareholders. To others, it is "greenwash" or just plain "hogwash."

How about instead some serious two-way conversation about the issues of our time and real accountability from companies about how they are responding to them.  Chevron has at least taken the first step and invited conversation about oil and climate change.  Cereal makers:  Let's talk about how to counter childhood obesity.  Bankers:  How about credit card debt?  Michael Moore has a shameful story to tell about the social responsibility of business.  How many US companies have a credible counter-story? We're listening!

Finally, how about a serious national commitment to CSR?  It is instructive that when Russia slipped to fifth in the 2010 Winter Olympics, Putin was publicly outraged, the head of the Russian Olympic Committee was sacked, and the nation vowed to regain its preeminence in winter sports. 

No USAer wants to chant "We're #9, We're #9!" While there's no committee to ready US companies for the next CSR Olympics, surely the Conference Board, Business Roundtable, and US Chamber of Commerce all have a role to play.  So, where's the national leadership to move US companies toward a medal for CSR?

For the past few years Reputation Institute and the Boston College Center for Corporate Citizenship have partnered to rank the top U.S. companies on their CSR performance.  Mirvis worked with the research team at Reputation Institute on its global rankings of CSR for this past year (2009).  Reports on the US company scores and on the global study Building Reputation Here, There, and Everywhere can be downloaded for free at the BCCCC Website.

This article was reproduced with permission from Bradley K Googins. To learn more and figure out what to do with this important message, go to http://www.bcccc.net/ and http://www.uschamber.com/bclc/resources/newsletter/2010_1003_googinsmirvis

Bradley K. Googins

Corporate Citizenship and Organization Mangement

Bradley K. Googins is executive director emeritus of the Boston College Center for

Corporate Citizenship, a membership-based research center that serves as a leading voice in the U.S. on the role of business in society. He took over leadership of the Center in 1997 and served in that capacity until 2009. He is also a Professor in Organizational Studies at the Boston College’s Carroll School of Management. In 1990 Dr. Googins founded the Center for Work & Family at Boston University and directed it for six years before moving the center to Boston College. He was selected as a National Kellogg Leadership Fellow from 1989- 1992.

He has authored dozens of books, monographs, and articles on corporate issues, most recently Beyond Good Company: Next Generation Corporate Citizenship, published by Palgrave in December 2007.

 

He has served as principal investigator for many research grants on corporate citizenship, including The Role of Corporations in Community and Economic Development, (Ford Foundation) and The State of Corporate Citizenship: A Global Survey, (Hitachi Foundation).

He sits on the review board of the Journal of Corporate Citizenship and the advisory boards of

Corporate Voices for Working Families, the Brazilian research and education center Uni-Ethos.

Vincular at the Pontifical University in Valparaiso Chile, and the Center for Corporate Citizenship in Berlin Germany. He will be a visiting fellow at the Asian Institute of management in 2010. He lectures widely on issues of corporate citizenship and the role of business in society across the globe.

 

Philip Mirvis

Business and Society Relations, Organizational Management

Philip Mirvis is an organizational psychologist and senior research fellow at the Boston

College Center for Corporate Citizenship. His studies and private practice concerns large-scale

organizational change, the character of the workforce and workplace, and business leadership in

society. An advisor to businesses and NGOs in the US, Europe, Asia, and Australia, he has authored ten books on his studies including The Cynical Americans (social trends), Building the Competitive Workforce (human capital), Joining Forces (the human dynamics of mergers) and To the Desert and Back (a business transformation case). His most recent is Beyond Good Company: Next Generation Corporate Citizenship (with Bradley Googins and Steve Rochlin).

Mirvis is a fellow of the Work/Family Roundtable, a board member of the Citizens Development

Corporation, and formerly a Trustee of the Foundation for Community Encouragement and Society for Organization Learning.

Mirvis has a B.A. from Yale University and a Ph.D. in Organizational Psychology from the University of Michigan. He has taught at Boston University, Jiao Tong University, Shanghai, China and the London Business School.

Contact Phil Mirvis at mirvisp@bc.edu.



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