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18 Feb. 2011 | Comments (0)

There is an acronym that has finally bubbled up to the boardroom: CSR, as in corporate social responsibility. And one of the reasons it is finally being taken seriously, or getting past the lip service phase, is that companies are discovering there is some real value behind CSR activities. A recent Director Notes report issued by The Conference Board Governance Center (Investing in CSR to Enhance Customer Value, February 2011) determined that CSR activities have the potential to create several distinct forms of value for customers. The report, co-authored by John Peloza, a professor with Simon Fraser University in Vancouver, Canada, and Jingzhi Shang, a Ph.D. candidate at the school, includes a review of 163 articles about the relationship between CSR activities and financial performance. Those values include: the efficiency of a product or service, the aesthetic appreciation of consuming a product, the social status a customer acquires from using a product, and the social or environmental benefit a community can derive from the widespread dissemination of the product. The report offers business leaders 10 recommendations to enhance the effectiveness of CSR activities on customer responses, such as:
  • Prioritize product-related activities over philanthropy and business practices.
  • Ensure coherence of the activities included in a CSR portfolio to build a strong and recognizable “CSR brand.”
  • Ensure consistent, long-term commitment to each activity in the CSR portfolio, especially when not product-related.
  • Make adequate use of marketing to enhance the customer value proposition of CSR activities.
  • Tie CSR to functional and utilitarian products.
  • Seek optimal level of CSR investment, and avoid over-investing.
“Any purchasing choice is a trade-off between the need to satisfy an egoistic value and the sensibility to the social and environmental impact of personal consumption on the society at large,” Peloza said. The report also found that the relationship between CSR activities and financial performance is typically by many other variables, which are not always considered by researchers, and that the metrics used to define CSR vary widely among researchers. CSR and sustainability have started gaining traction in boardrooms and C-suites across the world. One way to gauge its popularity is to look at the many blogs and Twitter feeds out there on the subject. One such blog post I came upon was written by Tim Merrick on The Green Economy Post. In his Jan. 24 article, “Four CSR Trends to Watch in 2011,” Merrick makes four predictions:
  • “CSR is a company-wide policy and will be managed daily.
  • CSR will be more transparent in operating terms but also more visible for customers and service users.
  • Supply chains will be expected to perform to the same standards of CSR as companies themselves.
  • More reporting and contrasting will be available thus enabling the public to better evaluate CSR performance.”
Merrick, who is a freelance writer for the CSR/green initiatives service provider Miratel Solutions, also mentioned in his post that the United Nations’ addition of CSR standards to its global legislation enhances the likelihood that a more refined global approach to social responsibility is closer than it ever was. So, he definitely sees 2011 as a year where significant progress should be made in the CSR area. That is one of the reasons Director Notes Series Director Matteo Tonello, who is research director of Corporate Leadership for The Conference Board, is launching a series of reports this year on the topic. If you would like to receive those reports as they are published, just drop me a line at gary.larkin@tcb.org.
  • About the Author:Gary Larkin

    Gary Larkin

    Gary Larkin is a research associate in the corporate leadership department at The Conference Board in New York. His research focuses on corporate governance, including succession planning, board compo…

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