March 13, 2020 Update:
In the face of a global pandemic, business leaders are making critical decisions related to employees' health—cancelling large corporate events, expanding paid sick leave, and enabling those who can to work remotely. Even prior to the emergence of coronavirus, one-third of executives said they'd increased spending on employee health and wellness—more than for any other corporate responsibility issue—in this 2020 report from BC's Center for Corporate Citizenship.
As markets react to the coronavirus's spread and shareholders' bottom lines are at stake, business leaders are wrestling with the question: How do we operate as corporate citizens in a society facing a global health crisis? But more generally, they've been asking: How can corporate citizenship help us achieve business goals?
Last August, nearly 200 chief executives from the Business Roundtable released a statement that made headlines for its declaration that delivering profits to shareholders is not the sole purpose of doing business. The list of signatories, which included big-name CEOs Tim Cook of Apple, Brian Moynihan of Bank of America, and Doug McMillon of Walmart, committed to serving their customers, employees, partners, and communities (in that order).
Public response to the letter was mixed. While some praised the statement’s progressive stance, others questioned whether the lofty letter would be followed up with clear changes at the corporations these executives lead.
If you are among the skeptics, new research released by the Boston College Center for Corporate Citizenship gives reason to hope. The State of Corporate Citizenship Report 2020 presents data to suggest that executives across business sectors are taking corporate social responsibility and sustainability seriously. When polled, the majority of executives reported that integrating corporate citizenship into their overall strategy has helped to achieve business goals, including attracting new customers, reducing operational costs, improving employee retention, and recruiting top talent.
And, like the Business Roundtable CEOs, they’re not opposed to going public about social issues they believe in.
What Corporate Citizenship is—and is not.
The Center for Corporate Citizenship at the Carroll School is well positioned to define what corporate citizenship is and how it operates in a for-profit environment. Founded in 1985, the center is the largest member organization of its kind, equipping more than 500 corporate members with research, insights, and tools to align their corporate citizenship objectives with business goals. (Members also have access to executive education courses through the Carroll School as well as networking opportunities.)
Katherine V. Smith, Executive Director, BC Center for Corporate Citizenship
The center defines corporate citizenship as “how a company exercises its rights, responsibilities, obligations, and privileges within a society.” This places a variety of environmental and social obligations—from reducing greenhouse gas emissions and minimizing waste, to closing the gender pay gap and promoting inclusive workplaces—under this umbrella. That said, effective corporate citizenship goes beyond discrete actions or initiatives.
“It’s not only what happens within your employee engagement department or corporate giving program,” explains Katherine V. Smith, the center’s executive director since 2000. “No amount of philanthropy or volunteering activity can make up for less-than-adequate supply chain management, employee relations, compensation, human rights. If you’re not doing everything the way you should be in your operations, the Department of Do-Good is not going to fix it for you.”
Citizenship in the C-Suite
And it takes more than a Department of Do-Good to get serious attention from the C-suite.
The center’s State of Corporate Citizenship Report 2020, released to members earlier this month, presents findings from a survey conducted every two years that specifically targets corporate leadership across business sectors. All of the survey’s 752 respondents are senior executives within two levels of the CEO who have knowledge of—but are not responsible for managing—corporate citizenship at their companies. The goal is to measure how business leaders perceive corporate citizenship and its value for their organizations.
Colleen Olphert, the center’s member services and membership director, recalls how, when they first launched the survey in 2003, executives’ discussion of corporate citizenship was “still a little nebulous,” primarily focused on reputation-building rather than more concrete business outcomes.
The 2020 data reflects how much has changed in 17 years.
What Executives Are Saying About Corporate Citizenship
Across industries, respondents tied corporate citizenship to business outcomes.
Executives were more likely to report achieving business goals like recruiting top talent, reducing operational costs and business waste, and attracting new customers when corporate citizenship is integrated into the overall business strategy.
Eighty-three percent of executives reported success in achieving customer retention when corporate citizenship was an integrated component of the business strategy, as opposed to 48 percent reporting success without it.
When companies commit to corporate citizenship practices for a longer period of time, they are more likely to report success in achieving related business outcomes.
The majority of executives reported that their company has made measurable commitments to environmental sustainability.
Nearly three-quarters of executives report their companies have in place—or are implementing—quantitative goals to reduce greenhouse gas emissions.
The majority also reported that their reduction targets for these emissions will be included in annual development plans and performance reviews.
More than 40 percent of executives stated that their company signed the “We Are Still In” declaration in response to the U.S.’s withdrawal from the Paris Agreement on climate change.
Social issues—particularly employee health and wellness—also ranked high on executives’ priorities.
Executives consider employee health and wellness to be the highest priority corporate citizenship dimension for their companies over time.
Over one-third of executives reported increasing resources for employee health and wellness in the last three years—more than for any other issue, including sustainable resource use, data protection, and formal stakeholder engagement.
Seventy-eight percent of executives reported success reducing employee turnover when corporate citizenship is a part of the business strategy, compared to 33 percent reporting success without it.
Nearly 45 percent of executives ranked diversity and inclusion among the top five corporate citizenship dimensions impacting their company’s success.
Overall, the report’s data reflects that, at the highest levels, business leaders recognize the strategic value of corporate citizenship to their business success. “There is no magic in this,” Smith stated. “It is work. And there is no substitute for doing every step of the work.”
What does that work look like? The latest report backs up what the center has been saying for some time: “You have to select the right issues, you have to integrate them across your business strategy, and you have to invest for duration,” says Smith. “If you do that, you will have positive results.”
Getting on the Soapbox
A willingness to put in the time and resources internally is one thing. Publicly taking a stand on an important issue, like the Business Roundtable CEOs, is another. Here, the 2020 report’s executives revealed astonishing alignment: Nearly 60 percent of respondents said their company’s leadership had taken a public stand on a social issue, and of those, nearly all (95 percent) expressed support for the decision to do so.
Smith, who published a laudatory response to the Business Roundtable letter on LinkedIn, was pleased with this statistic as well. “I think executives are figuring out that if they don’t step forward on the issues that really matter to them and stake out their position, that they will have their positions staked out for them by others.”
The executive summary of the State of Corporate Leadership 2020 Report is publicly available at the center’s website.
Leslie Ganson is a content development specialist at the Carroll School.