The Link Between CSR and Reputation Worldwide views on the local impact of corporate responsibility

Philip Mirvis, Center for Corporate CitizenshipFor UNGC Lead Webinar, May, 2009

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Reputation and CSR

Reputation is an “intangible” asset:

•Accounts for ±10% of market value of corporations

CSR is a major influencer of Reputation:

•40% of reputation is driven by Citizenship, Governance, and Workplace perceptions

Positive CSR perception leads to recommendation:

•65% of the General Public will “Definitely Recommend” the top 20 CSR US companies vs only 26% recommendation for bottom 20 CSR companies

Key Reputational Benefits

•Recruit and Retain Employees, Sales, Market Entry, License to Operate

•“Bad Behavior” = Reputation Killer

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Paradox for Business in a Downturn…..

Around the world...

10-20%

60-70%

5

Reputation is based on feelings

6

Reputation is driven by 7 dimensions

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Adjusted R-squared = 0.774n = 27,000

Note: Based on random sample of 1,000 rating per country

17.6%

13.6%

14.6%

14.5%

16.3%

11.8%

11.6%

Citizenship, Governance and WorkplaceAccount for Over 40% of Reputation Globally

CSR Index

Weight = 45.4%

Source: 2008 Global Pulse, Reputation InstituteCopyright © Reputation Institute. All rights reserved.

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The Corporate Social Responsibility Index- 3 Dimensions

Citizenship (Community and the Environment)

1. Expectation that Business will contribute to community

2. Environment #1 Issue for Public/Business globally

Governance (Ethics and Transparency)

1. License to Operate, Wall Street Crisis

2. Key Reputational Driver today

Workplace (Good place to work and Treats Employees well)

1. USA: #1 Criteria for Corporate Citizen

2. High Priority: Millennial Generation, EU and D&E markets

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Company Weights in Select Countries

Where will CSR give you the highest ROR (Return on Reputation)?

________France

________USA

________China

________Brazil

________ South Korea

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Company Weights in Select Countries

Where will CSR give you the highest ROR:

1 France

2 South Korea

3 Brazil

4 USA

5 China

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Importance of Citizenship, Governance and Workplace Varies by Country

Source: 2008 Global Pulse, Reputation Institute Copyright © Reputation Institute. All rights reserved.

Note: Weights are derived from the Driver Analysis. Each weight represents unique contribution ofgiven dimension to explaining companies’ reputation. The CSR Index weight is a sum of weights for citizenship, governanceand workplace dimension weights.

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Source: 2008 Global Pulse, Reputation InstituteCopyright © Reputation Institute. All rights reserved.

2008 Country Ratings of CSR Index

Note: Ratings are a mean of company scores collected in each country. All scores are globally adjusted. The CSR Index isa mean of the citizenship, governance and workplace dimension scores per country.

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Source: 2008 Global Pulse, Reputation InstituteCopyright © Reputation Institute. All rights reserved.

Performance vs. Importance- By Country

IMPORTANCE

PERFO

RM

AN

CE

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The Corporate Social Responsibility Index

45.4% of reputation

CSR has a major impact on business performance

The question is:

How do you leverage this?

Social Responsibility Index QuestionsQ: Workplace: 'Company' is an appealing place to work -- it treats its employees wellQ: Citizenship: 'Company' is a good corporate citizen -- it supports good causes & does not harm the environmentQ: Governance: 'Company' is a responsibly-run company -- it behaves ethically and is open & transparent in its business dealings

Corporate SocialResponsibility

Index

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How are Corporate Reputations Created?

ProductsCustomer Service

InvestmentsEmployment

StakeholderExperiences

BrandingPublic Relations

MarketingSocialResponsibility

CorporateMessaging Perceptions

Trust Admiration

Respect Good Feeling

Corporate ReputationCorporate Reputation

Print Broadcast Internet

MediaConversation

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Identify gaps between what you are doing, communicating and what creates stakeholder

support

Engage stakeholders on what’s relevant to them;Understand what they want from you and the

industry

Identify how your company vision and

values can play together with what

the stakeholders wantTake strategic actions to

‘close the gap’

Identify your key stakeholders

6

2

3

4

5

1Measure how your activities are increasing

support7

Communicate with stakeholders and the

public

Analyze & Improve

Using CSR to Drive Improvements in Reputation