Corporate Citizenship Gaining More Attention from CEOs

Once seen as a purely philanthropic activity - a source of general goodwill, with no bottom-line consequence - good corporate citizenship is becoming more of an issue at leading companies, according to a report released by The Conference Board. And employ

More and more companies are adopting corporate citizenship as a new strategic and managerial function, with bottom-line repercussions, that requires their attention.

Nearly 90 percent of corporate managers report that their companies have a citizenship goal as part of a statement of core values or business principles. The study found that these goals have been in place an average of 14 years. While traditional corporate relations, community affairs and contributions programs predominate, an emphasis on a broader citizenship approach, including the environment and sustainable development, is emerging as a new model.

According to the report, the reasons for the move toward corporate citizenship include:

  • Globalization as a result of the worldwide expansion of business, private enterprise and the market economy.
  • Heightened expectations from consumers and society that business can and should fill needs formerly left to governments, and should better align shareholder and stakeholder interests.

"In the U.S., citizenship had often been viewed as synonymous with corporate contributions and philanthropy," says Sophia A. Muirhead, senior research associate at The Conference Board and author of the report. "In countries where there is not as much of a contributions infrastructure and tradition, however, corporate citizenship is viewed and practiced from the perspective of how business operations and citizenship performance interact."

Companies around the world are beginning to place even greater emphasis on citizenship activities that do not rely exclusively on philanthropy. Managers report that their top citizenship priorities are employee health and safety, sustainability, equal opportunities/global diversity and globalization of contributions. About 60 percent of managers say that these and other citizenship activities have led to goodwill that opens doors in local communities and an enhanced reputation with consumers.

Other study findings include:

  • Although 68 percent of managers cited the link between citizenship and performance appraisal as "increasingly important," 57 percent of managers say their companies do not yet have appraisal systems built around their professed recognition of citizenship's significance.
  • While 58 percent of companies have a structured program to engage stakeholders that typically include employee/labor groups and local communities, only 25 percent do not have relationships with non-governmental organizations (NGOs). Among those that do, one in five relationships are with environmental groups and 15 percent are with labor groups.
  • While some companies view the proliferation of voluntary compliance codes - what some call "codemania" - as an onerous, inefficient and potentially costly distraction promoted by non-business entities, advocates say that by embracing such standards, companies can protect and enhance their reputations, insulate themselves from demands to sign other statements, establish management's commitment to stakeholder confidence in the company and demonstrate their emphasis on prevention rather than corrective action.
  • Only 20 percent of responding managers answered questions relating to global business conduct standards. The remaining 80 percent ignored them. This suggests that only a small number of participating companies have seriously considered endorsing the major global citizenship or business conduct standards.

Managers say citizenship challenges during the next three years will include growing one global identity, integrating it with business decision making and measuring results.

In assessing what will be necessary to assure a more successful business future, CEOs are split between internal factors, such as better managing their external relationships and creating industry-led guidelines, and external factors, such as clearer leadership from government and clearer consensus in civil society about solutions to critical challenges.

For more information, visit The Conference Board Web site at www.conference-board.org.

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