Reputation and Ethics: time for better communication
“This is not only about doing good, we have done it because it makes economic sense.” The words of Swiss Re’s Chief Investment Officer spoke volumes when in July the re-insurance titan moved its entire US$130bn in liquid assets to track ethical industries alone.
On this evidence, Corporate and Social Responsibility (CSR) activities are becoming increasingly important in the eyes of the investment community. Some might say they are now a cost of doing business to companies. However, many corporations seek to leverage their CSR programmes to gain reputational capital in addition to the table stakes required by the investment and regulatory communities.
Regardless of whether these initiatives are stuck in the Jurassic age of ‘doing a lot of great work for charity’ whilst other parts of the company operate less ethically, or holistic and highly sophisticated programmes such as Unilever’s Sustainable Living Plan, I suspect many companies struggle to maximise the reputational halo their CSR activities can bring. A lot of that is down to stakeholder confusion as to what the CSR focus of a company is, and ineffective communication.
Companies increasingly need third-party recognition and endorsement of their commitment to Corporate Responsibility. The trust deficit many stakeholders have means it is not enough for businesses to blown their own CSR trumpets. Consumers, in particular, need to be reassured the products and services they are purchasing come from companies with a clear commitment to ethical business behaviour.
Help may now be at hand for companies to communicate their CSR credentials better, quicker and more meaningfully to consumers. The rise of the B Corp movement (Benefit Corporations) over the past few years has been noteworthy. This community seeks to meet higher standards of transparency, accountability, and performance, through a voluntary certification process. By signing up to become a B Corp, companies have to demonstrate their commitment not only to shareholder return, but to benefit all stakeholders. So far, over 100 SMEs have become Certified B Corps in the UK.
Over time, being a B Corp could become a symbol of ethical reassurance for consumers at the point of purchase – a bit like FairTrade or Soil Association labels on food products. As a short-hand method to communicate the complexity of a company’s environmental, social, workplace and corporate governance activities, this could really help demonstrate holistic Corporate Responsibility, and so differentiate a company’s reputation for CSR.
There is still a long way to go. Publicly quoted multi-nationals are legally required to focus on maximising shareholder return, and have complex corporate governance and operating structures. B Corp is working with the likes of Danone to adapt the certification standards to accommodate these issues, yet remain a stringent ethical assessment of corporate commitment.
I also believe B Corp needs to establish its own reputation better, particularly in the minds of consumers. Without the B Corp logo meaning something in its own right, all that excellent work and ambition could get easily lost.
It will be fascinating to see which multi-national is the first to become B Corp certified. Regardless of who it is, my sense is this will be a game-changer in advancing the ethical purpose of business, and accelerating corporate reputation.