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Do Large Companies Have an Unfair CSR Advantage?

CSRHUB | Monday April 4th, 2011 | 3 Comments

CSR RatingsThe following is part of a series by our friends at CSRHub (a 3p sponsor) – offering free sustainability and corporate social responsibility ratings on over 5,000 of the world’s largest publicly traded companies. 3p readers get 40% off CSRHub’s professional subscriptions with promo code “TP40“.

By Bahar Gidwani from the CSRHub Blog

There are a lot of “Top 50” or “Top 100” lists for corporate social responsibility (CSR) issues.  Companies get kudos for how they treat women, blacks or Hispanics; for their attitude towards climate change, ethics, or shareholder treatment; or for being a good place to work, nice to commuters, or good to working parents.

We currently track 27 of these lists, and aggregate their views into our CSR ratings.  We tend to see the same companies appear over and over on these lists.  Is this because there are a few great companies and everyone knows it?  Or is the concentration of attention and awards due to the fact that big companies have big PR budgets, fill out lots of questionnaires, and have products that everyone recognizes and respects?

Using the tools on our site, we found that companies in the Fortune 1000 (the 1,000 biggest US companies) got an average of 2.9 mentions on “top something” lists.  This compared to an average of 0.2 mentions each for another 1,087 smaller US companies that we track.

Of course, this could be because big companies perform better socially than the small ones do.  After all, they have the resources to have strong training programs, good benefits, contribute to their communities, clean up their waste, cut their carbon use, etc.  We used our tool to compare the distribution of overall ratings for US companies that are in the Fortune 1000 against those we track who are not. (see graph below)

The average overall ratings for these two groups are pretty close (using our eco-oriented user profile, Fortune 1000 companies get a 48.4 rating and non-Fortune get a 48.1).  However, it looks to me like an awful lot of the smaller companies are better than the big ones!  The average advantage for the big companies probably is due to that little group of big companies who are way to the right—with scores in the 70s.  Without their influence, big companies would probably look worse overall on our sustainability scores than small ones.

So, why do “them that got, get?”  I think big companies get more attention, praise, and rewards because they can spend a lot of time and money communicating their performance.  Big companies fill out surveys and questionnaires, send out lots of press releases, and can afford to send their people to conferences and training sessions.  The occasional small company that shows up on a “top something” list probably got there by chance or because they did a really super job on the issue that is being covered.

I’d like to see the folks who research these lists either dig a bit deeper or at least set up a side list for the best smaller companies.  Being on a top 50 or top 100 list is satisfying and rewarding for both the management of a company and its employees.  I see frequent mentions of these “wins” via company press releases, and I know they generate a feeling of pride and accomplishment among the people who are responsible for the achievement.  Big companies already get plenty of attention.  Let’s do more to ensure that smaller companies get their fair share, too.

 


Bahar Gidwani is a Cofounder and CEO of CSRHub. Formerly, he was the CEO of New York-based Index Stock Imagery, Inc, from 1991 through its sale in 2006. He has built and run large technology-based businesses and has experience building a multi-million visitor Web site. Bahar holds a CFA, was a partner at Kidder, Peabody & Co., and worked at McKinsey & Co. Bahar has consulted to both large companies such as Citibank, GE, and Acxiom and a number of smaller software and Web-based companies. He has an MBA (Baker Scholar) from Harvard Business School and a BS in Astronomy and Physics (magna cum laude) from Amherst College. Bahar races sailboats, plays competitive bridge, and is based in New York City.

CSRHub is a corporate social responsibility (CSR) ratings tool that allows managers, researchers, consultants, academics and individual activists to track the CSR and sustainability performance of major companies. We aggregate data from more than 90 sources to provide our users with a comprehensive source of CSR information on about 5000 publicly traded companies in 65 countries. CSRHub is a B Corporation. Browse our ratings at www.csrhub.com

 

 


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  • http://www.facebook.com/people/David-Connor/1380344620 David Connor

    Apart from the obvious resource advantage many of the bigger corporates are expected to deliver against CSR issues, especially whoever is the industry leader – always a target for critics. Ticking CSR boxes is a big business in itself these days.

    More emphasis has be placed on smaller businesses to encourage the thriving entrepreneurial spirit, innovation, agility and risk taking that our planet and society desperately need. This would also provide momentum to the opportunity to begin to push the CSR message beyond the ‘those who know’ fence in to the mainstream audience.

    We need to actively sell the competitive advantages of CSR to SMEs. They’re more bothered about pure traditional survival to go looking for something they don’t know they need.

  • http://www.collectiveresponsibility.org Collective Responsibility

    In my expreience, this has little to do with the quality of the program, and has everything to do with the fact that (1) large firms have much stronger communications platforms, that are constantly looking for media hit opportunities (2) traditional media, and in many way new mediums, are more likely to focus on a story about a big company doing good vs. a good small company (3) very few SMEs have the budget to build a CSR report, or apply for CSR awards, where spending 10k USD for a large firm to retain a PR firm to package their applications is considered a minor budget item.

    It is a system that simply is too expensive (and time consuming) for many SMEs to participate in.. and there are only so many “feel good” firms that the media can pick up and support on an annual basis.

    R
    http://www.collectiveresponsibility.org

  • http://www.businessethicsblog.com Chris MacDonald

    Two key factors:

    1) Bigger companies have people to do all the box-ticking that David mentioned in his comment. Smaller companies just don’t have people to dedicate to filling out the forms that most rankings require.

    2) Regulations. Big companies (especially listed ones) are subject to additional regulatory requirements and are highly motivated by things like the US Federal Sentencing Guidelines. They thus have regulatory reasons to do a lot of the stuff that also happens to be measured by lots of ethics rankings.

    Chris MacDonald
    BusinessEthicsBlog.com