Can Competition Drive Corporate “C-Suites” Toward Better CSR?

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“. Originally published on the CSRHub blog

The C word that may have the biggest effect on the C-Suite is competition.

The C-Suite cares about budgets, quarterly results, and cash flow. But they also track and worry about how their company is performing against its competitors. As CSR thinking gradually permeates society, the occupants of the C-Suite are being asked how their company compares to other companies on employee engagement, community involvement, the quality of its corporate governance, and how it treats the environment. These issues affect a company’s brand and may enhance or limit it strategic options. Communities may welcome a new facility from a “good” company and make demands or put limits on the expansion of a “bad” company. A company may have trouble acquiring another company if the acquired company management doesn’t feel that its “values” match those of the acquirer. A “progressive” employer has an advantage over an employer that is seen as “old fashioned,” when it competes for top talent.

Using a tool like CSRHub, it is now relatively easy for C-level folks to benchmark their social performance against that of their major competitors. They can quickly drill down to find areas of weakness in their company and see how their competitors have burnished their social credentials. For instance, we recently found that companies who use the Global Reporting Initiative (GRI) system for organizing their social reporting get a 10 point benefit on their Environment Policy & Reporting score.

Many studies have tried to prove that companies that perform better on social issues and sustainability earn higher profits or get a lift in their stock price. However, data on these areas has not been consistently reported, not all companies report all data items, and social issues have been tracked for a relatively short time (less than twenty years). Therefore, these performance claims seem premature.

C-Suite managers have a burning interest in winning. If we can’t cajole them to change and if their calculations of ROI lead them to believe sustainability isn’t high return, we may still be able to get their attention by showing them what their competitors are doing. In truth, we should probably use all three means to get company C-Suites to “tip” to a view that sustainable and socially responsible policies will bring them valuable benefits.

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.

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CSRHub provides access to corporate social responsibility and sustainability ratings and information on nearly 5,000 companies from 135 industries in 65 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.CSRHub rates 12 indicators of employee, environment, community and governance performance and flags many special issues. We offer subscribers immediate access to millions of detailed data points from our 140-plus data sources. Our data comes from six socially responsible investing firms, well-known indexes, publications, “best of” or “worst of” lists, NGOs, crowd sources and government agencies. By aggregating and normalizing the information from these sources, CSRHub has created a broad, consistent rating system and a searchable database that links each rating point back to its source.

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