A few months ago, I wrote about the importance of operational resilience, and how corporate citizenship can play a role in helping companies survive and thrive. In order to compete and prosper over the long term—companies should do the work ahead of time that allows them to PASS through disruptions. To PASS, in short, is to:
Predict and prepare: Be proactive, not reactive.
Align your program with business strategy: Scan for risks, do what you can to avert them, and have a plan “B”.
Sponsorship: Enlist groups across and beyond the organization to make sure that everyone knows their role and why it is important.
Systems thinking: Consider technology systems, business processes, AND all of the people who interact with them. How can you build flexibility and redundancy in the systems so that if one node in your network is compromised, you can continue to operate?
I identified these four critical practices to help you navigate your companies through stress tests—and we have certainly weathered a few recently. From the U.S. withdrawal of the Paris Agreement to Hurricanes Harvey, Irma, and Maria, from constantly shifting regulatory expectations to the rapidly increasing social consciousness of consumers and employees—leading companies have contended with numerous bouts of uncertainty.
They have responded with a clear call for responsibility. Over the past few months, hundreds of companies such as JLL, NIKE, and Bloomberg have assured the global community that ‘We Are Still In’ the Paris Agreement. Verizon, Walgreens, Dow Chemical Company, USAA, Dell, and scores of others have stepped up to offer relief to Harvey victims, while Bank of America, Humana, and AT&T are among the many companies providing aid to those affected by Irma. Meanwhile, corporate leaders are advocating for ESG issues at an unprecedented scale—weighing in on topics such as immigration, marriage equality, LGBTQ rights, and renewable energy.
Their increased leadership underscores a new commitment to recognizing the linkages between resilience, responsibility, and results. As Apple CEO Tim Cook said recently: “…we [Apple] have a moral responsibility to help grow the economy, to help grow jobs, to contribute to this country, and to contribute to the other countries that we do business in.”
The relationship between resilience, responsibility, and results is one that is growingly appreciated by executives and stakeholders alike. In the Center’s State of Corporate Citizenship 2017 study, the majority of executive respondents reported that they were more likely to achieve key resiliency factors such as risk management and improved customer retention rates when corporate citizenship was integrated into business strategy. They also reported that long-term CSR initiatives contributed to business success.
Investors also appreciate the value of corporate citizenship, and are increasingly seeking out ESG data with which to make their valuations.[i] Studies find that strong citizenship performance is considered a proxy for risk management by investors, serving to lower the cost of capital, increase liquidity, and protect market value during crises.[ii],[iii],[iv]
At the Center’s 2018 International Corporate Citizenship Conference this coming April, we plan to explore the role of corporate citizenship in maintaining resilience and delivering results. This year, we are privileged to welcome Travelers as our convening sponsor. At its core, Travelers is in the business of resilience. For more than 160 years, it has been helping organizations and individuals plan ahead and develop the necessary structure and resources to prosper for decades—if not centuries—to come.
In Los Angeles, we will gather more than 600 of the leading CSR experts from around the world for a 3 day exploration of how we can build on this momentum, and create a more sustainable and prosperous future by investing in resiliency, responsibility, and results. I hope to see you there.
[i] State Street Global Advisors (2017). Performing for the future: ESG's Place in investment portfolios today and tomorrow. Retrieved from https://www.ssga.com/investment-topics/environmental-social-governance/2017/esg-institutional-investor-survey-us.PDF
[ii] Chava, S. (2014). Environmental externalities and cost of capital. Management Science, 60(9), 2223-2247.
[iii] Lang, M., Lins, K. V., & Maffett, M. (2012). Transparency, liquidity, and valuation: International evidence on when transparency matters most. Journal of Accounting Research, 50(3), 729-774.
[iv] Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The value of corporate social responsibility during the financial crisis. The Journal of Finance.