The seemingly inexhaustible list of ratings, rankings, and indices can puzzle even the most seasoned corporate citizenship professionals. They are as varied as the industry itself—from the Best Corporate Citizens and the Best Places to Work lists to the Environmental Performance Index. Through them, a company’s environmental, social, and governance (ESG) impacts and efforts are ranked and reported to large audiences—affecting both internal and external audience perceptions. As a company’s brand and reputation continues to be one of its most important intangible assets, contributing to up to 80 percent of a firm’s market value[i], understanding what CSR and sustainability rankings genuinely report about a company is vital.
Every year, the Boston College Center for Corporate Citizenship gathers 600+ CSR professionals together for its annual International Corporate Citizenship Conference. Some of the most popular aspects of this three-day event are the numerous breakout sessions, where attendees can learn from expert panels, practical workshops, and in-depth case studies. UPDATE: Save the date for next year's conference, hosted by Mary Kay, in Dallas, TX on April 28-30, 2019!
Below is a recap of a popular past session: Brand and reputation. You can find this story, and more, in our quarterly magazine, The Corporate Citizen.
The interaction between a company’s bottom line, its environmental, social, and governance (ESG) efforts, and the way customers view both its product and its people is complex. Figuring out the right mix may be demanding at times. If you get it right, the rewards are more than worth the effort.
“Reputation is what people expect us to do next. It is their expectation of the quality and character of the next thing we produce or say or do. We control our actions (even when it feels like we don't) and our actions over time (especially when we think no one is looking) earn our reputation.” – Seth Godin
Predictability is comforting. We like our daily routines, we wear the same jersey or sit in the same seat when our team plays, and we tend to remain loyal to the brands we like and trust. Unforseen events can shake our confidence in corporations, so companies spend a great deal of time preparing for the unexpected to ensure they consistently deliver on their brand promises. However, businesses today face a unique challenge in that most of their value is intangible, which must be protected and advanced in different ways.
In the 1970s, a company’s market value was comprised of 83 percent tangible assets, things like the physical property, products, and machinery that the company owned. Only 17 percent of the market value of a company was made up of intangible assets, like intellectual property, human capital or reputation.[i]
Fast forward to the present day and the proportion has completely inverted. Only 16 percent of a company’s value is comprised of tangible assets, while 84 percent is made up of intangible assets (see Figure A).
The following is excerpted from Issue 15 of The Corporate Citizen. To learn more about how you can engage your employees and contribute to your communities by developing a strategic corporate citizenship plan, consider joining us on online or in Los Angeles on February 7-9, 2018 for our Corporate Citizenship Strategy: Connect to Your Business and Community course.
For companies with a smaller operational footprint—even though they may have national or even global brand exposure—great value can be achieved by developing a foundational ethos, applying that mission to every aspect of business, from design through delivery, and incorporating it into community involvement strategy.
Founded in 1991 by Marcia Maizel-Clarke and Merlin Clarke, Dogeared, a global accessories brand that focuses on handcrafted jewelry, was built on the premise of community. The company sources the majority of products and materials locally from vendors around the Los Angeles area. Local artisans handcraft all of the company’s unique charms, and jewels are designed and assembled on-site in their Southern California studio.
“It takes many good deeds to build a good reputation, and only one bad one to lose it.” -Benjamin Franklin
A company’s brand and reputation are important assets. They can influence consumer perception, increasing loyalty and purchase intent. They are important forces in attracting and retaining top talent. Perhaps most importantly, they are major components of intangible value, which can account for more than 80 percent of market value.
We may call the value “intangible”, but the results of positive brands and reputations can and have been evaluated—and valued in cold hard cash. According to a 2010 study, brand and reputation have the potential to raise the market value of a company over and above the book value—and by more than just a little.[i]
For most of us, the days of receiving a report card are behind us, but that doesn’t mean that—as corporate citizenship professionals—our work is no longer evaluated and judged. The acronyms may have changed from GRE and LSAT to DJSI, CDP, GRI, etc.—but the assessments can still represent important achievements as well as reminders of where we need to work harder.
The world of corporate citizenship ratings and rankings can be just as intimidating to a novice as exams are to students, as the options and methods of submitting materials has increased exponentially over the past decade.
Is your corporate citizenship department looking to kick-start your employee volunteer program? Start with, “What’s in it for me?” Ask yourself: What’s in it for your employees and your business?
Corporate citizenship is not only a department in your company; it is more importantly the combination of how your company exercises its rights, privileges, obligations, and responsibilities—throughout all of its operations. What is the ecosystem of value that it creates for its stakeholders and for society?
A crucial aspect of corporate citizenship is the ability and desire to engage your company’s employees. Implementing volunteer, giving, and other “responsible” programs help to not only enhance your company’s reputation image, but more importantly, the loyalty of your employees. In our September webinar, we will explore the ways in which companies can most effectively execute these efforts: by aligning them with their overall corporate strategy.
According to Gallup’s State of the American Workforce report, 70% of the American workforce is “not engaged” or “actively disengaged” with their work. These employees are more likely to be emotionally disconnected from their workplace and less likely to be productive as a whole. Additionally, many American workers do not feel that they understand their company’s brand promise and brand differentiation, meaning they are unable to effectively communicate this to customers, or become more connected to the company themselves. This inability to articulate the goals and vision of one’s company can only add to the likelihood of disengagement by employees in their daily work.
Sustainability reporting is here to stay. A full 95% of the Global 250 issue sustainability reports.
These are among the findings of the Value of Sustainability Reporting study from the Center for Corporate Citizenship and Ernst & Young LLP. Sustainability reporting provides results that:
- Increase the reputation of the company
- Increase employee loyalty and public company reputation
- Aid in refining corporate vision and strategy
- Provide transparency
- Stimulate dialogue with stakeholders
Based on these stated benefits, sustainability reporting has quickly become a best practice standard performed by many major companies worldwide. The Global Reporting Initiative, the world’s most widely accepted framework, announced the fourth generation (G4) guidelines of on May 24, 2013.