5 Lessons in Corporate Citizenship for CEOs

At a roundtable gathering at the Corporate Citizenship Awards, executives and industry experts took note of how far corporate social responsibility has come. “Twenty years ago, we never would have had this roundtable,” said Carol Cone, founder of the New York-based consultancy Carol Cone On Purpose. “There would’ve been maybe three people in a room talking to each other, and they would have been talking only about philanthropy.”

The notion of corporate giving has evolved from check-writing and grant-making to sophisticated strategies that align with core business and involve employees directly, agreed participants at the roundtable, which was moderated by Mike Winkleman, editor-in-chief of Chief Executive.

Leaders in citizenship spend millions each year, deploying talent to both domestic and international nonprofit efforts with the goal of being good global corporate citizens. What’s more, while simply being the right thing to do factors into these initiatives, companies are also giving back because it’s good for business, both in terms of brand reputation and the bottom line.

1. Doing good is also good for business. While ROI data was once limited, research now shows improved numbers for companies with successful programs. According to Project ROI, a comprehensive report by ioSustainability and Babson College, large publicly traded companies have an opportunity to increase market value by 4 percent to 6 percent and reduce share price volatility by 2 percent to 10 percent.

Corporate citizenship also can reduce turnover by half and boost revenues as much as 20 percent. “That’s the potential,” said the study’s coauthor Steve Rochlin, cofounder and senior partner of the strategy, research, and public affairs firm ioSustainability. “But you have to do it well. If you do, you can outcompete your rivals.”

For Javier Flaim of Recyclebank, a company dedicated to encouraging recycling, ROI is a critical part of pitching cities on partnerships. “We don’t go in and say, ‘It’s the right thing to do,’” he says. “Absolutely not. It’s the right thing to do—and we will give you value. We will give you value in terms of community engagement, in terms of decreased waste cost, in terms of improved recycling commodity values, in terms of consulting expertise. We’ll give you value, and we will have a great outcome.”

2. Initiatives often help identify innovative solutions to business problems. Companies that are integrating sustainability into their core businesses are finding innovative new business solutions they wouldn’t have otherwise found, said Tensie Whelan, director of the Center for Sustainable Business and clinical professor of business and society at NYU Stern School of Business, citing as an example the pulp and paper company, Domtar, which figured out how to combine waste from its plants to create a natural, bio-based fertilizer that it then sells to farmers at cost, thereby eliminating the need for costly waste disposal. “These innovations are resulting in really significant operational efficiencies and competitive advantage,” said Whelan.

Cone pointed to Unilever’s Project Shakti as another example. The company wanted to reach hundreds of millions of consumers in India, but had no local supply chain. So it sought out local women in the villages who might be interested in selling product for Unilever. “They created this entire ecosystem of empowering women, educating women, making money, selling more product,” she said. “It was innovation, and it was a win-win.”

IBM’s program, Corporate Service Corps, has delivered substantial value to its own enterprise. The initiative provides small businesses, educational and governmental institutions, and community organizations in developing countries with teams of 10 to 15 top-performing IBM employees for a full month to aid select projects at the intersection of business, technology and society. Since its launch in 2008, the Corporate Service Corps has had a positive impact on the lives of more than 140,000 people through skills transfer and capacity building. At the same time, it has increased the company’s understanding and appreciation of growth markets while creating global leaders who are culturally aware and possess advanced teaching skills.

“We very clearly delivered the ROI for IBM, which is why we’ve been able to thrive in this program as we are in our tenth year,” said Gina Tesla, director of IBM Corporate Citizenship Initiatives, who adds that employees consistently report that their participation in the program has been “a life-changing experience.”