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.”

3. Strong citizenry can boost recruitment and engagement efforts. Being able to offer prospective employees that sort of pride of purpose has become a competitive advantage in the ongoing war for talent, particularly among Millennials. “We’ve led research over the past five years to basically prove that there is an ROI around purpose at work, using purpose as the primary mechanism for incentivizing people,” said Arthur Woods, cofounder of Imperative, a benefit corporation dedicated to leading research and innovation on purpose for the workforce. “There is a whole subset of our workforce that is primarily driven by purpose over a paycheck and a promotion. And we’ve learned this is the highest performing group by every measure.”

At the automotive technology company Harman International, the corporate social responsibility section of its website is the one most trafficked by potential employees. “They immediately go and see what we’re doing in the community,” said Harman’s Paula Davis. “Having a sense of purpose in their jobs and in the community is very important.” Harman Inspired strengthens music education in underserved areas by collaborating with Little Kids Rock, a national nonprofit, to develop a new music technology curriculum that teaches kids to play, compose and improvise music styles culturally relevant to them.

Davis said Harman’s biggest clients, the automakers that deploy the company’s audio technology, “are very engaged on this topic, and they increasingly want to know what we’re doing. So the business case is built-in.”

CEOs increasingly are reporting higher employee engagement and improved talent acquisition and retention as a result of their corporate citizenship programs, reported Sarah Bostwick Stromoski, manager of CEO Leadership at CECP, a CEO-led coalition that believes that a company’s social strategy determines company success. “About 68 percent of CEOs tell us that the main benefit of their corporate societal investment or engagement or whatever you want to call it, has to do with their employees. That’s a huge driver. And it’s actually up in recent years; brand reputation, while it’s still important, is down in relation to the employee driver,” says Stromoski.

Cisco’s TacOps, a first response team working to establish emergency communications in the wake of disasters to coordinate relief efforts and speed food, water and medical care to those in need, was able to retain employees during the most recent downturn by having them work for a time at some of Cisco’s nonprofit partner organizations, said Mary deWysocki, senior director, corporate affairs strategy and global problem solving initiative. “We knew we had to have a restructuring,” she said. “But we were able to leverage some of our CSR relationships to retain that talent as we went through that cycle.”

4. Despite the potential benefits, justifying costs can be challenging—especially for public companies and SMEs with fewer resources. Even when companies see a potential long-term payoff, it can still be a challenge for public companies to justify large investment in corporate citizenship, noted Whelan. “They’re managing to shareholder value and when you’re managing to short-term shareholder value, you’ve got to reduce your margins, and you’ve got to justify that the way in which you do business is going to result in short-term profits.”

Even then, the investment can be tough to justify. For example, for a company that has factories in drought-prone areas, planning for potential stranded assets and invest-ing in conservation of water in those areas makes sound business sense. Yet, “you’re not going to be rewarded for that in the shareholder-value kind of equation we have right now,” said Whelan.

Add to that the challenge of small or midsize companies, many of them B2B, that struggle to find ways to make a meaningful contribution, noted Marshall Cooper, CEO of Chief Executive Group. “The B2B manufacturer that make broom handles—how do you give that company a purpose and a social mission? And they’re not as profitable as Google. So how do you rationalize the investment in both money and time?”

5. CEO involvement is critical to overcoming hurdles and sustaining citizenship efforts. Often, programs are driven by the CEO’s own desire to give back, especially at smaller companies. “Social responsibility is just kind of who I am given my upbringing,” said Mark Shugoll, CEO of the marketing research company Shugoll Research. “What we do is driven by the fact that I want our business to be involved in our community and care about our community.”

Shugoll Research, with just 30 employees, began by offering pro-bono work to arts nonprofits that needed the kind of market research Shugoll provided to its Fortune 500 clients. “We started doing it because we cared, but as we matured we realized that if we’re going to invest corporate resources that could go in other directions, we do need to get some sort of return,” he said, noting that Shugoll negotiated to receive sponsorship recognition for its pro-bono work. “That builds awareness of our company and creates an image of an organization that cares. We talk about our social responsibility in pitches to clients to differentiate us from other organizations.”

The company’s ArtSpeak program has also helped with retention, noted Shugoll. “The people who work at Shugoll Research have tremendous pride in the fact that we’re engaged with the arts. They kind of fight each other to work on the pro bono art studies. There’s fantastic engagement and pride, even with my part-time people—and we have 100 of them—who go out in the community and talk about what the company is doing. They are incredible ambassadors for us in that way. We have a very high retention rate, and I think that pride of commitment contributes to it.”

At IBM, Tesla reported that in coaching other companies on corporate responsibility programs, “one of the strongest success factors is having that CEO involvement.” At IBM, she added, CEO support has been strong since the program was launched by former CEO Sam Palmisano in 2007. “It is amazing to me how I’ve seen [IBM CEO] Ginni [Rometty] speak so many different times about the Corporate Service Corps without a single talking point because she’s very close to the program.”

The more the program is integrated into the core business, the more likely a company’s CEO will be involved, said Leora Rajak, founder and co-owner of the South African business support service provider Enterpriseroom.

“Unfortunately, as we all know, there are many, many CSR departments, or however you want to call them, that are run by the wrong people for the wrong reasons.” But with top down support, and as corporate citizenship programs become more integrated into business, companies have the potential to impact whole communities, while winning market share and attracting top talent, said Cone, who pointed to IBM’s Corporate Service Corps as an example. “It helps the community, it helps the culture and it’s so exciting because it’s not about a silo in the HR department or the philanthropy department, or such,” she said. “It’s coming together—and it’s the CEO who gets this.”

CHIEF EXECUTIVE’S 1ST ANNUAL CORPORATE CITIZENSHIP AWARD RECIPIENTS

Please join us in recognizing the following companies for leading initiatives that both support communities and individuals in need and successfully align with their companies’ missions and bottom-line goals:

CULTURE & ARTS
Harman International
HARMAN Inspired
A partnership with Little Kids Rock to strengthen music education in underserved communities.

Shugoll Research
ArtSpeak!
A program to bring theater artists into public schools to meet students and inspire a love of theater and the arts

EDUCATION (K-12)
CommonBond
Social Promise
Funds the education of children in need, through a partnership with Pencils of Promise.

Recyclebank
Green Schools Program
Points program designed to help public schools develop sustainability strategies.

HIGHER EDUCATION
UBS
NextGen Leaders
An education initiative aims to increase college graduation rates among lower-income, first-generation college students.

ENVIRONMENT
Mondelez International
Cocoa Life
Designed to link cocoa farming with community development in programs ranging from detailed farming-technique training, to education and literacy programs, to business management and financial literacy.

Mohawk Fine Papers
Greenhouse Gas Reduction Initiative
A commitment to conserving energy, supporting emission-free energy projects and engaging in responsible forestry practices.

SUSTAINABILITY
Dell
Internet of Bees
Pilot designed to showcase the broad range of impacts that Internet of Things can have on society, the economy and nature.

Burgerville
Locally Sourced Food
A commitment to source from local ranch and farm providers, repurpose oil, raise hormone-free beef and compost to reduce waste.

Project 7
Partnerships with Nonprofits
Collaboration to provide a host of services, including emergency relief for natural disaster survivors, meals for the hungry, clean drinking water and education in developing nations.

COMMUNITY/ECONOMIC DEVELOPMENT
IBM
Corporate Services Corps
A progam that sends teams of consultants to provide extended pro bono help to communities in need around the world.

Warby Parker
Buy a Pair, Give a Pair
Initiative to help train men and women in developing countries to conduct eye exams and sell glasses at affordable prices.

Twillory
RE:Purpose
A program that delivers donated work apparel to underprivileged men.

HEALTH & SOCIAL SERVICES
Estée Lauder
MAC AIDS Fund
An initiative that raises money through product sales for prevention and treatment of HIV.

Revolution Foods
DC Free Summer Meals
Provides nutritious meals to children during the summer months.

LSTN
Hearing Aid Partnership
A program to help restore hearing for people in need by providing hearing exams and hearing aids.

DISASTER RELIEF
Cisco
TacOps
A first response team working to establish emergency communications in the wake of disasters.

Miir
Clean Water
For every water bottle purchased, one person in water-stressed countries is given clean water for an entire year.

CHILDREN
Medtronic
Project Baiterek
A program to increase access to insulin pump therapy for children with diabetes in Kazakhstan.

BedGear
Sleep Fuel Foundation
Nonprofit organization that offers free interactive sleep deprivation programs to youth of all school ages.

Anton’s Cleaners
Coats for Kids
Annual program to provide children in need with clean, warm coats.

CIVIC/PUBLIC AFFAIRS
Northrop Grumman
Operation IMPACT
A diversity program focused on assisting severely wounded service members as they transition from the military to a private-sector career

Seventh Generation
ComeClean Campaign
Media campaign designed to encourage companies to disclose the ingredients they use in their feminine products, and to use healthier ingredients.

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