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Yearly CSR rankings for reputation tell us what the public thinks, but are those companies really the most responsible, or are there other factors at play?
Who do you think of as the world’s best companies for CSR?
When searching for the answer myself, I was expecting to find rankings of companies based on their CSR initiatives/impact. However, what I discovered was a lot of things written about reputation. The most prominent article was by Forbes, who listed the world’s best CSR reputations in 2017 based on the CSR RepTrak® from the Reputation Institute (RI). The top 10 is full of big household names who certainly do have great CSR credentials. However, it made me ask the question: are these companies really the most responsible, or are others missing out on recognition?
I decided to delve a little deeper into the report to see what I could find.
Size is on your side
The first clue that reputation may not paint a true picture of CSR comes from the fact that the RI only analyses companies that have an international operation (operating in the 15 largest economies). While obviously necessary when looking for companies with a global reputation, this does immediately disqualify a great many other companies that may work strongly towards CSR initiatives, but only operate in one or two countries. Surely, where a company operates in the world is not necessarily indicative of their philanthropic endeavours?
Fortune favours the famous
Within companies that do qualify, there is another clue that ubiquity is king. The CSR RepTrak® report states that companies with the highest consumer familiarity score have a 12.5% advantage in CSR reputation over those with the lowest, meaning the more well known you are, the higher your reputation for CSR is likely to be. Is this because well-known transnational corporations have the capacity to “shout louder” than companies with less resources? Whatever the reason, such a strong bias in favour of famous companies suggests public perception of CSR may be based on more than just the facts.
If fame can give a boost to your CSR reputation, what about the industry you operate in? Over 25% of the CSR RepTrak® score is based on “workplace”, defined as “rewarding employees fairly, employee well-being, and equal opportunities”. The tech industry, where the trend of focusing on employee satisfaction is most strongly manifested, is rated highest by the RI. However, its progressive workplace culture and on-the-job perks are more about attracting and retaining the best talent in a competitive market than they are about social responsibility – more HR than CSR. Do industry incentives to invest in the workplace give some companies an unfair advantage over others for whom unlimited holiday and free gourmet food are not a viable option?
The top 100 also features some companies who have been accused of some very irresponsible things over the years. Volkswagen (VW), for example, still sit at number 100, just two years after their highly public emissions scandal. Volkswagen also feature above every single one of the world’s major banks, and according to the RI, the financial industry is behind on every level. Are the world’s financial institutions really less ethical, fair and supportive of good causes, or do memories of the financial crisis and the popular image of the unscrupulous banker obscure the good work that is being done?
Are we biased against the financial industry? And are VW really the 100th most responsible company in the world, or is the power and influence of their brand propelling them above other companies with a far better track record?
Despite the possibility that the best reputations may not always translate into the best results, it’s important to note that there are companies listed on the CSR RepTrack® that are more than worthy of recognition. Lego, for example, have made hugely positive advances towards embedding CSR into everything they do, and Microsoft’s Satya Nadella is well known for his commitment to environmental and social responsibility. The CSR RepTrack® also gives great insight into public perception of CSR, which is hugely important for companies when judging return on investment. However, if reputation is not necessarily a reliable indicator of actual responsibility, then what is?
A new standard for reporting
Research recently published in the CPA Journal that analysed companies listed on three different leading CSR rankings (including the CSR RepTrak® 2015) found that only 12% of companies were listed in all three. The report even goes as far as to say that the commonalities between them were so minimal that it is difficult to even talk about a “Top 100”. It is perhaps unsurprising, then, that I came up short when searching for a definitive list of CSR rankings. However, with more and more consumers and investors taking CSR into account in their decision making, perhaps the time is now right for consistent reporting standards, so that outcomes and long term impact can be properly judged, and one company be accurately compared to another. Who knows how that information might affect the world’s best CSR reputations.