Corporate responsibility: The communication challenge Received (in revised form): 20th April, 2004

Jenny Dawkins is an associate director of MORI. With a background in both consumer and local government research, she is Head of corporate social responsibility research at MORI. Jenny has extensive experience in all facets of MORI’s stakeholder opinion research and has worked for a wide range of corporate and not-for-profit clients in this field. She graduated from Durham University with a first class degree in English Literature.

Abstract An ever-increasing number of companies are recognising the reputational risks and opportunities that corporate responsibility brings, and for these companies aligning corporate behaviour with stakeholder expectations is an ongoing business priority. Communication, however, often remains the missing link in the practice of corporate responsibility. The information requirements of a range of opinion leader and mass stakeholder audiences are not currently being satisfied by many companies, so they are not getting full credit for their responsible corporate behaviour. Of course, there are specific challenges in communicating corporate responsibility — including scepticism towards company messages and potentially hostile reactions from the media, campaign groups and others. The diverse information requirements of different stakeholder groups also present special communication challenges, and these requirements are examined in turn. Using MORI’s British opinion research to illustrate the case, this paper first examines communication to opinion leader audiences (such as legislators, business press, investors and non-governmental organisations), and in particular the opportunities and limitations of the social report. It then goes on to address communication of corporate responsibility to the general public and the need to trigger wider consumer engagement in this topic. Lastly, it covers the communication opportunity presented by companies’ own employees and the internal communication challenges surrounding corporate responsibility. The paper suggests, in conclusion, that effective communication of corporate responsibility depends on a clear strategy which evaluates both the opportunities and the risks to the brand, and which tailors messages to different stakeholder groups. It calls for a coordinated approach, which ideally embeds corporate responsibility messages into mainstream communications. The paper also identifies internal communication as an under-utilised and potentially powerful channel for enhancing a company’s reputation for responsibility among its key stakeholders.

Jenny Dawkins Head of CSR Research, MORI, MORI House, 79–81 Borough Rd, London SE1 1FY, UK. Tel: +44 (0)7347 3087; E-mail: [email protected]

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KEYWORDS: corporate social responsibility, corporate citizenship, stakeholder opinion, research/market research, reporting: social/CSR/citizenship, operating and financial review (OFR), ethical consumerism, cause (related) marketing, internal communications, employee volunteering, corporate community involvement (CCI)

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Corporate responsibility: The communication challenge

INTRODUCTION Companies are increasingly recognising the reputational risks and opportunities associated with corporate responsibility, and many large corporations are making significant investment in policies, practices, management and reporting systems to ensure their corporate behaviour is responsible in the eyes of their stakeholders. But in a climate where the majority of the British public think that most companies do not listen to the public and respond to their concerns on social and environmental issues (see Figure 1), effective communication of companies’ responsibility programmes remains a rare achievement. Alignment of corporate responsibility communications with stakeholders’ concerns is essential if companies are to break through the communications barrier and capitalise on the potential reputational benefits of corporate responsibility. There are specific challenges inherent in communicating on corporate responsibility. In particular, against a backdrop of public cynicism towards

companies, the credibility of corporate messages on social, environmental and ethical issues is often called into question. These debates often surround companies’ motivation for investing in corporate responsibility, especially if they are perceived to be aiming to gain a marketing advantage out of proportion to the good they are doing. For credibility, the causes companies support have to be seen to fit with their brand, and their corporate behaviour as a whole has to be seen to be consistent — or their corporate responsibility programmes risk being regarded as a smokescreen for unethical behaviour. For example, Christian Aid’s report ‘Behind the mask’,1 criticises some leading companies’ corporate responsibility claims as being in conflict with the reality of their behaviour in developing countries. A further challenge for companies trying to communicate in this space is that different stakeholder audiences have different expectations of companies, different information needs and they respond differently to the various communication channels available. Some

‘Most companies listen to the public and respond to public concerns on social and environmental issues’

No opinion 2% Strongly agree 4% Strongly disagree 9%

28%

Tend to disagree

Tend to agree All % 32

Agree

38%

Disagree Net agree

47 –15

19% Neither Source: MORI

Base: 1,044 GB adults 16+

Figure 1:

Listening and responding to social/environmental concerns

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audiences are predisposed to have particularly high expectations of companies regarding corporate social responsibility (CSR): around seven in ten of both the British public and Labour MPs, for instance, agree that industry and commerce do not pay enough attention to their social responsibilities (whereas Conservative MPs have a very different view). Among City audiences agreement is lower, but still half of business journalists and a third of institutional investors think that industry does not pay enough attention to its responsibilities. Often these City audiences see corporate responsibility issues in terms of risk management and in some cases as an indicator of quality of management. Some industry leaders themselves are calling for more action on these issues; two in five agree that industry and commerce do not pay enough attention to their responsibilities. (In Figure 2, ‘Captains of industry’ are senior Board Directors of the top 500 British companies). Certain stakeholder groups will also be particularly interested in specific CSR

issues. At the broadest level, for example, the British public consider child labour, education and environmental issues particularly important for companies to address, whereas MPs commonly raise the issues of local community contribution (especially in their own constituencies) and treatment of employees. Therefore, on corporate responsibility as on other topics, tailoring messages (or illustrations) to the different interests, information needs and preferred channels of different stakeholders is crucial to effective communications. As discussed below, there is evidence that corporate responsibility communications are not yet being effectively tailored to different stakeholder audiences — and further, that these messages are not currently getting through to many stakeholders. The next section draws together findings on communicating corporate responsibility issues to a range of stakeholder audiences, from opinion leaders such as legislators, business press, investors and non-governmental organisations to the general public and company employees. In each case, it is

‘Industry and commerce do not pay enough attention to their social responsibilities’ Agree

Disagree 70%

General public

32%

35%

Investors Labour MPs

68%

15%

Base: All audiences 2002/2003

110

12%

59%

43%

Captains of industry

Figure 2:

22%

50%

Business journalists

Conservative MPs

8%

39%

Source: MORI

Expectations of CSR

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Q

How important is the way a company communicates its CSR actions to you personally when judging a company? Not important

Important Editors

80%

MPs

78%

Business & financial journalists

49%

Analysts

40%

Investors

40%

9%

46%

56%

59%

Base: 120 MPs, 85 UK investors, 37 business & financial journalists, 30 editors, Summer 2002

Figure 3:

20%

Source: MORI

Importance of communicating CSR

clear the potential for communicating on corporate responsibility topics has yet to be fully realised.

COMMUNICATING TO OPINION LEADER AUDIENCES In this context, opinion leader audiences include legislators (MPs in Britain), business press, investors (both mainstream institutional investors and the social responsible investment or SRI community) and non-governmental organisations (NGOs). The communication of companies’ responsible behaviour is important to diverse opinion leader groups. High proportions among MPs and editors of British media see the communication of corporate responsibility as important when they are judging a company. Even among more hardened mainstream City audiences, half of business press and two in five of City analysts and institutional investors now see companies’ communication of their responsibility as important. Social reports represent a prime

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potential channel for companies to communicate their response to corporate responsibility issues. The audiences for these reports can, however, be diverse with very different information requirements. MORI evaluates stakeholders’ opinions of many companies’ social reports. The research shows that engaged audiences such as NGOs and corporate responsibility ‘experts’ (including think-tanks, commentators, consultants and Social Responsible Investment analysts) are predominantly looking for evidence of the impact of companies’ corporate responsibility programmes. They want to see detailed indicators, benchmarks, targets and trends as well as case studies. The inclusion of external voices and stakeholder criticism is important in gaining their trust, and they are impressed by an integrated and crossfunctional approach to corporate responsibility and adherence to reporting standards such as the Global Reporting Initiative (GRI) and AccountAbility’s reporting standard, AA1000. At the other extreme, many mainstream

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investors have still to be convinced of the business case for corporate responsibility. When they look at social reports, the lack of established indicators and the use of specialist jargon are barriers with this audience. Relevance is key for mainstream City audiences, so they look for overview explanations of how corporate responsibility fits within the business strategy and its impact on the bottom line. Identification of the risks and opportunities specific to the company are key to engagement, and linking the issues to more familiar concepts such as employee retention, corporate governance and risk management can be helpful in overcoming communication barriers. Internationally, opinion formers are found to have varied expectations and information requirements regarding corporate responsibility. At the broadest level, different issues tend to be higher priorities in some regions, for example community contribution can be particularly valued by US stakeholders, whereas environmental issues can be a priority for Northern European audiences and employment issues often concern Japanese opinion formers. Companies also need to balance giving a clear global overview in their reporting with providing a detailed local picture for those stakeholders to whom it is relevant. Clearly, satisfying these divergent expectations (as well as others) in one social report can be a challenge for companies. Clear definition of the priority target audiences for a company’s social reporting, and evaluation of their information needs in relation to its specific corporate responsibility issues, is vital to ensure the social report is an effective communication vehicle. An obvious first step is for companies planning to produce their next corporate responsibility report is to consult priority stakeholders’ opinions of their existing reporting before embarking on an update, ideally through

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proactive consultation rather than just relying on the (possibly atypical) minority of stakeholders who respond to feedback forms. In addition, the number and length of social reports being produced are increasing, and companies are increasingly vying for the attention of their stakeholders. Creative communication solutions are needed to communicate corporate responsibility messages in a way that will be striking, relevant and understandable. In terms of best practice, companies highlighted at the 2003 ACCA UK Awards for Sustainability Reporting include The Co-operative Bank, Shell International, GlaxoSmithKline (particularly strong on their environmental reporting), BAT, BT and Powergen (the last three mentioned for their online reporting).2 The internet is increasingly being used by companies to tailor their corporate responsibility messages to different audiences, but creative use of offline information channels is also required. Many audiences are not proactively looking for information on corporate responsibility, and while stand-alone social reports clearly have a place for some engaged audiences, there is a case for embedding corporate responsibility messages in more mainstream communications with a clear explanation of the relevance of the issue to the stakeholder concerned. This could include Annual Reports and investor information, as well as one-to-one meetings with investors and dialogue sessions with NGOs and community groups. Of course, it also relies on engaging the specialists within the company that own each stakeholder relationship and equipping them to address responsibility issues in their day-to-day communication activities. Engaging mainstream investors has long been an ambition of the corporate responsibility movement. This relies on

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Q

How would you rate the quality of [companies’] information on environmental, social and sustainability performance? Poor 45%

Analysts

Investors

Journalists

IRMs

Good 32%

28%

54%

63%

20%

33%

63%

Base: All respondents (93 analysts, 50 investors, 30 journalists, 30 IRMs)

Figure 4:

Source: MORI

Quality of company information

providing meaningful information to City audiences, and as mentioned above, it is essential that the relevance of corporate responsibility issues to the business strategy and the bottom line is highlighted to these groups. Analysts, investors and the business press, however, are more likely to rate company information on environmental and social issues as poor rather than good, which suggests their requirements are not being met. Ironically, the only group which rates company information on these issues positively is the investment relations managers within companies, who of course generally have responsibility for providing this information.3 Certainly the forthcoming UK legislation on the operating and financial review (OFR), which will require quoted companies to report on non-financial information that is ‘material’ to the business, should ensure that the boards of many of the largest companies engage in the debate of how to report non-financial information in a meaningful way and how to assess which issues are material to the success of the business.4

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Therefore, opinion research emphasises the various information requirements of the different opinion leader audiences towards which social reports are commonly targeted. Furthermore, the mainstream investment community, one of the audiences less engaged in corporate responsibility issues, is particularly critical of company information provision.

COMMUNICATION TO THE PUBLIC The general public is rarely a primary target audience for specialist communication channels such as social reports. Nevertheless, there is public interest in receiving information about companies’ responsibilities; eight in ten of the British public consider it important for companies to spend money publicly communicating their activities, even if that means they have less to invest in the programmes themselves. MORI’s research suggests that the public is increasingly aware of its consumer power and keen to use that power to reward ‘good’

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Q

Which of these statements best describes your view of the balance between programmes and communications? It’s important to know about companies’ programmes, they should spend significant amounts to tell us

Don’t know Not important to know, no money should be spent on communications

6%

17%

8%

All % Companies should make an effort to tell us but should not spend significant amounts

Not important

8

Net important

+78

69%

Source: MORI

Base: 1,044 GB Adults 15+, July– August 2003

Figure 5:

Q

86

Important

Communication of CSR

Are you aware of any cases of particular companies helping the community or society in any way? Are you aware of any companies that are particularly socially, environmentally or ethically responsible? 100

Awareness of companies helping the community Awareness of socially environmentally & ethically responsible companies

80

60

% 40

Yes 37% Yes 30%

20

0 1991

1992

1993

1994

1995

1996

1997

Base: 982 or 1,044 GB adults 16+, July– August 2003

Figure 6:

1999

2000

2001

2002

2003 Source: MORI

Awareness of involvement — trends

companies and punish ‘bad’ ones. Internationally, a study of public opinion in 23 markets across the world in 1999 showed that around a quarter had punished a company seen as socially

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irresponsible in the previous year, with North America and Northern Europe the regions with the highest level of this consumer activism and Asia and Eastern Europe those with the lowest level.5

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Q

To what extent do you agree or disagree with the following statement? If I had more information about companies’ social, environmental and ethical behaviour this wold influence my decisions about what I buy No opinion 1%

Strongly disagree 3% Tend to disagree 8%

25% Neither

Strongly agree

14% Agree Disagree

74% 11%

49% Tend to agree Source: MORI

Base: 1,044 GB adults 16+, July–August 2003

Figure 7:

Impact of increased information on purchase

Public awareness of responsible corporate behaviour has, however, remained fairly low over the last ten years, despite increasing company involvement in the field. Only around a third of the British public can name any specific company that helps the community or society without prompting, while only three in ten can name a company that they consider to be particularly environmentally, socially or ethically responsible. Therefore, there is clearly a need to improve the effectiveness of communicating companies’ responsibility if mass consumer power is to be engaged and purchase behaviour influenced. There are indications that increased communication of corporate responsibility would have an impact on consumer purchase; a quarter of the British public strongly agree that if they had more information about companies’ social, environmental and ethical behaviour, this would influence their purchase decisions. There is a niche group of consumers who are more open to messages on

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corporate responsibility; they are more engaged in these types of issues, and more tuned in to communications on these topics. MORI has identified a group named ‘CSR activists’; they make up 15 per cent of the population and are more likely than average to be aged 35–54, be of higher social grades, broadsheet readers and graduates. This group are particularly engaged in responsibility issues, more likely to purchase on ethical criteria, more aware of companies’ activities in this field and more likely to actively investigate companies’ ethical behaviour.6 A study across 12 European markets in 2000 found that consumer activism in Great Britain was in the middling to lower range compared to other European markets. The countries with the highest levels of CSR activists were Switzerland, Sweden and Belgium, while levels were very low in France, Portugal and Italy.7 In any case, CSR activists form a potentially lucrative niche market for brands that are recognised for their corporate responsibility.

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But most consumers do not proactively seek information on company behaviour, even on the emotive issues they consider to be particularly important (such as child labour); only 5 per cent of the public have sought information on companies’ ethical behaviour in the last year. Companies’ most effective communication vehicles to the public seem to be cause marketing campaigns and other point of purchase communication channels (alongside informal channels such as word of mouth, discussed below). Regarding cause marketing, of course there are risks involved in this sort of high-profile campaign, particularly if the cause chosen is seen to be inappropriate for the company concerned (as was the case with Cadbury’s Get Active Initiative, for example), and companies certainly need to conduct a thorough analysis of the risks and opportunities involved. Nevertheless, as with other audiences, there is potential for companies to integrate corporate responsibility messages with other mainstream communications, especially when they demonstrate a benefit for the consumer as well as benefits to the society or the environment, for example in the marketing of service features such as paperless billing which can have a cost benefit to the consumer as well as an environmental benefit. Across Europe, the public feel the most appropriate channels for companies to communicate their social activities are on the product/label itself, through voluntary reporting and through editorial coverage on television and in the press.8 Furthermore, companies can overestimate the level of public scepticism towards the credibility of their information on corporate responsibility. The public would tend to trust company information on its responsibilities to its stakeholders; around six in ten would trust this kind of information from companies, only just behind the 66 per cent who

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would trust this information from NGOs (defined in the questionnaire as ‘campaigning organisations and charities, such as Greenpeace and Amnesty International’). Of course, sensitivity regarding the tone of communications is vital here, but it does seem that, public distrust of company information on corporate responsibility tends to be less of a barrier than the difficulties of getting the message through in the first place. In short, communication on corporate responsibility issues is not getting through to the majority of consumers, although the indications are that consumers are interested in the issue, that it has the potential to influence their purchasing decisions and that most are pre-disposed to trust company information on this topic.

INTERNAL COMMUNICATION One communication channel often underestimated by companies when promoting corporate responsibility is their employee base. Often the main interface with some stakeholder groups, and considered a particularly credible source of information (their word carries far more weight than a company spokesperson or glossy brochure), employees are potentially powerful advocates of a company’s corporate responsibility programme. Corporate responsibility is an important consideration for the majority of employees; around nine in ten British workers consider it important that their employer is responsible to society and the environment (and 59 per cent say it is very important). Therefore, corporate responsibility is potentially a factor in the ‘war for talent’ in attracting and retaining the best people. Some companies say that pages on corporate responsibility are now among the top areas of their websites to be accessed by graduates when researching prospective careers.

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Q

Many companies now produce a social or partnership report outlining their impact on and contribution to society, the environment and the economy in which it operates. Which of these statements come closest to your opinion if you were an employee of the company?

No interest 4% Would not expect to see, but would like to know it was produced

Would not expect to see, but would be ‘nice’

Don’t know 3% Would expect/like to see

5%

65%

23%

Would expect to see a copy

Source: MORI

Base: 527 GB adults who are working July –August 2002

Figure 8:

Employees’ expectations of social reports

Employees are also generally interested in receiving information about their employers’ responsibilities; for example, 65 per cent of workers would expect to see their employer’s social report. This gives

Q

88%

companies another potential stakeholder audience for their corporate responsibility reporting, although bespoke communications using familiar channels are often more effective for employees.

Which comes closest to your opinion of your company as an employer?

Not aware of CSR programmes

Aware, not involved

I would speak highly of them

I would be

50%

23%

65%

Involved

19%

82%

Base: c. 2,000 employees across six companies, March - May 2000

Figure 9:

critical

13%

Source: MORI

Impact of CSR programmes on employees

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Q

Which, if any, of the following have you done in the last twelve months? Talked to friends or family about a company’s behaviour

51%

Advised someone against using a company because it has not acted responsibly

32%

Advised someone to use a company because it had acted responsibly

28%

Received advice against using a company because it has not acted responsibly

18%

Received advice to use a company because it has acted responsibly

17%

Positive advice Negative advice

Base: 527 GB adults who are working, July–August 2002

2003 % 35 38

Source: MORI

Figure 10: Employees’ advocacy of companies

Nevertheless, it is important to give consistent information both internally and externally, not least to equip employees to answer stakeholders’ queries on whether the company is actually taking these issues as seriously as it claims. Corporate responsibility also has the potential to increase employee motivation and enhance their opinion of their employer. In a study among employees from six major corporations from several industry sectors, among employees involved in their company’s community activities, their advocacy of their company (the proportion that would speak highly about the company to others) is substantially higher than that among employees who were not aware of their employer’s community activities.9 The reach of employees as a communication channel to other stakeholder audiences should not be underestimated. The most effective communication channel to the public in terms of generating recognition of companies’ responsibilities are informal channels, such as word of mouth, being or knowing an employee. Among workers, a third have advised someone else to use a company because it had acted responsibly, and a similar proportion have advised

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someone against using a company. Another internal communications issue in many companies is generating crossfunctional involvement in managing corporate responsibility. With regard to communications, engaging people across the business who own the company’s relationships with different stakeholder groups can be vital in winning space for corporate responsibility messages; this of course includes corporate communications or public affairs, but also functions ranging from marketing to human resources to investor relations. Therefore, employees are a key potential communication channel for companies’ corporate responsibility, since they have a wide reach among other stakeholder groups and are considered as particularly credible information sources. Responsibility messages have the potential to engage employees, and effective internal communication of corporate responsibility programmes is key to winning potentially powerful advocates, both in terms of the ‘grass roots’ employee base, and key allies within functions across the business.

CONCLUSIONS In order to produce effective

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communications on corporate responsibility issues, MORI’s opinion research highlights a number of key lessons for companies:

References 1.

2.

— develop a clear communications strategy, taking into account which aspects of the responsibility programme best fit with the corporate reputation and with stakeholders’ concerns, and also the opportunity and risk to the brand inherent in the communications activity — tailor the content, style and channel of communications to the different expectations of the various stakeholder audiences (while, of course, maintaining the overall coherence of the company’s message) and consult stakeholders when developing or revising communications on corporate responsibility — coordination is key, ensure the consistency of messages and the alignment of the company’s communication with its behaviour. The most effective communication in some cases may involve embedding corporate responsibility messages within mainstream communications — do not under-estimate internal communications, employees are an underutilised and potentially powerful channel for enhancing a company’s reputation for responsibility among its key stakeholders.

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3.

4.

5.

6.

7.

8. 9.

Pendleton, A. (2004) ‘Behind the mask: The real face of corporate social responsibility’, Christian Aid, London, www.christian-aid.org.uk/indepth/0401csr/ index.htm ACCA (2004) ‘ACCA UK Awards For Sustainability Reporting 2003: Report of the Judges’, The Certified Accountants Educational Trust, London, www.accaglobal.com/sustainability/awards Business in the Environment (2001) ‘Investing in the future: City attitudes to environmental and social issues’, Business in the Environment, London, www.bitc.org.uk/resources/research/ research_publications/bie1.html For further discussion of the implications of the OFR for corporate reporting, see Institute of Public Relations (2003) ‘Reputation and the bottom line: A communicators’ guide to reporting on corporate reputation’, Institute of Public Relations, London, www.ipr.org.uk/Products/productsframeset.htm Environics (1999) ‘The Millennium Poll on Corporate Social Responsibility’, Environics, Toronto, www.mori.com/polls/1999/millpoll.shtml See also Cowe, R. and Williams, S. (2000) ‘Who are the ethical consumers?’, The Co-operative Bank, Manchester, www.co-operativebank.co.uk/ethics/ ethicalpolicy_consumerism.html CSR Europe (2000) ‘The first ever European survey of consumers attitudes towards corporate social responsibility’, CSR Europe, Brussels, www.csreurope.org/publications/ europeansurvey_page3462.aspx Ibid. Tuffrey, M. (2003) ‘Good companies, better employees: How community involvement can enhance employee morale, motivation, commitment and performance’, The Corporate Citizenship Company, London, www.corporate-citizenship.co.uk/ employees/studies/hr3

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