jen ace,
the corporate environmentalist
Getting an ROI out of CSR
Net Impact wrapped up on Saturday, and it turned out that the two most interesting sessions I saw fell one right after the other. Possibly not coincidentally, both sessions were led by one person, and thus that person was able to devote a significant amount of time to giving the audience real insights into some facet of CSR. Some of the moderated panels found it difficult to progress beyond statements and examples with which I'm sure much of the audience was already familiar.
branding corporate social responsibility
The first talk was by Kellie McElhaney who, probably not coincidentally, has a new book out. McElhaney was a skilled speaker who was obviously used to lecturing, being interrupted by questions, and picking up where she left off without blinking. Her main point was that companies should brand their Corporate Social Responsibility (CSR) efforts and use them to sell more product to achieve a return on investment. She used Pedigree (the dog food manufacturer) as a major example. Pedigree's CSR program is carefully, simply, and elegantly branded: "Help us help dogs." They have some heart-rending commercials to convince viewers to adopt dogs from shelters - and to turn those viewers into Pedigree buyers. (The website covers all its bases: even people who love dogs but can't adopt one can help: by buying Pedigree!) The beauty of the Pedigree campaign is that it creates an immediate link between the company's CSR efforts and selling more dog food, and the more Pedigree does CSR, the more dog food it sells. This is supported by the fact that the simple message is so easily communicated across multiple channels - from materials distributed to new employees, to every speech the CEO gives, to CSR reports and Point of Sale materials.
McElhaney's second major point - which Chip and Dan Heath also support in their book Made to Stick - is that stories trump facts 10 times out of 10. She cited Whirlpool's recent Habitat for Humanity campaign: check out the video on YouTube. Viewers made an immediate connection with the commercials, and even though Whirlpool is only mentioned briefly, it's obvious what Whirlpool sells, and the company comes out smelling like roses. People also loved the extended campaign ads that Reba MacEntyre had plastered all over her tour. Apparently Whirlpool forgot the Point of Sale connection, though, leaving potential customers stranded in Sears desperately trying to remember whether it was GE or Kenmore that had done the great work with Habitat for Humanity. Stories thus help companies forge connections with consumers in a way that facts never could.
The overarching message of her talk was that companies should use their CSR spending to generate a Return On Investment - and that companies can only achieve that ROI by talking about their CSR. She asked the audience members to raise their hands if they were raised in Catholic/Christian/Jewish households, adding that her mother would put money into the donation tray in church because it was the right thing to do, but that it was important to make sure nobody saw her... I'm not really sure what to think about companies bragging about their CSR. I wasn't raised in a religious household, but even I somehow picked up the idea that a good deed is a better deed if it's done anonymously - or at least without the person actively seeking recognition for their kindness. While Milton Friedman would argue that a company has no responsibility to do any good deed beyond generating revenue for shareholders, I do think that companies should engage in CSR. Perhaps branding CSR actually reconciles these two points of view: if CSR sells more product, it increases shareholder revenue.
measuring the roi on csr
Jason Saul of Mission Measurement went one step further: his opinion is that corporations should not engage in CSR if it cannot be shown to have a positive ROI. He cited the findings of a study that Mission Measurement conducted to find out how the perception of CSR activities varies by job title.
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•CSR managers want CSR programs that are scalable, far-reaching, authentic, and effect social change.
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•CEOs want to know that a CSR program represents the best possible use of company dollars, that the program adds to brand value, and that it is linked to the company's strategic business plan.
Saul believes that not employing child labor in factories or not polluting the environment has become simply a hurdle over which all businesses must jump, and that companies need to far exceed these standards (and create aspirational programs - "we will do good," rather than reactionary programs - "we will try not to pollute.") I disagree with this point; clearly there are still companies who employ child labor, and also who produce lots of pollution. In the absence of government regulation to establish a a standard-sized hurdle, the companies who use child labor or pollute will continue to do so since this gives them a competitive advantage. These companies will be able to produce products more cheaply than other companies, and so will be able to undercut their competitors.
how to do it?
I do think that companies need to find a way to generate value (or just track the value that is already being generated) through CSR departments. For example, Saul gave information on OfficeMax's CSR program, which aims to positively impact schools (since schools buy office supplies), engage employees (to reduce turnover), engage teachers (because teachers often have to buy office supplies when schools run out of money), etc. OfficeMax stores give out a free $50 gift card for kids to pass along to their favourite teacher, who creates an account on OfficeMax.com to spend the money. OfficeMax gets vendors to donate the materials purchased using the gift card, and now has the teacher's contact information for future marketing efforts. The metrics through which the success of this program is measured are written in the language of a business plan, not a CSR report. Company managers understand the program's value, and are much more likely to support it.
I think it's easier to make the connection between getting a return on investment out of CSR through social programs, rather than through environmental programs. So many environmental programs focus on prevented impacts (such as avoiding polluting the environment, or reducing carbon dioxide emissions) rather than actual good (planting trees, or sequestering carbon dioxide). Companies seem to be struggling enough with getting a handle on the prevented impacts for any incremental move toward actual good to be realistic. Perhaps one way to improve this situation would be to combine Philanthropy and CSR departments, which usually currently reside in separate places in an organization, in order to more easily link money spent with ROI. This would be quite a radical change for many old companies, whose philanthropy may be well-entrenched and tied to the company's history - the department may wield significant influence and not be inclined to go through a "merger" with another department. Such a merger could provide the necessary impetus for the rethinking of CSR as a revenue-generating activity, and could thus benefit the company in the long run.
the blog: corporate social responsibility
