How to keep sustainability perceptions in line with performance

Proof Points

How to keep sustainability perceptions in line with performance

Looked at a certain way, responsible and sustainable business is an idea whose time has come. Sustainability functions are now part of the furniture in many businesses. With the science never clearer about the size and urgency of the tasks at hand, more and more companies around the world are integrating environmental and social goals into their corporate strategies. For practitioners, responsible business summits, conferences and workshops continue to proliferate. And with new concepts such as "shared value" gaining momentum, the movement looks to be in robust intellectual health.

But is anyone actually paying attention? GlobeScan has been tracking the evolution of public attitudes around the world towards the role of business in society for over a decade, and the evidence suggests that the public has been left unmoved by the ferment of activity within business around CSR and sustainability.

We measure public expectations -- views on the extent to which businesses should be held responsible for delivering on a range of fourteen 14 social and environmental activities, such as treating their employees fairly, not harming the environment and supporting charities and community organisations. And we measure perceived performance -- how well the public feels a range of 10 industry sectors are doing at being responsible corporate citizens.

When we look at the two side by side over time, it is clear there is a significant gap between expectations and perceived performance. Expectations exploded after corporate scandals in the early part of the last decade (remember Enron, WorldCom, Parmalat, Royal Ahold and the rest?) and have remained at this high level ever since. However, the public's rating of business' performance declined significantly between 2001 and 2009, with a slight uptick in 2011.

expectations vs. performance gap

How to explain the decline in perceived performance in the area of corporate responsibility when all "hard" data suggests that companies are more committed to it, investing resources in a more comprehensive and sophisticated way than a decade ago?

Why Corporations Don't Get the Credit They're Due

First of all, there has been a clear failure of business to connect with external stakeholders. Companies' communications on the responsibility agenda have not cut through to the public, so much so that 38 percent of the public on average, when asked to name a responsible business, is unable to do so.

In part, this is a consequence of the isolation of sustainability functions within many businesses -- cut off from the main marketing and communications functions, they have continued to focus on often technical, dense and complex metrics, whose breadth and sophistication mean they are hard for the uninitiated to grasp. Businesses able to tell a clear and meaningful story about the value they bring to society are still in short supply.

Second, social media now plays an ever-greater role as an information source for consumers, who have become used to bracing frankness and have raised the bar for companies when they communicate. Indeed, when asked to name the one thing a company has to do to be considered responsible, the proportions mentioning openness and transparency has doubled from 10 percent in 2008 to 20 percent in 2010.

Third, there remains an ingrained suspicion of business's motives, particularly in advanced economies where companies' contribution to current standards of living has been long forgotten.

Far fewer people trust businesses, particularly global ones, to act in the best interest of society than trust the NGO community. Many believe that companies are ultimately only concerned about maximizing profits and their share prices. Communications, marketing and engagement are particularly difficult when trust is absent.

So, what can be done to bring consumers' perceptions of corporate sustainability performance in line with their high expectations? The recent slight uptick in perceived performance may turn out to be the start of a trend, driven in part by the rise in sustainable corporate brand positionings and campaigns.

There is, of course, no single panacea, and the solution will look very different for a Microsoft than it will for a BP. But companies genuinely committed to responsible business can learn from the likes of Unilever, GE, Interface and Marks and Spencer.

These firms have all led the way in framing an inspiring overall vision that benefits society as well as their share price, used their corporate brands adroitly to unify their message and engage their different stakeholder groups, and involved their top communicators -- including the CEO -- in delivering it.

The world of responsible business is changing fast, and those left behind will need to continue to mind the gap.

Leaping gap photo via Shutterstock.