Most Companies Lack Effective Measurement of Corporate Citizenship – Study
Thursday, 9th October 2008 at 3:22 pm
Most US companies lack an effective measure of their corporate citizenship strategies and effectiveness according to the Boston College Centre for Corporate Citizenship’s latest landscape study.
Among the findings of this survey of more than 400 companies:
– Less than 50 percent of companies say they “rigorously measure” performance related to the environment and ethics;
– 40 percent of companies do not measure human rights performance;
– Less than 40 percent use these measures to set long-term performance objectives, evaluate programs or report to external stakeholders “to a great extent;”
– 10 percent of companies report no communication at all related to corporate citizenship.
Research Associate Sylvia Ciesluk says in order for corporate citizenship to be effective, companies must approach it with the same rigor as other traditional areas of business. This means managing corporate citizenship through careful measurement.
Ciesluk says while public companies are only required to disclose financial measurements in the United States, many companies now come under increasing scrutiny and pressure to report social and environmental impacts of their business.
She says measuring performance in these areas will not only help respond to critics and curious stakeholders, the practice will also help identify areas of weakness and introduce accountability mechanisms to spark improvement.
The Centre’s Profile of the Practice study revealed the greatest weakness among companies comes in how measurements are used. Most report they only “somewhat” use citizenship metrics to report externally, evaluate programs, review performance and set objectives. Even fewer companies say they use these metrics when allocating budgets and resources and evaluating staff.
A comparison by industry showed the most advanced companies, in terms of measurement and communication of corporate citizenship, were found in manufacturing and the energy and utility industries.
These companies’ survey responses indicate better than average measurement and communication practices.
While greater investment is needed for the development and use of metrics, companies are increasingly communicating about their corporate citizenship activities.
Nearly three-fourths of companies surveyed have information on corporate citizenship posted on their web sites. Out of this sample, 131 companies now produce a separate social report and that number will likely increase sharply in the coming years.
Corporate Register, a global directory of resources related to corporate social responsibility, reports dramatic growth in the number of sustainability reports issued globally, from 26 in 1992, to 2,500 in 2007. Data from Corporate Register show that industries related to chemicals, electricity, oil and gas are issuing the most social reports today.
When asked about future investment plans for corporate citizenship, 76 percent of companies responded that communications are targeted for investment, while 70 percent reported investment plans for measurement and review mechanisms.
As corporate social responsibility reports, ratings and indices, and socially responsible investing gain increasing attention in the mainstream media, companies are waking up to the importance of being accountable for social and environmental impacts. As a result, measurement has become a hot topic in the corporate citizenship world.