Although not its primary purpose, a new report from IBM illustrates why it can be difficult for investors and others to assess how socially responsible a company is.
Nearly all of the 224 respondents say they are committed to corporate social responsibility (CSR) principles and want to improve their business performance, contributions to society and reputation. But the survey also showed that most companies are not collecting and analyzing environmental data often enough to know what improvements they could be making. And most companies don't understand the concerns of investors, customers and other stakeholders when it comes to CSR issues, such as environmental, labor, product safety and other business practices.
But if a company isn't fully aware of its problems or its advantages because it isn't collecting the needed data often enough, how is an investor to know whether the firm is doing what it should be when it comes to CSR issues?
"Our survey participants clearly understand that integrating CSR considerations into their business strategies is essential to their growth and performance," said Eric Riddleberger, IBM's business strategy consulting global leader, who heads up the company's corporate social responsibility consulting efforts. "But it's also pretty obvious many of them don't know what they need to know to actually make changes that would improve both business performance and societal impact."
Key findings of the survey include:
Eight-seven percent of respondents say they are focusing corporate social responsibility (CSR) activities on improving efficiency, and 69% say they are using CSR to help create new revenue opportunities.
Only 30% are collecting data frequently enough to make strategic decisions that address inefficiencies across eight major categories-CO2, water, waste, energy, sustainable procurement, labor standards, product composition and product lifecycle. Twenty-four percent are collecting this information only monthly and 32% no more than quarterly.
Twenty-nine percent aren't collecting any data at all from their supply chains. Eight in 10 aren't collecting supplier data for CO2 and water, and six in 10 aren't checking supplier data for labor standards.
Sixty-five percent say they still don't understand their customers concerns about CSR issues. And 37% aren't conducting any research on the topic.
Outperformers among the respondents rank consistently higher in collecting every type of CSR information frequently or in real-time across all major green and sustainability categories-from CO2 emissions and water conservation to ethical labor standards and sustainable procurement. They also ranked higher in information collection from suppliers.
Nearly twice as many of the outperformers said they understand customer concerns about CSR. They are also more proactive in collaborating with key stakeholders and twice as likely to rate open sharing of information among business partners and stakeholders of the highest importance in achieving their CSR objectives;
Despite the current global recession, 60% said CSR is more important to their businesses now than it was a year ago, with only 6% saying it was less important.
Companies are coming under increasing pressure from governments, advocacy groups, investors, prospective employees, and consumers to make their operations, products and services more socially responsible, IBM notes.
IBM also maintains that businesses that are successful in addressing CSR issues as part of their overall strategies will have a significant advantage attracting investors, talent and customers, developing new products and services, and gaining access to new markets and new opportunities. It also will help them improve operational efficiency and reduce costs, and meet regulatory requirements, which can allow them to qualify for incentives and avoid penalties.
Who wouldn't agree with that?