Corporate citizenship activities—which include corporate grants, employee volunteerism, education and community engagement, disaster aid, and racial injustice and equality support—are great ways to accomplish good things for US companies. With brand purpose expectations still high among consumers, openly and actively participating in these societal initiatives earns goodwill, not to mention the reward of improving one’s own community. And leading corporations naturally take advantage of this PR boost by providing the public with significant amounts of information on their contributions and efforts.
According to a recent report by The Conference Board, a full 98 percent of 100 leading US firms surveyed report on their charitable contributions and 61 percent of the S&P 500 do so. Among top companies, disaster response is the most common topic addressed (included in 66 percent of reports), followed by racial equality (65 percent), local community needs (60 percent), and education (46 percent).
Yet even companies with robust reporting practices are seeking to enhance their reporting, as a way of both improving and proving the value of their activities, according to the firm’s new report, with sponsors CSR and ESG impact measurement firm True Impact and employee financial relief nonprofit E4E Relief. A survey of corporate citizenship executives finds that only 40 percent are satisfied with their reporting, and 81 percent expect it to become more challenging in the future.
As the report points out, one focus area is to step up reporting on impact: 58 percent of leading firms report on the “outputs” of their work (e.g., the number of people served), 21 percent report on the outcomes of their corporate citizenship initiatives, such as improved health, while just 3 percent report the return on investment to the company of their efforts. Reporting on outcomes and ROI can both help to assess the effectiveness of programs, while building support among key constituencies, such as boards, senior management, and investors.
Additional insights and findings include:
About half of leading companies report on their citizenship efforts within larger ESG or sustainability reports
- ESG reports (36 percent) and sustainability reports (20 percent) are the most common reporting channels for corporate citizenship efforts, according to an analysis of 100 leading companies.
- Other practices include communication through the company website (17 percent), presenting results in cross-functional impact reports (7 percent), stand-alone citizenship or traditional CSR reports (14 percent).
Companies primarily report on corporate citizenship to enhance their reputation—specifically, with current and prospective employees, consumers, and the communities in which they operate
- Employees top the list of stakeholders shaping and influencing measurement and reporting: 64 percent of survey respondents cite them as the most important driver for corporate citizenship reporting.
- Customers and communities were the next most-mentioned drivers, with 48 percent of respondents citing each of them.
“While corporate citizenship can learn from other types of corporate reporting—such as financial and ESG disclosures—it should not duplicate them,” said Paul Washington, executive director of The Conference Board ESG Center, in a news release. “Whereas ESG reports are aimed at satisfying regulatory and investor requirements, corporate citizenship reports focus on current and prospective employees, consumers, and the broader public. Moreover, ESG reporting tends to be data-heavy, while citizenship reporting emphasizes storytelling. At the same time, both types of reporting can benefit from an increased emphasis on the ROI of the company’s activities to both the firm and society.”
Ensuring accuracy is the leading challenge when collecting information for corporate citizenship and reporting
- Accuracy tops the list of reporting challenges, with 61 percent of respondents citing it.
- Collecting information across multiple corporate functions and nonprofit partners is the second most-cited obstacle (42 percent), followed by ensuring data integrations and systems compatibility (36 percent).
“Accuracy is paramount when it comes to reporting for corporate citizenship efforts, particularly as the ‘S’ in ESG increases in importance,” said Holly Welch Stubbing, president and CEO of E4E Relief, in the release. “For example, the SEC has updated its requirements for reporting related to human capital, which raises the bar for reporting on matters related to the workforce. The sentiment from C-level leaders is that information built to withstand ESG assurance level standards is a critical part of a company’s audit requirements and sets the stage to tell the company’s vital stories.”
Few companies currently report the ROI of their corporate citizenship efforts
- Only 3 percent share quantitative metrics on the ROI of citizenship to the firm itself, typically by linking citizenship efforts with internal business metrics such as employee engagement.
- Companies have the ability to calculate this ROI, which can be used to help educate key internal constituencies and investors about the tangible benefits of corporate citizenship.
“Companies should approach citizenship reporting through the lens of multi-faceted storytelling,” said Andrew Jones, senior researcher at The Conference Board and author of the report, in the release. “Ideally, the company will be telling not only its own story, but that of communities it has served, non-profits it has worked with, and individuals whose lives have changed. And the stories should come not just from the company itself, but from all the others who have been part of achieving impact.”
“Measuring social outcomes has several benefits, including demonstrating real-world impact, guiding future investment decisions, and identifying opportunities for improvement. But many corporate citizenship executives think it’s beyond their capacity due to the complexity of social issues, the lack of standardized metrics, and a perception that it’s too challenging to distinguish their results from other contributors,” said Farron Levy, CEO and founder of True Impact, in the release. “In practice, these challenges can be overcome by collaborating with nonprofit partners to measure a few select outcomes and using simple contribution calculations to calculate a specific company’s impact.”
Download the full report here.
The report draws upon the analysis of Fortune 1000 company disclosures; a survey of 97 leading companies, more than half of which have an annual revenue of over $11 billion; and a series of Chatham House Rule roundtables with 247 participants from 99 firms.
