Corporate Citizenship - Why It Matters

Hosted 

By 

Lisa Fratzke

Partner & Executive Strategist,

Head of Client Strategy

Published 

7.29.2022

Key Takeaways:

  • Align corporate citizenship with your company purpose
  • Integrate corporate social responsibility into your business model
  • Tell your story authentically internally and externally
  • Learn from transforming brands, like Patagonia
  • Identify the benefits, including: attracting top talent, enhancing your reputation and connecting with consumers and investors

What is Corporate Citizenship?

Corporate citizenship or corporate social responsibility refers to a company’s responsibility to its employees, local community, and more broadly, society as a whole. This responsibility encompasses how they meet ethical, environment and legal responsibilities as established by stakeholders including employees, consumers and investors. 

Like people, companies have an opportunity to make a positive impact in the world or a negative one. Socially responsible companies proactively work to create a positive difference through their employment experience, how they choose to operate and how they choose to spend their time and profits. 

A brand’s ability to introduce effective corporate citizenship programs and authentically share their impact internally and externally can positively impact their reputation and bottom line. 

Why Does Corporate Citizenship Matter?

In today’s socially conscious world, consumer values are increasingly driving consumer behavior and their buying decisions. 77% of consumers are motivated to buy from brands who have demonstrated a commitment to making the world a better place. This also applies to your workforce engagement and attracting top talent. 

Corporate Citizenship - Why It Matters - Consumer Statistic 1 - Fratzke Consulting

Employees are seeking companies that align with core values during their employment search - and this number only gets higher amongst young adults. Having an employer mirror their ideals has influenced 78% of millennials in their decision to work for an organization. Plus, the number of employees that are highly engaged can increase to 60% when company’s act on today’s social issues. 

In addition, social media has given employees and consumers a louder voice to champion the companies and products they believe in. Or, on the flip side, negatively impact a company’s reputation. That’s why your approach to corporate citizenship needs to be a key piece of your brand’s strategy internally and externally. 

But, what exactly does it mean to make the world a better place? In today’s social and political landscape opinions may vary. It’s important for companies to define who they are (company purpose) and who their audience is (customer personas) in order to define a corporate citizenship strategy that is in sync with both. 

Corporate Citizenship Stages Of Development

How do you measure the effectiveness of your corporate citizenship efforts? More often than not, a company’s level of social responsibility is noticed when something is not working versus when it is working (for example, BP’s Deepwater Horizon Oil Spill or the recent Uber data leak). These examples are extreme, but they do showcase the unplanned fallout that can occur when corporate citizenship is not prioritized or valued within a company. 

At Fratzke, we measure a company’s corporate social responsibility maturity by the five stages of development, as defined by the Center for Corporate Citizenship at Boston College. We’ve also outlined the communication styles of companies within each stage.

Corporate Citizenship - Stages Of Development - Graphic - Fratzke Consulting

Elementary

In the elementary stage, a company’s citizenship activities are often underdeveloped and sporadic. There is little to no dialogue with stakeholders or involvement from executive leadership. The focus is on compliance and protecting the brand’s reputation, which puts the company in a reactive position. Many small companies often fall into this stage of development due to a lack of resources and structure. 

Communication Style: If corporate citizenship is talked about, it is often reactive and defensive after external stakeholders or the press attack the company’s reputation due to questionable or illegal practices or actions that are out of sync with the brand’s culture.

Engaged

In this stage, executive leadership takes a more proactive approach to corporate citizenship beyond simple compliance and engages in two-way dialogue with key stakeholders. Engaged brands will often use company policies as a tool to minimize risk and implement practices that go above and beyond the law to provide a positive impact in terms of employment, health, safety and the environment. There is increasing ownership and accountability by leaders and departments for corporate citizenship initiatives. 

Communications Style: A mix of reactive messaging in response to certain issues and proactive stories and communication about the company’s policies that go above and beyond the requirements. 

Innovative 

In the innovate stage, companies broaden their corporate agenda and establish a business case for the initiatives they champion. This stage is marked by high levels of innovation and learning. There is a diversity of ideas that is nurtured by open, two-way communication with a wide range of leading companies, experts, forums, etc. The result is a number of corporate citizenship programs that are planned, funded and launched. The challenge is making sure there is a coordinated, coherent process and message. 

Communication Style: Messaging is highly proactive, but often lacks focus since there are so many different initiatives that are being led by different departments. It will be important to center storytelling efforts around a clear strategy that aligns with company purpose and culture. 

Integrated

At the integrated stage corporate citizenship efforts are increasingly collaborative, operationalized and integrated within lines of business. As part of this, targets are set, performance indicators are identified and performance is monitored throughout the organization. The reason for pursuing socially responsible initiatives is fueled by core values instead of simply a business case. The commitment for socially responsible initiatives is deepened at all levels with the organization. 

Communication Style: Integrated brands are proactive and transparent in sharing the wins and even corporate citizenship failures. The connection between corporate citizenship and company core values helps create an increasingly clear message that resonates with employees and consumers. 

Transforming

Transforming brands are often grounded in a visionary company purpose to make the world a better place. These companies don’t operate in a silo and collaborate extensively with nonprofits, community groups and other businesses to address key problems together. Their social and environmental activism is a part of their brand that appeals to employees and consumers. Their socially responsible outlook and business agenda are fused together. 

Communication Style:  For transforming brands, their purpose and corporate citizenship message are seamlessly aligned. Their desire to make the world a better place is communicated through their products, packaging, marketing materials and more. It’s become more than a message - it’s part of their brand identity. 

RELATED: Internal Communications - Why It Matters

Pursuing A Strategy Of Social Responsibility And Corporate Citizenship 

So, how exactly do you get corporate citizenship right? There is no one size fits all approach. How your brand decides to implement socially responsible practices will depend on what your brand does, your company purpose, your customers and what your company can uniquely contribute to making the world a better place.

Let’s dig into a few best practices that companies can follow when approaching and implementing a corporate citizenship strategy. 

Corporate Citizenship Best Practices

Align Corporate Citizenship With Your Company Purpose

How will your company make a positive impact in the world? The answer to that question is often embedded within your company's purpose. The importance of an effective purpose statement that goes beyond lip service and is embedded within every facet of an organization is growing as younger generations join the workforce and society begins to increasingly prioritize social and environmental issues.

Your company's purpose does not have to be to change the world - but it does need to capture the value you seek to provide your customers with your products and services. When your corporate citizenship initiatives align with your purpose and core values as a company, you will become more strategically positioned to operationalize, communicate and embody them throughout your organization. 

Integrate Corporate Social Responsibility Into Your Business Model

Elementary corporate citizenship efforts often feel like “add-ons” or corporate philanthropy that takes place outside of day-to-day business operations. Engaged, innovative and transforming corporate citizenship goes beyond monetary giving and becomes embedded within how a company seeks to operate and interact with stakeholders at every level.

An example of this is PepsiCo who began to transform how they do business inside and out with a focus on “performance with purpose.” According to Indra Nooyi, the CEO of PepsiCo at the time, “I wanted PepsiCo’s contribution to society to be rooted in its core business model… We needed to change the way we made money - not just give away some of the money we earned. “

Tell Your Story Internally And Externally

How you choose to communicate your socially responsible programs and practices is a key component of your corporate citizenship strategy. It’s important to communicate the “why” behind your programs and business practices to internal teams and employees to gain buy-in and advocacy. In addition to that, it’s also important to share internally and externally what the company is doing to contribute  to the well-being of their employees, consumers, communities and more broadly, society. 

The key to “sticky” or “memorable” corporate communication is to connect it to your larger brand purpose or core values and make it personal. Showcase individual employee stories about the positive workplace experience you provide. Shine a light on underserved communities and highlight the impact of your philanthropic efforts in creative and heartfelt ways.

Be Authentic

Unfortunately, when it comes to telling your story, companies are often met with a healthy dose of skepticism. About half of consumers said they would believe a company who says they wanted to help make the world a better place. The good news is that you have a 50/50 shot here! The difference is often in the authenticity of your message. Do your actions back up your words? If they don’t, people will find out and your reputation will be negatively impacted. 

On the opposite end, if you take a stand on a social issue that some of your customers don’t agree with, you could lose those customers. So, if you are going to implement a corporate citizenship strategy and talk about it - you should be prepared for the additional scrutiny that comes with it. 

Corporate Citizenship Example - Patagonia

When it comes to implementing socially responsible initiatives and doing corporate citizenship well, Patagonia is a company that stands out.

Patagonia’s corporate social responsibility extends to almost every facet of their business making them a transforming leader in the space. Their purpose “we’re in the business to save our home planet” resonates deeply with their employees and consumers. In fact, Patagonia boasts a 4% employee turnover rate - more than 3x less than the retail and consumer product industry average (13%).

Their commitment to the environment is embedded within their operations, commitment to donate 1% of their profits to the planet, partnerships with non-profit organizations and even their commitment to bail out employees who are arrested for participating in peaceful environmental protests. Their marketing reflects their commitment as they’ve released ads that encouraged consumers “Don’t Buy this Jacket.” 

Their most recent demonstration of their purpose-driven storytelling followed a Supreme Court’s ruling in June 2022 that the Biden administration cannot enact the Clean Power Plan without Congress. They put an OpEd about the ruling in the most valuable real estate on their website - the homepage banner, a place usually reserved for revenue related selling - for over two weeks. 

Source: Patagonia

Benefits Of Being A Socially Responsible Company

As consumer expectations evolve and they look to purchase from companies that align with their core values, integrating socially responsible ideas and practices is becoming increasingly important for companies to drive growth and relevancy. The same can be said for attracting and engaging a high functioning workforce. 

Attract and Retain Top Talent

Employees are increasingly prioritizing company social responsibility and core values in their job search with 95% of employees believing businesses should benefit all stakeholders (and not just shareholders). As we illustrated with Patagonia, having a strong sense of corporate social responsibility translates to a lower turnover rate and increased employee engagement. 

Enhance Your Reputation and Brand

Your brand reputation is the perception internal and external stakeholders have of your company based on the history of your words and actions. A brand’s reputation is never set in stone. It is living and breathing and subject to change if you take actions that are out of alignment with your stated values and purpose. 

When it comes to crafting a meaningful reputation, consumers, employees and investors want to know how you are making a positive impact - which begins with a clear corporate citizenship strategy that is integrated into how you operate, how you treat your employees and how you tell your story.  

Connect with Consumers

Investing in a corporate citizenship strategy is a key component of business growth. 70% of Americans believe it’s “somewhat” or “very” important for companies to make the world a better place - and that is compared to just 37% who believe it’s important for companies to make money for shareholders. It’s best to balance both of these objectives and attract consumers who align and resonate with your company’s core values. 

Corporate Citizenship - Why It Matters - Consumer Statistic 3 - Fratzke Consulting

Attract Investors

Investors are increasingly prioritizing ESG criteria when making investment decisions. ESG is environmental, social and governance criteria used by investors to make socially conscious investment decisions. In 2020, 58% of investors indicated an increased interest in ESG investments. In addition to providing social value, ESG helps investors understand potential risks that could occur if companies are not operating in an ethical manner. 

In Conclusion

There is a difference between avoiding doing harm and actively seeking to do good - and that difference is a robust corporate citizenship strategy that aligns with your company purpose, core values and stakeholder expectations. 

In today’s day and age, consumers want to feel good about the things they buy, employees want to believe in the companies they work for and local communities want to know that businesses in their area are going to help make their community a better place. Companies are increasingly acknowledging the financial and social benefits of pursuing corporate social responsibility with almost 90% of brands within the S&P 500 Index publishing SCR reports in 2019 (compared to just 20% in 2011). 

If your brand is looking to implement a corporate citizenship strategy and/or effectively communicate your corporate social responsibility efforts, we can help. Schedule a free consultation with a Fratzke strategist today.

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