CSR Not Always Easy to Accomplish

University of Michigan researchers break down the corporate social responsibility efforts of public vs. private companies.

When companies make public declarations of social responsibility, it can be hard to tell whether they actually change practices or if they exaggerate the impact — a practice known as greenwashing.

Most of the attention has focused on company financial effects and stock price reaction of corporate social responsibility initiatives. But new research by professors Jun Li and Andrew Wu examine the social outcome of corporate social responsibility efforts.

They found a striking difference between public and private companies’ behavior after signing onto the United Nations Global Compact program. Their analysis shows private companies are significantly more likely to follow through on their promises than public companies.

“There do seem to be conflicts for public companies when it comes to corporate social responsibility,” says Li, professor of technology and operations. “They are constrained by shareholders and by law to maximize profits. If the CEO of Patagonia wants to buy organic cotton, he can make it happen even if it means lower margins. A public company has to justify that to shareholders.”

Li and Wu developed a novel method to find a common corporate social responsibility proxy and track the outcomes. They examined the 6,420 companies that signed onto the United Nations Global Compact (UNGC) between 2007 and 2016. It covers a broad array of responsibility goals — such as labor standards, environmental, and corporate governance — and it’s a unified set of standards.

They then matched those companies with reports from RepRisk, a third-party firm that screens more than 80,000 media, regulatory and commercial documents in 15 languages each day for negative events regarding company-level environmental, social and governance events.

Li and Wu found that private companies that signed onto the UNGC reduced their negative impacts, as reported by RepRisk, by 6.3 percent per month. There was no change for public companies, though in some cases the negative impacts increased slightly.

“If you think about corporate social responsibility, it’s mostly a diversion of resources,” says Wu, professor of technology and operations and professor of finance. “Not only from company shareholders to other stakeholders, but also from short-term to long-term. But public company managers tend to focus more on the short term and are incentivized as such.”

The exceptions they found among public companies were ones that own customer-facing brands. In those cases the value of corporate social responsibility is aligned with shareholders, since consumers often punish companies for irresponsible behavior.

When Green Isn’t as Green as it Seems

In today’s world of carbon footprints, sustainability and simply all green all the time, there’s a lot of greenbacks to be made by advocating your environmental friendliness. And, like most other similar concerns, the vast majority of people on the green bandwagon are there for the right reasons and being upfront about their products and services.

As we have the last two years, we’re going to highlight some of those companies, organizations and communities in the July-August BizVoice magazine. (Check out the last two years: 2009 and 2008 issues). There are good stories to tell, and we’ve got excellent writers on staff who will do just that.

But the growth of green was closely followed by "greenwashing," defined as misleading information about environmental practices or benefits. Recently, Energy Star products that may not be as efficient as advertised and green buildings that don’t always live up to that label have been in the news. Are there other "not so fast on the green claims" that are out there? Let us know your thoughts and any leads would be appreciated.

It will be another great "going green" issue, but if some green initiatives are leaving you feeling blue, we want to report on those too.

Tell Us: Is Carbon Footprint in Your Vocabulary?

I’ve told you that the July-August BizVoice® magazine is going to be “all green all the time.” In addition to a stellar story lineup from our talented writers, I’m gathering insights from Indiana Chamber members. 

The first two interviews traveled the green spectrum – one person describing active involvement in a community recognition program for environmentally-friendly practices; the other admitting to not having greenwashing and carbon footprint on her radar screen.

What do you think? Do you feel a personal responsibility to alter the way you operate at home, work and play to try and make a difference for future generations? Or, despite Al Gore’s best efforts, are you unconvinced about global warming and man’s direct impact?

 Let us know what you think. I’d like to add your perspective to our BizVoice® report and analysis.

Don’t Be Blue; We’re Going Green

If you have not jumped on the green bandwagon yet (quick, there might be room to squeeze in), the next edition of BizVoice magazine is for you.

If you’ve added the word green to your daily vocabulary and cannot be accused of greenwashing, there will be plenty of interesting stories and analysis for you too. In fact, you might want to promote your organization’s products and services to 15,000 others who have already made the leap or are planning to be on the green team.

The July/August issue will contain the most comprehensive focus on one topic in the 10-year history of the magazine. Among the subject areas to be covered in staff-written articles are:

  • Low-cost programs/policies companies can implement as a green strategy starting point
  • More comprehensive green efforts that include a higher up-front investment but potential cost savings down the road
  • Going green and the energy industry
  • Short profiles about companies, communities and universities with innovative green initiatives
  • A Community Focus on BioTown and the effort to turn an Indiana community into a self-sustaining energy provider
  • A roundtable discussion with industry leaders and an invited national expert
  • An Indiana Ingenuity feature on a Hoosier company that is a national player in its field                                 

Business owners, presidents and CEOs will be reading about going green. Jim Wagner has the information advertisers need to know.