The State of Corporate Citizenship in the United States: 2003

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1 The State of Corporate Citizenship in the United States: 2003 July The Trustees of Boston College

2 Why Corporate Citizenship? Successful companies have recognized the fact that there is a demand on business to be a good corporate citizen in all aspects and it s more than money I believe there is lots of evidence to say that the most successful companies today are the ones that incorporate the aspects of good corporate citizenship into the way that they do business everyday. It is hard for me to imagine a company that has a successful product, that has a successful reputation, that has something good to offer the community, and that can not be even more successful by emphasizing that. Ralph Schrader, Booz Allen Hamilton 2003 The Trustees of Boston College 1

3 There is an emerging view among leading organizations of corporate citizenship Elements of corporate citizenship Living your values Practicing good governance and ethics Being involved in communities Incorporating into everyday business Creating value for shareholders and value for stakeholders Building trust, building relationships Being transparent and accountable Providing safe, reliable products Treating employees well Having a positive, social impact Contributing to a sustainable environment To make every effort to enhance the positive impact of our activities and to minimize any negative impacts on the people, environment, everywhere we invest and operate. World Economic Forum 2003 The Trustees of Boston College 2

4 Why did we do this research? Corporate citizenship is becoming a critical business essential This is the first corporate citizenship survey in the U.S. to include small and medium size businesses and the first to gather information on business efforts in low-income communities. New demands and pressures on business To examine business engagement in economically distressed communities To create a baseline for gauging trends in corporate citizenship 2003 The Trustees of Boston College 3

5 The sample Population: U.S. businesses Sample: U.S. Chamber of Commerce members, The Center at Boston College members Margin of error = ± 4% Total responses = % have 250 employees or more 47% have between employees 28% have less than 10 employees Analogous distributions by revenue 18% are public companies Balanced distributions by industry and geography 2003 The Trustees of Boston College 4

6 Presentation overview Corporate citizenship is an important part of business practice Business perspective How do companies define good corporate citizenship? What drives corporate citizenship? Who are the stakeholders and how do companies respond? What do companies believe about public expectations? What are barriers to corporate citizenship? What are companies doing around corporate citizenship? How are companies investing in corporate citizenship? The economy Response to stakeholders Community involvement Does size, industry, and/or region matter? The future of corporate citizenship The business case Issues affecting future business priorities Hypothesis: Business organization 2003 The Trustees of Boston College 5

7 Key Findings Companies see corporate citizenship as an important part of their business. Investment in corporate citizenship has increased or remained constant among most businesses. The scope and scale of corporate citizenship is bigger than expected small and medium sized businesses are quite active in the corporate citizenship arena. Corporate citizenship is driven largely by internal corporate values (75%) and customer feedback (53%). The primary obstacle to corporate citizenship is Lack of Resources (identified by 46% of companies); all other barriers received less than 20% identification. 20% of businesses include improving conditions in poor communities in their corporate citizenship efforts The Trustees of Boston College 6

8 Key Findings A majority of businesses, regardless of size, provide cash, volunteer time and/or goods and services to local communities. The Future: We expect to see companies adopt an increasingly comprehensive view of corporate citizenship that includes the environment and community engagement The Trustees of Boston College 7

9 Businesses see corporate citizenship as an important part of day-to-day business 2003 The Trustees of Boston College 8

10 Corporate citizenship is an important part of business The business perspective Companies believe: Good corporate citizenship helps the bottom line.. 82% Corporate citizenship needs to be a priority. 82% The public has a right to expect good citizenship % Companies also believe: Many companies do a great deal more for their communities than is talked about... 85% Corporate citizenship should be completely voluntary no laws should govern it... 80% 2003 The Trustees of Boston College 9

11 Companies say corporate citizenship has several features How do companies define good corporate citizenship? Very Important Important Operating with ethical business practices... 87% 11% Treating employees well... 85% 14% Making a profit, paying taxes, and providing jobs... 82% 13% Providing safe and reliable products/services.. 81% 17% Having a good environmental record 57% 33% Working to improve conditions in the community... 50% 34% 2003 The Trustees of Boston College 10

12 Corporate citizenship starts from the inside What drives companies to embrace corporate citizenship? Internal motivators Traditions and values 75% Reputation/image 59% Business strategy 52% External pressures Customers and consumers 53% Expected in community 30% Laws and political pressures.. 24% Recruit/retain employees 38% 2003 The Trustees of Boston College 11

13 Non-traditional stakeholders are emerging Priority of stakeholders: Customers/ shareholders Response to stakeholders: Producing accurate financial reports Employees Government/ local communities/ suppliers Creating a healthy, safe, and family-friendly employee work environment Talking with community leaders about their concerns/safeguarding the environment 2003 The Trustees of Boston College 12

14 Companies believe that the public expects good corporate citizenship What companies believe about public expectations Exceed laws to make sure products are reliable and safe 75% Exceed laws to protect the environment Contribute time and money to address community needs Be involved in solving problems in society 53% 53% 58% 0% 20% 40% 60% 80% 100% Agree/Strongly Agree 2003 The Trustees of Boston College 13

15 Obstacles to corporate citizenship are resource-based What are the barriers to corporate citizenship? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 46% Resources Lack of resources Middle management does not support it 18% 14% 9% Management/ Employees Top management does not support it Not of real interest to employees Not sure what being a good corporate citizen means 11% 9% Business Case No significant benefit to the business 2003 The Trustees of Boston College 14

16 What are companies doing around corporate citizenship? 2003 The Trustees of Boston College 15

17 Investment in corporate citizenship has increased or remained constant among most companies How are companies investing in corporate citizenship? 86% have invested more or the same in corporate citizenship over the past year 90% of companies have invested more or the same in assisting economically distressed communities Increased 30% Remained the same.. 56% Decreased.. 14% Increased 23% Remained the same.. 67% Decreased.. 10% 2003 The Trustees of Boston College 16

18 Investments in corporate citizenship continue even in a down economy The Economy 31% of companies assert that their financial business performance has been above average or excellent compared to the last fiscal year. 32% Less 31% 37% The same Of those companies that financially performed: Above Below average/ average/ Excellent Average Poor Increased investments in corporate citizenship.. 38% 31% 23% Increased efforts in reaching out to economically distressed communities. 29% 21% 17% 2003 The Trustees of Boston College 17

19 Companies believe they invest more resources than competitors to respond to stakeholders 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Response to Stakeholders Compared to competitors, how much time and energy is given to: 70% 29% Producing accurate financial reports 62% 38% Ensuring employee health and safety 60% 45% 43% 40% 31% Having Supporting familyfriendly communities education in work policies 40% 43% 42% Supporting employee volunteering Talking with community leaders about concerns More/Far more Consistent 34% 59% Safeguarding the environment 2003 The Trustees of Boston College 18

20 Support for communities is becoming a core element of business What are companies doing in their communities? What do companies contribute? Large/ Great Extent Moderate Extent Cash. 31% 39% Goods/ Services.. 28% 29% Employee Volunteers... 27% 28% Products. 24% 28% Equipment 11% 25% What are their priorities? Percent K 12 Education... 48% Economic Development.. 38% Job Training 32% Community Safety. 27% Health Care. 26% 2003 The Trustees of Boston College 19

21 New partners for business: employees, non-profits, government 33% have a company volunteer program 67% 33% Partnerships Local non-profit organizations. 38% National non-profit organizations. 22% State and local government agencies 20% Federal government agencies.. 11% 2003 The Trustees of Boston College 20

22 Companies are starting to help rebuild communities To what extent are companies doing things for the community? Providing training for lower-wage employees Improving conditions in economically distressed communities Purchasing from women-owned suppliers Purchasing from minority-owned suppliers Offering job training to people in economically distressed communities Hiring people from poor communities Locating company facilities in poor communities 19% 17% 16% 12% 12% 10% 33% 0% 20% 40% 60% 80% 100% Great/Large Extent 2003 The Trustees of Boston College 21

23 Does size, industry, and/or region matter? No But Behaviors, attitudes, and commitment are consistent Small and medium sized businesses are keeping pace with big business in valuing the environment and contributing to charities All industries are engaged in corporate citizenship Companies in all regions of the US buy-in to corporate citizenship Large companies are more apt to have employee volunteer programs, to work with government and nonprofits, and to have community development programs The scope and scale of corporate citizenship is bigger than expected small and medium sized businesses are quite active in the corporate citizenship arena The Trustees of Boston College 22

24 The future of corporate citizenship 2003 The Trustees of Boston College 23

25 Corporate citizenship is a business essential Do companies see a business case for corporate citizenship? Good corporate citizenship helps the bottom line 82% Corporate citizenship improves image and reputation Corporate citizenship is important to our customers Corporate citizenship is part of business strategy 53% 52% 59% Corporate citizenship helps to recruit and retain employees 38% 0% 20% 40% 60% 80% 100% Great/Large Extent 2003 The Trustees of Boston College 24

26 Cost and access to health care is the top business priority What issues will affect future business priorities? Cost and access to health care 63% Threat of terrorism and homeland security measures Increased environmental regulations Performance of public schools (K 12) Legislation/regulations to change financial governance and accountability 36% 35% 32% 31% Immigration policy Tensions between haves and have nots Protests and opposition to globalization 10% 16% 14% 0% 20% 40% 60% 80% 100% Great/Large Extent 2003 The Trustees of Boston College 25

27 Companies say they need to be a part of the solution to difficult social problems In what issues do businesses believe they should play an active role? Education Health care Development of alternative energy sources The digital divide Human rights Global climate change Hunger Poverty AIDS 34% 32% 27% 25% 25% 20% 51% 50% 59% 0% 20% 40% 60% 80% 100% Great/Large Extent 2003 The Trustees of Boston College 26

28 Hypothesis: Business organization Providing safe and reliable products Operating with ethical business practices Making profits, paying taxes, and providing jobs Environment Community Companies that include the environment and community in their business organization are more likely to say that: Local Communities are a key stakeholder (42% vs. 16%) Companies should exceed laws/ regulations to protect the environment (66% vs. 47%) Companies should be actively involved in solving problems in society (60% vs. 42%) 2003 The Trustees of Boston College 27