see full report at The Companies With the Best CSR Reputations.
In today’s reputation economy, what you stand for as a corporation often matters more than what you produce or sell.
Hard to believe?
This was confirmed in June when Reputation Institute, a private global consulting firm based in New York, invited about 47,000 consumers across 15 markets to participate in a study that ranked the world’s 100 most reputable companies–all multinational businesses with a global presence.
In addition to finding the companies with the best reputations, the study discovered that people’s willingness to buy, recommend, work for, and invest in a company is driven 60% by their perceptions of the company, and only 40% by their perceptions of the products, says Kasper Ulf Nielsen, Reputation Institute’s executive partner.
Each company earned a “RepTrak™ Pulse” score representing an average measure of people’s feelings for it. The scores were statistically derived from four emotional indicators: trust, esteem, admiration, and good feeling. Reputation Institute then analyzed what it calls the seven dimensions of corporate reputation, including workplace, governance, citizenship, financial performance, leadership, products and services, and innovation.
Three of the seven dimensions that drive reputation (citizenship, governance, and workplace) fall into the CSR category—and analysis shows that 42% of how people feel about a company is based on their perceptions of the firm’s corporate social responsibility practices.
“CSR speaks to who the company is, what it believes in and how it is doing business,” Nielsen says. “Companies that are able to get recognition for the softer sides of their business are on the right path to building a sustainable business for the future.”
That’s why Reputation Institute decided to separately rank and honor the corporations with the best CSR.
In Pictures: The 10 Companies With The Best CSR Reputations
Through an online questionnaire, consumers were asked to evaluate to what extent they agree with the following three statements: ‘Company’ is a good corporate citizen — it supports good causes and protects the environment; ‘Company’ is a responsibly-run company — it behaves ethically and is open and transparent in its business dealings; and ‘Company’ is an appealing place to work — it treats its employees well.
It turns out the corporation with the very best CSR is Microsoft, the Washington-based software giant.
“It’s a tremendous honor and one that we’re very proud to receive,” says Dan Bross, Microsoft’s Senior Director of Citizenship and Public Affairs. “Being ranked the No. 1 company for CSR in this report is especially meaningful, since the data comes directly from surveys of the general public. Our citizenship mission is to serve the needs of communities around the world and to fulfill our responsibilities to the public. This has been part of our DNA for the past 30-plus years. Being recognized by the Reputation Institute really shows that our efforts are making a positive impact on people in our own backyard and around the world.”
Bross says being a responsible global corporate citizen is a commitment made at all levels of the company. “It’s not just a top-down effort and it’s not just a grassroots effort – it’s important to all of us.”
How did Microsoft earn the best CSR reputation?
“I think this is really a testament to our employees worldwide and the difference they make in their local communities,” Bross says. “While we have a small Citizenship team here at the corporate level, we have Citizenship Leads across the globe and they work daily in collaboration with a wide range of stakeholders on a range of issues important to local communities.”
Microsoft works with governments, investors, nonprofits, and a wide range of other organizations including BSR, the Boston College Center for Corporate Citizenship, CSR Europe, the Clinton Global Initiative, Net Impact, and the World Economic Forum.
“Another factor of our success is our employees’ passion for supporting their communities and causes through charitable giving and volunteering,” he adds. In fiscal year 2012, 93% of employees reported feeling that Microsoft is a good corporate citizen in their communities and around the world. “Our employees and our partners—approximately 640,000 small to mid-size businesses around the world—are our best ambassadors when it comes to sharing the positive results of our CSR work around the world.”
In September 2012, Microsoft refocused much of their efforts around creating opportunities for youth by launching Microsoft YouthSpark, a major initiative to connect hundreds of millions of youth with opportunities for education, employment and entrepreneurship. The company is working to bridge the opportunity divide that separates youth who have opportunities from those who don’t, with the goal of helping young people secure their individual futures and also the future of our global economy, Bross says.
In October 2012, Microsoft celebrated their 30th Employee Giving Campaign and announced the milestone achievement of $1 billion in employee contributions (inclusive of company match) to more than 31,000 nonprofits around the world since 1983.
Microsoft employees in the U.S. have also volunteered more than 2 million hours of their time to causes they care about since Microsoft began their volunteer match program in 2005. In total, they’ve provided more than $6.5 billion in cash, services and software to nonprofits around the world since 1983, Bross says.
And their CSR efforts are paying off.
In 2012, the company reported revenue of $73.7 billion, an increase of $3.76 billion from the previous year. “Positive revenue growth is clearly a factor of many things, most significantly our product strategy and our ability to deliver great technology solutions to the market. But it’s also true that consumers are more likely to engage with companies and brands that they respect and trust,” Bross says. “Our CSR efforts have a direct and positive impact on people in our own backyard and around the world, and in turn, their ongoing engagement with us contributes to Microsoft’s business success.”
In Pictures: The 10 Companies With The Best CSR Reputations
No. 2 Google fell slightly from the top spot in 2011, but it remains high in the CSR rankings because “it’s seen as the best company to work for in the world,” Nielsen says. “Google’s strong workplace perception helps secure its strong reputation overall and within CSR.”
Fifty percent of consumers across the 15 countries say they definitely think that Google treats its employees fairly and takes their well-being into consideration. “And when consumers are asked where corporate responsibility starts, they say it’s with the employees,” Nielsen says.
But Google might be facing a “growing-up problem,” he adds. “As the company moves into its teenage years, it is losing its baby image of ‘Do No Evil.’ The global war in technology is showing a different side to Google where they are the established company fiercely defending their business against the younger Facebook, the sleeker Apple, and the lower profiled Amazon.”
Google saw a drop in overall reputation from No. 1 to No. 6 this year, and it needs to carefully define how it will compete in the future while maintaining a strong emotional appeal with stakeholders around the world, Nielsen says. “Consumer’s perception on Google’s citizenship varies from country to country, with an excellent score of around 80 in Australia and Russia, to an average score in the mid-60s in China, South Korea and Germany.”
The Walt Disney Company, which earned the top spot in the citizenship category, ranks No. 3 in terms of CSR. Half of all consumers across the 15 markets think that the company “is a good corporate citizen that supports good causes and protects the environment.”
“The question to ask is, how much of that perception is based on action from The Walt Disney Company versus the positive effect from its magic universe of characters?” Nielsen says. “It’s hard to image Mickey Mouse not supporting good causes, and Lightening McQueen not having a fuel efficient engine. Companies see a link from the product and services to CSR. And the great companies understand how to use that link so CSR becomes part of their business. The Walt Disney Company is a good example of that.”
BMW and Apple round out the top five.
In total, three automakers rank among the top 10 on the CSR list. How can companies that produce products that are polluting the environment have a strong reputation for social responsibility? “Because it’s not about their products, it’s about the company behind the products,” Nielsen says. BMW (No. 4), Daimler (No. 6), and Volkswagen (No. 7) are demonstrating that if you have CSR as an integrated part of your business strategy, you can use this to successfully establish a strong international name for yourself.
The three German car companies outperformed their competitors by a wide margin; Honda ranks 15th, Toyota 37th, Nissan 43rd, Suzuki 79th and Hyundai 96th–and it’s paying off.
If you compare BMW–which has the best overall reputation in the world in 2012–with Toyota, who has a strong reputation, BMW has 9% more willingness from consumers to buy products, 13% more recommendation from consumers, and 8% higher willingness to welcome the company in the local community.
“These are powerful advantages in the global fight for customers, and this shows the business case for investing in reputation,” Nielsen says.
Companies spend millions of dollars every year on corporate social responsibility; they invest in programs to support local communities, give away products to support people in need, invest in clean technology to lower their environmental footprint, donate money from sales, and engage their employees in nonprofit work. But many are mismanaging their CSR investments.
“It’s that simple,” Nielsen says. “They do not apply the same rigor on these investments as they do on other core business priorities. They do not link it to their business strategy. But treat it like a separate initiative and investment. Only a fraction of the largest companies in the world have integrated annual reports. The majority still have separate CSR or Sustainability Reports.”
Companies need to reassess how to spend their money if they want to improve their return on investment. “You don’t do CSR for the sake of CSR. You do CSR as part of your reputation management strategy to drive business growth, customer loyalty, and employee alignment.” Only a few companies get it right. But those who do see the results, he concludes.
To qualify for the ranking at all, each company had to have an above-average reputation score (defined as over 64) in its home market, based on Reputation Institute’s global database of RepTrak™ scores spanning 2006 to 2011. The criteria for qualification also included company size, based on annual revenue, multinational presence and high familiarity among consumers in the measured 15 markets (Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russia, Spain, South Korea, the U.K. and the U.S.).