July 24, 2014

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How is CSR Funded & Connected to the Corporate Brand?

Regardless of the tilt that comes with organizational structure, the scope of issues that the CSR group must influence and communicate extends beyond the boundaries of traditional corporate roles.

Tim_mohin

By Tim Mohin

Editor's Note: Tim Mohin’s new book: Changing Business From the Inside Out: A Treehugger’s Guide to Working in Corporations has been heralded as "the ultimate insider's guide, from someone who has been at the front lines of corporate change-making at some of the world's biggest companies," and an "essential reading for anyone who wants to build a meaningful career."

Because of an enthusiastic response to a recent news release introducing the book – with multiple queries coming in and shares across social media channels – Mohin has agreed to answer some of the questions he received from CSRwire readers and the students of the Applied Corporate Responsibility Class at Harvard University, one of the first cohorts to read the book, in a blog series on Talkback.

Through these blogs, Mohin will attempt to demystify the field of CSR and sustainability and offer bite size tips and lessons from his experience for current and aspiring CSR professionals.

In Part 2, Tim takes on a question from CSRwire's Jan Morgan.

Where is the funding (or support) for CSR coming from within the corporation? Do many CSR officers have P&L responsibilities and how well are they coordinating with the efforts of brands within the company?

This is a question that I get asked pretty often at conferences. Most CSR officers that I am familiar budgetwith do not have profit and loss (P&L) responsibility at this time. I also don’t see this as a natural progression of this career path.

Nor do I see this as an impediment to the importance or growth of CSR.

In my last post, I compared the rise of the CSR profession to that of the quality movement. The analogy holds for this question as well: quality engineers add value by improving product yield and the CSR professional adds value by overseeing the company’s reputation, but neither job has a direct P&L responsibility. 

Funding CSR

As for funding, the CSR budget is a line item in whichever corporate department hosts the function. There is a lot of variability in where CSR is housed, and thus, how it is funded. In Chapter One of Changing Business From the Inside Out, I talk about the roots and organizational structure of CSR and how these factors can influence the practice. A brief excerpt:

Group gravity

The old axiom of “where you stand depends on where you sit” comes into play depending on where your CR department is located within the corporate structure. The gravity of the function and culture of your organization will affect the make-up and focus of the corporate responsibility department.

For example, if your CR team sits within the marketing department, you will likely have access to the marketing decision-makers and budget. Naturally, your efforts will lean toward weaving responsibility into brand or product messages. At Apple, I worked in the procurement or “operations” group and, predictably, my team was focused on how we could drive responsibility through supplier relationships. At Intel, my team was in the EHS department, which drove our focus into facilities and compliance issues.

Regardless of the tilt that comes with the organizational structure, the scope of issues that the corporate responsibility group must understand, influence, and communicate extends beyond the boundaries of traditional corporate roles. While this can be frustrating, it can also be exciting and satisfying. Very few jobs, outside of the executive suite, have access to more of the company’s functions, and fewer still have the opportunity to influence these functions to improve social and environmental outcomes.

CSR & the Corporate Brand

Your second question about coordination between CSR and brand, however, is a major growth area. Patagonia: Don't Buy This JacketThere are many examples of companies utilizing CSR themes in their brand messages. For example, Timberland has developed a successful business around their Earthkeeper® line of footwear and apparel designed with a core philosophy of environmental stewardship.

General Electric’s Ecomagination line of energy-efficient products claimed $21 billion in revenues in 2011. Perhaps one of the most innovative CSR branding initiatives was the Patagonia advertisement that ran on “Black Friday” in the New York Times with the bold message “DON’T BUY THIS JACKET.” It is hard to imagine a stronger CSR stand than a company asking you NOT to buy its products. The core idea behind this ad and the company’s philosophy:

“Everything we make takes something from the planet we can’t give back. Each piece of Patagonia clothing, whether or not it’s organic or uses recycled materials, emits several times its weight in greenhouse gases, generates at least another half garment’s worth of scrap, and draws down copious amounts of freshwater now growing scarce everywhere on the planet.

It would be hypocritical for us to work for environmental change without encouraging customers to think before they buy. To reduce environmental damage, we all have to reduce consumption as well as make products in more environmentally sensitive, less harmful ways. It’s not hypocrisy for us to address the need to reduce consumption. On the other hand, it’s folly to assume that a healthy economy can be based on buying and selling more and more things people don’t need – and it’s time for people who believe that’s folly to say so.”

CSR & Cause Marketing

Another connection between branding and CSR is “cause marketing.”

Cause marketing involves cooperation between companies and nonprofits for mutual benefit. Well Product Redknown examples include “Product Red” to raise awareness and funds to help eliminate AIDS in Africa and the “Pink Ribbon” campaign to combat breast cancer.

The importance of the connection between corporate branding and CSR continues to grow. The Reputation Institute studied the aspects that make up a company’s reputation and concluded that 43 percent is based on issues within the scope of CSR (citizenship, governance and workplace). While monetizing corporate reputation can be tricky, the valuation of a company’s brand is a good place to start.

Millard Brown estimated the valuation of the world’s top brands in 2011:

Company

Brand Value ($M)

Apple

$153,285

Google

$111,498

IBM

$100,849

McDonalds

$81,016

Microsoft

$78,243

If 43 percent of a company’s reputation is based on CSR and the top corporate brands are valued in the $100 billion range, then it is easy to see why CSR is a rising profession.

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Got a question for Tim? Use the comments section below – or connect with us on Twitter and Facebook -- and he'll answer it in a future blog post on Talkback. Connect with Tim on Twitter @TimMohinAMD and @corp_treehugger.

Previously:

Defining Success for a "CSR Professional": Driving Yourself Out of a Job?

Changing Business from the Inside Out: How to Pursue a Career in CSR and Sustainability

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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