US Companies Take Significantly Different Approaches to Corporate Citizenship

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Jan 03, 2024, 09:00 ET

New Report Offers Insights on How Companies Aim to Enhance the Measurement and Reporting on Corporate Citizenship

NEW YORK, Jan. 3, 2024 /PRNewswire/ -- While leading US corporations provide the public with significant amounts of information on their corporate citizenship activities—which typically include corporate grants, employee volunteerism, and community engagement—they stand out from most of corporate America.

According to a recent report by The Conference Board, 98% of 100 leading US firms report on their charitable contributions and 61% of the S&P 500 do so, compared to only 25% among the full Russell 3000. Among top companies, disaster response is the most common topic addressed (included in 66% of reports), followed by racial equality (65%), local community needs (60%), and education (46%).

Yet even companies with robust reporting practices are seeking to enhance their reporting, as a way of both improving and proving the value of their activities. A survey of corporate citizenship executives finds that only 40% are satisfied with their reporting. Moreover, 81% expect it to become more challenging in the future.

As the report points out, one focus area is to step up reporting on impact: 58% of leading firms report on the "outputs" of their work (e.g., the number of people served), 21% report on the outcomes of their corporate citizenship initiatives, such as improved health, while just 3% report the return on investment (ROI) to the company of their efforts. Reporting on outcomes and ROI can both help to assess the effectiveness of programs, while building support among key constituencies, such as boards, senior management, and investors.

The report was produced with True Impact and E4E Relief. It draws upon the analysis of Fortune 1000 company disclosures; a survey of 97 leading companies, more than half of which have an annual revenue of over $11 billion; and a series of Chatham House Rule roundtables with 247 participants from 99 firms.

Additional insights and findings include:

About half of leading companies report on their citizenship efforts within larger ESG or sustainability reports.

ESG reports (36%) and sustainability reports (20%) are the most common reporting channels for corporate citizenship efforts, according to an analysis of 100 leading companies.
Other practices include communication through the company website (17%), presenting results in cross-functional impact reports (7%), stand-alone citizenship or traditional corporate social responsibility (CSR) reports (14%).

Companies primarily report on corporate citizenship to enhance their reputation—specifically, with current and prospective employees, consumers, and the communities in which they operate.

Employees top the list of stakeholders shaping and influencing measurement and reporting: 64% of survey respondents cite them as the most important driver for corporate citizenship reporting.
Customers and communities were the next most-mentioned drivers, with 48% of respondents citing each of them.

"While corporate citizenship can learn from other types of corporate reporting—such as financial and ESG disclosures—it should not duplicate them. Whereas ESG reports are aimed at satisfying regulatory and investor requirements, corporate citizenship reports focus on current and prospective employees, consumers, and the broader public. Moreover, ESG reporting tends to be data-heavy, while citizenship reporting emphasizes storytelling. At the same time, both types of reporting can benefit from an increased emphasis on the ROI of the company's activities to both the firm and society," said Paul Washington, Executive Director of The Conference Board ESG Center.

Ensuring accuracy is the leading challenge when collecting information for corporate citizenship and reporting.

Accuracy tops the list of reporting challenges, with 61% of respondents citing it.
Collecting information across multiple corporate functions and nonprofit partners is the second most-cited obstacle (42%), followed by ensuring data integrations and systems compatibility (36%).

"Accuracy is paramount when it comes reporting for corporate citizenship efforts, particularly as the 'S' in ESG increases in importance. For example, the SEC has updated its requirements for reporting related to human capital, which raises the bar for reporting on matters related to the workforce. The sentiment from C-Level leaders is that information built to withstand ESG assurance level standards is a critical part of a company's audit requirements and sets the stage to tell the company's vital stories," said Holly Welch Stubbing, President and CEO of E4E Relief.

Few companies currently report the return on investment (ROI) of their corporate citizenship efforts.

Only 3% share quantitative metrics on the ROI of citizenship to the firm itself, typically by linking citizenship efforts with internal business metrics such as employee engagement.
Companies have the ability to calculate this ROI, which can be used to help educate key internal constituencies and investors about the tangible benefits of corporate citizenship.

"Companies should approach citizenship reporting through the lens of multi-faceted storytelling," said Andrew Jones, Senior Researcher at The Conference Board and author of the report. "Ideally, the company will be telling not only its own story, but that of communities it has served, non-profits it has worked with, and individuals whose lives have changed. And the stories should come not just from the company itself, but from all the others who have been part of achieving impact."

"Measuring social outcomes has several benefits, including demonstrating real-world impact, guiding future investment decisions, and identifying opportunities for improvement. But many corporate citizenship executives think it's beyond their capacity due to the complexity of social issues, the lack of standardized metrics, and a perception that it's too challenging to distinguish their results from other contributors," said Farron Levy, CEO and Founder of True Impact. "In practice, these challenges can be overcome by collaborating with nonprofit partners to measure a few select outcomes and using simple contribution calculations to calculate a specific company's impact."

About The Conference Board
The Conference Board is the member-driven think tank that delivers Trusted Insights for What's Ahead™. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.ConferenceBoard.org

Learn more about our sponsors E4E Relief and True Impact.

SOURCE The Conference Board