The buzz we are hearing.
By Jay Whitehead
If there is any single question we at CR Magazine get asked the most, it’s what is coming around the corner. The truth is that we have no crystal ball. But because we get the question a lot, we spend more time than anyone else asking around. Then we write down what we hear. And we report it to you. Here are today’s nine most-anticipated CR trends, and why you should care.
1. The 100 Best Corporate Citizens List Effect
In 2010, the scores of the companies on the 100 Best Corporate Citizens List improved an average of 19 percent over 2009, the #1 company score improved 66 percent, and the #100 company score rose 30 percent. The improvement is tied largely to the fact that the List’s methodology is popular, open, and provides a roadmap for executives who want their companies to be known as transparency leaders. (It doesn’t hurt that a significant number of Russell 1000 company CROs have a bonus tied to how their company does on the List every year.)
2. The Black List Effect
The “Black List,” which debuts with this issue of CR Magazine, will also serve to improve corporate performance—in this case, among the least transparent members of the Russell 1000. Certainly, there will be those companies that could not care less about what others think. But the smart money is on the fact that the mere existence of the Black List will scare more public companies into picking up a transparency roadmap, and following it.
3. New Health Care Plan Costs Will Increase ROI Pressure on CR Programs.
That the new US health care bill will increase employer costs is undisputable, since it adds $940 billion to employer and employee cost burdens over the coming decade—that means roughly two percent cost increases for many public company employers. This added cost will put pressure on corporate responsibility execs to demonstrate a return on investment from their CR programs. Smart prognosticators, therefore, see that providers of programs that either demonstrably cut costs or increase company value will succeed, while other programs that might feel good but represent a cost will be left in the dust. Good bet growth areas for CR executives include energy cost savings, carbon and water cost cutting, compliance and governance cost reduction, CR automation (especially software-as-a-service solutions), shareholder marketing/communications programs that include effectiveness measurement, CR-based employee productivity enhancement programs that feature built-in feedback loops, in-kind philanthropy, and responsibility-based customer and product marketing. Likely victims of the ROI pressure include unmeasured consulting of all sorts in CSR/CR/ESG/GRC, annual report prep and printing, and checkbook philanthropy.
4. Carbon Costing as a Cottage Industry.
By 2014, the SEC requires all public companies to include carbon emission and cost data in their public filings. Software will automate the data collection process—that is, once you’ve gone through the pain of finding all your data sources. Hint: There are millions of them. Start with Scope 1 and 2. Leave Scope 3 for the next person you hire.
5. The Toyota Effect
That driver in Southern California whose Toyota accelerator apparently stuck and caused him to kill people? Driver error. With 24-hour news and the blogosphere ready to jump on Toyota when it was already down, the company suffered a mighty blow to its brand value and market cap. So companies, anticipating that they might be victim of the same fate at some point, are starting to inoculate themselves against viral media rumors by starting to gather phalanxes of social media experts. The logic: when fighting an online fire, it’s best to have some flamethrowers of your own.
6. Water Costing
More than 300 of the west’s largest companies have been asked by the Carbon Disclosure Project’s new Water Disclosure program to report water usage. Most companies have much less of a clue about water usage than they do about their greenhouse gases. Regulators will track water faster than they did CO2.
7. The Gates Foundation Effect
The Bill and Melinda Gates Foundation has done as much to create a new standard for managing philanthropy as Microsoft’s Office and Windows suite did to standardize business computing. The proof-based Gates method is the reason why Warren Buffett gave a big chunk of his vast fortune to the Foundation to run. It’s giving-as-a-business (where the payoff is not profit but proof of progress), and it’s taking the corporate foundation and social entrepreneurship worlds by storm. While a vast improvement in proving outcomes over scatter-gun philanthropy, Gates’ metric-focused approach does not always guarantee success. But at least, as Thomas Edison said of his famous 1,000 failures on the way to inventing the electric light bulb, “it allows us to know the many ways that don’t work.”
8. Intel’s “CR Inside” Model
On April 2, 2010, Intel agreed to amend its corporate charter to include “corporate responsibility and sustainability performance” in its overall policy responsibility. Rather than create another Board Committee on Sustainability, the company, citing its 11 consecutive years on CR Magazine’s “100 Best Corporate Citizens List” as evidence of its CR strength, renamed its existing Governance and Nominating Committee. The move was prompted by institutional investors including Harrington Investments, and will likely be widely followed and prompt the advance of CROs in the C-suite.
9. Is CR the New TQM or the New HR?
President Obama has labeled this the “era of corporate responsibility” and referred to a new age in how human capital is deployed. But patron of the Total Quality Management movement, former GE CEO Jack Welch, has likened the CR efforts of companies to his beloved TQM. So is CR’s professional evolution following that of the HR profession, in which the ranks of HR-titled pros grew from fewer than 100 in 1975 to more than 250,000 today? Or is CR more like TQM, with its army of disciples and Black Belt certifications imbedded throughout organizations in a vast variety of roles? The smart money has CR titles growing fast among the Russell 1000, CAC 40, FTSE 500 and larger NYSE Euronext companies first. Smaller companies might skip the CR-titled officer, but use CR as a TQM-type set of disciplines, rather than a corporate function.