Companies’ CSR Walk and Talk Don’t Jibe

August 10, 2009

Though Americans are willing to pay more to patronize companies they think are socially responsible, there is no consensus among them on which companies top the list, and some consumers are hard pressed to name a socially responsible company, according to (pdf) a collaborative study by WPP agencies Penn, Schoen & Berland, Landor Associates, and Burson-Marsteller.

More significantly, the study found that there is a significant disparity between a company’s actual corporate social responsibility (CSR) record (as measured by industry experts) and consumers’ views of that company as being socially responsible.

The poll tested consumer perceptions of 69 brands, 23 of which were also ranked in Corporate Responsibility Officer’s (CRO’s) 100 Best Corporate Citizens list of 2009 (pdf). Statistical analysis comparing the performance of brands ranked in both the CRO 100 and the WPP study found no correlation between performance on key metrics and consumer perceptions.

As an example, only 30% of consumers surveyed considered Gap, Inc. to be a socially responsible company, yet the CRO 100 ranked the company 24th, the study found. #1 Bristol Myers-Squibb, #2 General Mills and #3 IBM Corp. topped the CRO 100 list, but were not “top-of-mind” mentions in the WPP study.

Microsoft, which received the same score as General Mills in the WPP study, placed significantly lower than General Mills on the CRO 100 list, and Wal-Mart, which was “top of mind” the most among consumers (with 13 mentions) in the WPP study, did not even make the CRO 100 list.

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“There is a definite disconnect between companies’ corporate social responsibility initiatives and the public’s perception and awareness of them,” said Scott Siff, EVP of Penn, Schoen & Berland. “Companies are not successfully delivering messages to consumers about their efforts in this area, despite the fact that many consumers say they would rather make purchases from socially responsible companies.”

Consumers Will Pay More for Socially Responsible

Despite the gloomy economy, 75% of consumers are willing pay extra for products from companies they know to be socially responsible, and more than half are ready to pay at least 6% more on a $100 purchase to patronize such companies, the study found.

According to consumers, the main things a company should do to be considered socially responsible are treat its employees well, be environmentally sound, and give back to its community. Consumers also say – perhaps in reaction to corporate events of last year – that that a company’s honesty and trustworthiness have more of an impact on purchase decisions than the quality or value of its products – though both attributes remain vitally important.
Additional survey findings:

  • Johnson & Johnson is the top-scoring brand among consumers for corporate social responsibility.

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  • Despite concerns about the economy and their personal financial situations53% of respondsents say they will purchase and spend the same amount or more on products and services from socially responsible companies.
  • People are willing to receive less salary in exchange for working for a socially responsible company, particularly those between the ages of 25 and 49 with higher incomes.

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  • More than 70% of employed respondents are not aware of any socially responsible practices their own employer is taking.

Finance, Auto Least Socially Responsible Industries

The study also found consumers view financial services as the least socially responsible sector by a wide margin, with the auto industry coming in second to last. Consumers identified the food and beverage sector as the most socially responsible industry. Being socially responsible is more important in certain industries than others:

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The study’s sponsors believe that negative perceptions for some industries are a result of the current economic situatin. “Some industries have seen real damage to their reputations over the past year,” said Eric Biel, managing director for corporate responsibility at Burson-Marsteller. “Firms operating in these industries will need to concentrate on rebuilding trust by focusing on improving their performance in the areas that consumers care about most.

A recent study by Fleishman-Hillard and the American Marketing Association found that corporate sustainability efforts are likely to increase, despite the economic downturn.

About the study: The study was conducted using an opinion poll and related data analysis. The CRO 100 list compares the large companies listed in the Russell 1000 on their policies and performance on the environment, climate change, human rights, employee relations, philanthropy, financial and governance.

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