Corporate Purpose is the Tie that Binds: CECP’s Annual Trends Report
Date: December 13, 2018
Leading companies are laser-focused on corporate purpose. They explore what their purpose is and how it translates to their people and community and bring that purpose to life through intentional practices and strategies. They use a human-centered lens for all business operations because it helps them see around corners and delivers a competitive edge. All this leads to a future-forward outlook that enables a long-term view. Within this purpose megatrend, we see five prominent themes: Employee Power, Collaborative Advocacy, Responsible Tech, Long-Term Growth Going Mainstream, and Impact Measured.
Two thousand eighteen was the year of the employee. Low unemployment rates and the ongoing war for talent have created a new focus on the needs of the employee to bolster recruitment, training, and retention efforts. At the same time, people are finding opportunities to speak up in support of their purpose and values. And these voices have enormous power: employee’s social media posts can generate 8X more engagement than when a brand shares similar content. The intersection of these two trends is employee power. Leading companies are listening to and supporting the needs of their employees, and providing tools and resources to elevate those voices.
Companies are doubling down on support and protection for employees in ways such as education, nonprofit fellowships, healthcare, pro bono sabbaticals, and more. At Google, employees used the tools the company gave them—a culture of speaking out and collaborative tech —to make a difference in the world.
What CECP is Doing:
CECP tracks employee power through our work on diversity & inclusion (D&I), employee communications, purpose and fulfillment in the workplace, and through Giving in Numbers, the unrivaled leader in benchmarking on corporate social investments. Findings include:
- Matching gifts: Hidden in traditional giving programs is a mighty employee power tool, and companies have figured out how to supercharge them. Sixty-two percent of companies offered employee-choice matching gifts (Giving in Numbers).
- Purpose and fulfillment: CECP, Imperative, and PwC’s report, Building a Fulfilling Employee Experience, uncovered fulfillment as the focal point of individual purpose and the new employee power structure. Eighty-two percent of employees agree that fulfillment is primarily their own responsibility, and 42% say that they are their own greatest barrier to finding fulfillment at work.
- Employee communications: Leading companies make use of employee recognition programs and automatic feedback outlets for employees to share their stories. Companies don’t just communicate top-down; they also enable sharing one voice at a time.
- Diversity & Inclusion: CECP’s Diversity & Inclusion in Corporate Social Engagement, with the Walmart Foundation, found employees are forming D&I employee resource groups (ERGs), with access to budgets to identify and support issues and organizations they care about.
Employee passions and needs will continue to dominate. Companies will employ complex (and simple) listening strategies, both digital and in person, such as town halls, focus groups, and advisory committees, to assess and test programs, policies, and messages.
Each year as we share our views on trends, we witness a growing list of ways companies have stepped up and spoken out to make their values known. In the last 12 months, however, we’ve seen brands taking stands with varying degrees of success. While report after report tells us that a majority of consumers and employees expect companies to voice an opinion, all those stakeholders have different points of view. It’s nearly impossible to please everyone without suffering some sort of backlash.
For companies that want and need to take a stand, what’s the solution? Safety in numbers, coalitions, and movements. Investors cannot divest from all companies taking a stand on important social causes. (It’s worth noting that leading investors are supporting those stands, by the way.) And no one company can solve these massive social challenges alone. In the end, the fear of going out alone moves companies to collaborate—which they should be doing anyway.
Companies must learn new ways to thread the needle:
- Talk to larger segments of stakeholders, not just one: Ipsos’s research uncovered a list of words to use to communicate to both sides of an issue, such as responsibility, entrepreneurs, creative, innovative, self-reliant, and nonpartisan.
- Collaborate inside of the company: In both red and blue companies, boundaries are blurring between CSR, HR, D&I, supply chain, C-Suite, and beyond as a company determines its values and acts on them today — and over the long-term.
- Find pre-competitive collaboration opportunities: Companies are coming together to move on issues, such as CEO Action for D&I, the fashion industry, Regeneron-led gene sequencing, Reboot Representation Tech Coalition, and more. Another building trend is companies bringing their grantees and nonprofit partners together to solve challenges, encourage collaboration, and build capacity of each to pursue their missions; Allstate, Wynn Resorts, GE, and CenterPoint offer interesting models.
- Align your issues with your mission: Based on your skills and expertise, can you add value to issues such as immigration, human rights, guns, inequality, voting, census, and #metoo? But, importantly, companies need to listen before they act, and back up their talk about their values with meaningful actions. Customers and others are on the lookout for virtue signaling.
What CECP is Doing:
How does a company know when to speak up? CECP, building on the work of Chatterji and Toffel, has developed a framework through which CEOs and their teams can assess when to act: 1) What are your company’s purpose and values?, 2) What issues matter to your company and your stakeholders?, and 3) What are your options: lead, follow, collaborate, or take internal action first?
CECP had the opportunity to bring companies together on a variety of issues to learn how to pool resources and expertise to solve social challenges:
- Diversity & Inclusion: Through Diversity & Inclusion in Corporate Social Engagement, CECP surveyed nearly 100 corporate practitioners, informing 6 trends.
- Equity, Talent, and Tech: To inform CECP’s paper, Systemic Investments in Equity, Talent, and Tech, more than a dozen companies joined together to examine the pervasive obstacles facing people of color who are seeking opportunities in the tech workforce. Findings included tying STEM exposure to formal learning and aligning corporate responsibility with hiring.
- Opioids: A group of companies have come together to develop their companies’ strategies, focused on stigma, employee supports, partnerships, and advocacy, with many companies coming together in the spring of 2019 for a first-of-its-kind forum.
- Long-Term Plans: As the Strategic Investor Initiative (SII) prepares companies for their long-term plan presentations, colleagues from investor relations (IR), the CFO, HR, D&I, CSR/sustainability, citizenship, and other business units are coming together–in many cases for the first time–to develop new long-term narratives about their plans to address growth, strategy, and risk.
Leading companies today are thoughtful, collaborative advocates, and their purposeful actions are integrated through each business unit and the long-term business plan. Leading CEOs are at the helm of successful, sustainable companies taking measured stands on issues that are germane to their mission and stakeholders.
In this cyclical period of companies standing up for causes, facing backlash, retreating, and standing up again, it’s time to rethink the strategy. Companies play an integral role in solving societal challenges and a permanent retreat from social issues would happen to the detriment of the global community. To move forward, companies need to band together in greater numbers to show that this movement is not going away, and is happening because it is good for business, expected, and vital. Until other stakeholders see the future value of these movements, companies will need the fortification that comes from collaboration.
Is social media the new smoking? With all that tech has afforded us, we sense that it can take as much away. We saw Jana Partners and CalSTRS send a letter to Apple about giving families more options to guide how children and adolescents use devices. Edelman Trust Barometer noted a 2% drop in trust in search engines and social media platforms. Security and privacy are high on any company’s list of challenges. The public is pushing back and examining the risks of living a digital life. But this is not just an issue for the tech sector; every company is a tech and data company. And with that acknowledgment comes responsibility.
As tech advances, companies are thinking about the benefits and challenges:
- Artificial Intelligence (AI): The opportunities for AI abound, from IBM’s Science for Social Good applying computing power to solving social challenges, to Siemens using AI in turbine operation to reduce toxic outputs. But we have also uncovered the challenges, such as AI algorithms based on data that contain historical statistical biases for factors such as race or gender, which resulted in exacerbated bias in practices such as hiring.
- Data for Good: Numerous collaborations have sprouted up to hack corporate and social data for good, such as Aetna identifying and putting on notice super prescribers of opioids.
- Blockchain and bitcoin: Companies and nonprofits are exploring the potential for ‘radical transparency’ of investments and securely sending aid money where it is needed.
What CECP is Doing:
A partner to companies seeking to put their massive data collections to work, Giving in Numbers is the unrivaled leader in benchmarking on corporate social investments. It is the premier industry survey on data insights and trends, providing standard-setting criteria in a go-to guide that has defined the field. CECP has the largest dataset in the industry, sourced from more than 400 multi-billion-dollar companies over nearly 15 years, representing more than $200 billion in corporate social investments. The report is used by professionals across all sectors to understand how corporations invest in society, with topics ranging from cash and in-kind/product grantmaking, employee volunteerism and contributions, and impact measurement. From quick questions to presentations to company teams, boards, and CEOs, CECP is a trusted advisor analyzing companies’ Giving in Numbers data to provide customized support to enhance strategy and make the business case for further investment in society. Our 2019 survey launches on January 1, 2019. Companies can take part by contacting firstname.lastname@example.org.
The long-term plans CEOs present at the Strategic Investors Initiative’s (SII) CEO Investor Forums ask companies to address how they are anticipating megatrends in their industries, which for any industry is responsible tech. In the last CEO Investor Forum, Martin Schroeter, Senior Vice President of IBM Global Markets, shared that the company is focused on building a credible level of trust and transparency for AI. To meet this need, IBM uses three principles: the purpose of AI has to be clear; AI data belongs to IBM’s clients; and AI has to be transparent, explainable, and audit-able.
We look towards the power and scale of cross-sector collaborations to encourage the responsible use of tech, such as the Microsoft’s AI for Humanitarian Action, a new $40 million, five-year program, which will harness the power of AI to focus on global priorities. CECP will look to SAP, Robert Wood Johnson Foundation, and others who are mining data in communities to layer into their work to find opportunities to invest their skills and resources and track impact. CECP has also begun exploring how blockchain can be levered by companies for their social investments now and in the future.
LONG-TERM GROWTH GOING MAINSTREAM
Why did BlackRock CEO Larry Fink’s sixth company letter in 2018 resonate so much more than the first five? CECP’s sense is that the world is ready for companies to take the long-term view, define their purpose, and share their social contributions. We heard much in 2018 on short-termism, the detriments of quarterly reporting, and the need for companies to share their purpose from public figures including Senator Elizabeth Warren, President Trump, JP Morgan’s Jamie Dimon and Berkshire Hathaway’s Warren Buffet, and others.
The United Nations Development Program launched an effort to move private capital to advance the Sustainable Development Goals. Swell Investing’s study found that 84% of investors aged 18-24 are either already invested in socially responsible or impact investments or plan to in the future. Allstate included an Investor Hub in their latest Sustainability Report. Nielsen’s What’s Sustainability got to do with it? reminded us that, “in our digital and social media age, transparency and authenticity are key…Winning requires making sustainability a key part of your business strategy from beginning to end.”
What CECP is Doing:
CECP’s SII is a coalition of leading companies and investors committed to re-orienting capital markets toward the long term. SII convenes CEO Investor Forums to provide a venue for CEOs to share their long-term strategic plans, created with SII guidance (see 7 questions in SII’s Investor Letter), with audiences of long-term investors—such as BlackRock, Vanguard, State Street, and Goldman Sachs.
Recent research from KKS and CECP demonstrated that, when companies present these long-term plans to investors, markets move. More than 30 CEOs from companies including Aetna, Nestle, and Medtronic, have shared long-term plans—outlining their sustainable value creation strategies–to an audience representing in excess of $25T in AUM. See additional research and company guidance from SII.
Not many are advocating for less transparency. It’s the method, the content, and the audience that’s in question. Buy-side investors are becoming more vocal, including the institutional, patient investors who are usually silent. They are taking their cues from the activists, and asking questions and outlining the signals of sustainable value creation they need to see to make decisions. Leading companies will commit in 2019 to publicly, voluntarily, and regularly share their long-term plans. Is your CEO ready to present your company’s long-term plan?
We know from past Giving in Numbers that companies were trying to measure all their social investment work. Recent data show that companies are prioritizing focus by measuring outcomes of signature, high-visibility programs and not every partnership in their portfolio. The next big movement by companies is to determine which measurements to track to show meaningful impact. According to a Pulse Survey by CECP, 72% of companies reported that the most important way to improve impact measurement for the field is to measure business and ROI metrics, such as those that affect brand, customer, and employees.
What CECP is Doing:
CECP has been tackling the challenges of measurement for many years. Nearly ten years ago, Measuring the Value expressed three measurement conversations that are as vital today as they were then: 1) Between grant recipients and CSR heads, 2) between CSR heads and CEO, and 3) between the CEO and investor community. But ultimately, “measurement frameworks can be introduced by leveraging models and evidence developed by related business disciplines; they can also help identify key intermediate outcomes that, if targeted, can ultimately yield desired business behaviors and benefits.”
CECP is working with leading companies to up their transparency game internally by adding “social” metrics to the vital few KPIs the C-suite regularly monitors. CECP’s scorecard resources include:
- Strategic Scorecard: For the CEO audience, captures high-level metrics. Inspired by Johnson & Johnson’s approaches and others.
- S in ESG report: Introduces Total Social Investment as a metric that bridges between CEOs and community investment teams.
- Guide to Social Scorecards: Fundamental principles and advisement for community investment teams’ work to use measurement to manage for social and business outcomes (proprietary access for CECP companies; see blog for additional information.)
CECP has gathered hundreds of case studies that are allied with solutions journalism, a movement that explores and shares stories of what works when solving social issues. To convey stories of how businesses are investing in society to solve community challenges, we work with companies to align their stories with our pillars of excellence—partnership, innovation, CEO leadership, and impact. We shepherd companies through communications audits to source impact stories and share them in the outlets that matter. Do you have a case study to share?
CECP’s scorecard-driven approaches will go ever-deeper to support companies, specifically working with a community of companies to equip its participants with a new or refreshed scorecard to support their work. Could your company use a scorecard to measure what matters?
The Giving in Numbers survey, the unrivaled leader in benchmarking on corporate social investment launches in January 2019. With this year’s edition, CECP is taking its benchmarking to the next level. Based on years of research by CECP, expanded questions will better enable a company to report and benchmark its impact.
How will your company make an impact in 2019? Are you ready? Contact email@example.com for more information on the actions listed here.