CEOs see long-term benefits in a ‘New Deal’

By Oliver Phillips

Companies have made their environmental, social and ethical performance a priority over the past decade. Despite a softening economy, three factors guarantee that corporate responsibility is here to stay: A “New Deal” between corporations, governments and nongovernmental organizations (NGOs); Millennials; and globalization.

New Deal

A “New Deal” is emerging between global corporations, governments and nonprofits. It is steadily replacing a traditional relationship of distrust with a spirit of collaboration. A key impetus for this change is the shifting gravity of power from governments to corporations. Today, 41 of the one hundred largest economies in the world are companies. Exxon Mobil is bigger than Poland and Austria. Wal-Mart is bigger than Denmark. Governments are realizing that they simply cannot solve major social issues without the active involvement of the corporate world and are reaching out to them as never before.

The U.K.’s Prime Minister Gordon Brown typifies the new outreach. He is calling on industry to lift Africa out of poverty by helping achieve the UN Millennium Development Goals (MDGs). Not too long ago, had you asked a global CEO what MDG meant, he or she might have replied that Chinese food tastes better without it. Today a growing number can recite all eight and list their specific targets.

Underpinning this outbreak of altruism is a healthy dose of mutual self-interest. Governments clearly see an advantage in spreading the burden of expectation that they alone must solve society’s endemic problems, and CEOs are seeing an opportunity to make strategic inroads into emerging markets.

Concurrently, many NGOs have radically altered their view of the corporate world. Several UN agencies have recently restructured their department of private partnerships to reflect this changing attitude--no longer regarding corporations as the enemy, nor as faceless checkbooks, but as constructive partners for progress on issues of joint concern.

Rise of the Millennials

Born after 1982, Millennials represent a distinct break from preceding generations in their global, optimistic outlook. They genuinely believe they can make a positive change in the world, and expect institutions and companies vying for their loyalty to share their values. Now that they have come of age, they are suddenly commanding special attention from corporations because they represent the current and future crops of MBAs entering the work force. The first question recruiters encounter at career fairs is no longer “What’s my first-year bonus?” but “What is the carbon footprint of your company?”

Globalization

The speed of transmission of good news, bad news and everything in between has transformed the global marketplace. Britney Spears’ kid sister’s pregnancy is news in Auckland and Omaha. U.S. elections are followed as closely in Bangalore as in Boise. Child labor abuses in the developing world make headlines worldwide within the same news cycle.

Early adapters to CR were responding to this new norm. Nike and Starbucks had their CR epiphanies in the crucible of battles around distant supply chain problems. Today, CR programs have progressed from reactions to external prompts on a single issue to proactive mechanisms for radically overhauling reputations.

The most successful CR programs combine three elements that together separate them from purely marketing or PR exercises: they are authentic, they are organic and they are amplified through effective partnerships. The most evolved CR program is no longer a siloed activity largely operated at arms’ length by a company’s philanthropic foundation, but is thoroughly integrated at all levels--product line, supply chain, workplace practices and operations. Communications around these efforts need to be aligned internally and externally.

Although there is still no proven link between doing good and near-term profit, CEOs are attracted to CR for long-term reasons. They fear missing out on the best young talent will erode their competitiveness over time. They are concerned about providing insulation for their company’s reputation, which can take generations to build but can unravel in a single news cycle. So while CR may not make money now, ignoring it could be costly in the future. And beyond the profit motive, some CEOs may even be motivated by the desire to leave the planet better off.

Oliver Phillips is a partner in Brunswick Group, a corporate communications partnership. He joined the firm in 2007 and focuses on clients with crises and broad corporate reputation issues. Phillips brings highly specialized expertise on matters involving corporate social responsibility, and has significant experience creating mutually beneficial alliances between corporations and NGOs across a wide range of areas.