Common Sense, Dollars and Cents, and Corporate Social Responsibility

March 1, 2018

[aflac]
[aflac]

More than 93 percent of the world’s largest 250 companies will publish corporate social responsibility reports this year, documenting what makes them “good.” Some will highlight how they have lowered their carbon footprint; others will share examples of how they have fought for national causes like hunger relief, cancer treatments or education access. Many will tackle social issues like equal pay and workplace diversity.

However, despite the different approaches to “doing good,” all share a common thread: the connection between socially responsible acts and the company’s business purpose. Each codifies a corporate character — much like a person’s character — that consumers, investors, and the public can understand and appreciate.

If we think about corporate character as a synonym for a brand’s reputation, then corporate social responsibility can translate into traits you might look for in a trusted friend. Just as we choose to spend time and energy with someone who demonstrates good judgment and is kind, consumers, partners and investors choose brands that demonstrate good character — by treating employees well, helping local communities and operating ethically and responsibly. Break that trust and the pendulum swings the other way. In fact, according to a recent Aflac survey, 75 percent of consumers would take negative action toward a company they felt was acting irresponsibly.

Corporate social responsibility also reaches beyond public acceptance. As it turns out, doing good is actually great for business. In a report from Reputation Institute, considered the gold standard in reputation tracking and analytics, companies with strong reputation scores performed significantly better in the stock market, nearly doubling returns of the overall market.

They also see an increased percentage of consumer choices and recommendations, experience better stock-price recovery after a crisis and are given the benefit of the doubt during difficult times. Similarly, results from a study done by the Ethisphere Institute — a leader in analyzing corporate ethics — comparing the 2017 World’s Most Ethical Companies honorees listed on the S&P 500 over the last two years, indicates performance of ethical companies surpassed the S&P by a margin of 6.4 percent.

Integrating CSR

It is no wonder so many smart companies have integrated corporate social responsibility into their core business strategies.

Taking a page from Reputation Institute, if we envision reputation as a wheel made up of seven categories that impact overall reputation — product and services, innovation, workplace, governance, citizenship, leadership, and performance — more than 40 percent of that wheel is dedicated to categories directly tied to CSR activities, specifically citizenship, governance and workplace.
 
Companies that perform well in such categories support important causes, have a positive societal influence and are environmentally responsible. Their business operations are transparent; they behave ethically and are considered fair in their business dealings. Finally, they offer equal employment opportunities, reward employees fairly and care about employees’ personal well-being.

In 2015, Aflac was celebrating 60 years in business, becoming the leading voluntary insurance company in the U.S and Japan. Since 2000, our iconic Aflac Duck had anchored our marketing efforts. Moreover, Aflac had earned placements on coveted lists like Fortune magazine’s World’s Most Admired Companies and Ethisphere’s World’s Most Ethical Companies due to innovations like Say on Pay, an unprecedented shareholder vote on executive compensation, and One Day Pay, which enables Aflac to pay many claims in only one business day.

Nevertheless, all of these business and governance achievements were not translating to consumer recognition for our social responsibility efforts. Even after we crossed the $100 million donation-marker for childhood cancer support and research, a reputational analysis still revealed a frustrating disconnect between consumers and Aflac’s corporate social responsibility profile, particularly in the categories of citizenship and workplace.

There was no ducking this deficit (sorry, couldn’t help it) until we launched a robust campaign — industry research, internal reporting, thought leadership and a groundbreaking new philanthropic project — to showcase Aflac’s commitment to the community and society on a national scale.

We elevated our support (and brand) for our primary philanthropic cause, childhood cancer, by creating forums like The Washington Post’s Chasing Cancer Summit and sponsoring CureFest, a national grass-roots effort aimed at making childhood-cancer research a national priority. We elevated our once regionally recognized cause into the national spotlight. 

As a result, we landed six minutes on CNBC’s “Squawk Box” with the only corporate spokesperson to appear for the exclusive purpose of discussing corporate social responsibility in the history of the show. The elite Washington Ideas Forum placed Aflac and childhood cancer on their 2017 agenda — another first.

Detailing results

After executing our programs, measuring and reporting the results is essential. We created an award-winning CSR Report, detailing our advancements in philanthropy, diversity, sustainability, ethics and governance. We also responded to the public’s ever-increasing desire for transparency by including, for the first time, detailed information about hiring practices and employee demographics — including gender pay equity — heading off potential activist investors.
 
Taking things a step further, we used social media to promote our Duckprints program, which honors people around the U.S. who champion the childhood-cancer cause. For every use of #Duckprints on social media, Aflac donates $2 to The Aflac Foundation, Inc.’s childhood-cancer fund. Because of this new strategic focus, we garnered nearly 1 million social media actions, beating our annual giving goal of $1.5 million in both 2016 and 2017.

The results are very rewarding. Ethisphere named Aflac to its “World’s Most Ethical Companies” list for the 12th consecutive year in 2018, and Reputation Institute revealed a statistically significant increase in our reputation score. In fact, we earned consistent reputation improvements, maintaining our reputation in the “strong” range for the last five quarters.

Of course, the bottom line is in how the program affects business. Sales increases in 2017 point to a potential financial return on our investments. Whether through research conducted by Aflac, Reputation Institute or Ethisphere, certain things are becoming very clear. Potential customers and professional investors alike view socially responsible corporate behavior as a cultural marker of integrity, trust and, for investors in particular, lower risk.
 
As business leaders begin to measure and understand the new realities of a more demanding culture, we expect to see corporate social responsibility continue to grow as an important part of any strategic business plan. Those who lag behind do so at their own potential expense. 

Catherine Hernandez-Blades

Catherine Hernandez-Blades is Aflac’s senior vice president, chief brand and communications officer.

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