Stages of Corporate Citizenship
Business leaders throughout the world are making corporate citizenship a key priority for their companies. Some are updating policies and revising programs; others are forming citizenship steering committees, measuring their environmental and social performance, and issuing public reports. Select firms are striving to align staff functions responsible for citizenship and move responsibility — and accountability — into lines of business. And a vanguard is trying to create a market for citizenship and offer products and services that aim explicitly to both make money and make a better world.
Not all of these initiatives are suitable for every company. How then is an executive to know what to act on now, or assuming the company is already knee-deep in many initiatives, what is the optimal set of initiatives for the company and its stakeholders?
A company should assess the appropriate and effective actions it should take regarding transparency, governance, community economic development, work-family balance, environmental sustainability, human rights protection and ethical investor relationships. A company should ask whether there is a connection between risk management, corporate branding, stakeholder engagement, supplier certification, cause-related marketing and employee diversity.
The balance between confusion and coherence often depends on what stage a company is in relative to its development of corporate citizenship.
Relative neophytes, for instance, often lack understanding of the many aspects of corporate citizenship and have neither the expertise nor the machinery to respond to so many diverse interests and demands. Their chief challenges are to put citizenship firmly on the corporate agenda, get better informed about the concerns of stakeholders, and take sensible initial steps.
At the other extreme are companies that have already made a significant investment in citizenship. In this case, the CEO is typically leading the firm’s position on social and environmental issues, and the board is fully informed. To move forward these companies might try to connect citizenship to core business strategy and to employees through a “live the brand” campaign like those at IBM and Novo Nordisk, or by establishing citizenship objectives for line managers, as Dupont and UBS have done.
Citizenship is a Stage-by-Stage Process
Center research suggests that the development of citizenship is a stage-by-stage process in which a combination of internal capabilities applied to environmental challenges propels development forward.
The Center’s research has identified five stages of citizenship, as displayed in the graphic above.
These stages are based on several dimensions of citizenship, including:
- Citizenship Concept: How is citizenship defined? How comprehensive is it?
- Strategic Intent: What is the purpose of citizenship?
- Leadership: Do top leaders support citizenship? Do they lead the effort?
- Structure/Operations: How are responsibilities for citizenship managed?
- Issues Management: How does a company deal with issues that arise?
- Stakeholder Relationships: How does a company engage its stakeholders?
- Accountability: How does a company measure the quality and impact of its social, environmental and economic efforts on the business and on society?
- Transparency: How open is a corporation about its financial, social and environmental performance?
The five stages of corporate citizenship and the citizenship dimensions on which they are based are more fully described in The Center’s monograph, The Stages of Corporate Citizenship.
What stage is your company in?
Recognizing the stage in which a company is operating and understanding the challenges created by advancing citizenship, will help clarify for executives a sense of where things stand, frame strategic choices about where to go, aid in setting benchmarks and goals, and perhaps speed movement forward.
The Center has developed a survey tool that can help you identify the stage of development of corporate citizenship in your own company.
Once you complete the survey, you will immediately receive a cumulative benchmark showing the overall stage of your company's corporate citizenship, with a graphic indicating your scoring on each of the dimensions of citizenship. You will also have an opportunity to read more about the challenges associated with your designated stage and ways to overcome them.
The survey is not intended to provide an in-depth assessment of the state of corporate citizenship in your company or how well it is managed. Rather, it is a first-pass diagnostic that can provoke thinking and help with planning. It also provides a perspective on how your company fits into the current business landscape. Most companies find they are not at any single stage and that the characteristics of their citizenship that matter most may be reflected in a few stages.
To learn what stage your company is in, complete our brief online survey.