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January 29, 2008

New Survey Uncovers Discrepancies on Corporate Citizenship Issues
    by Anne Moore Odell

There is gap between what executives say on corporate citizenship and what their corporations actually do, finds a survey of over 750 executives. -- A survey released by the Boston College Center for Corporate Citizenship (BCCCC) and The Hitachi Foundation shows CEOs and other executives support responsible corporate citizenship, at least in principle. The third biennial 2007 State of Corporate Citizenship in the US, "Time to get real: Closing the Gap Between Rhetoric and Reality," studies what CEOs and other business executives say they believe about the importance of corporate citizenship and what policies are actually in place at their businesses.

Visit the
Prospectus Ordering CenterThe BCCCC describes corporate citizenship as the commitment of companies to minimize risks, maximize benefits, and be accountable and responsive to stakeholders, while supporting strong financial results.

Although 73% of the 751 top executives surveyed said that corporate citizenship needs to be a priority for businesses, only 39% of the businesses include corporate citizenship as part of their business planning. An even smaller percentage of these businesses (28%) actually have written corporate citizenship policies or statements.

"We think the gap between aspirations and actions is to be expected at this time because business is going through a significant transformation," said Vesela Veleva, Research Manager at BCCC and lead researcher on the Report.

"Companies are still adjusting to globalization, increased transparency, instant communications and a more sophisticated-and larger-network of stakeholders. It's only natural that senior level executives would articulate their ambitions to be responsive to these pressures before they are able to integrate the practices into strategies across the business," Veleva continued.

US companies are behind European and Japanese companies in creating corporate citizenship policies, the report concludes. This could have dire consequences for US companies that have not taken action incorporating social and environmental issues into their businesses.

"We did see some movement toward corporate responsibility [in the 2007 Survey], especially in the area of increased support for low-income communities, greater hiring of women-owned and minority-owned suppliers," Veleva told "We also found increasing recognition among US businesses of the importance of corporate citizenship for the brand reputation."

One of the most striking discrepancies between CEO rhetoric and business actions is the way businesses actually treat employees. Four out of five top-level executives answered that they "see the importance of valuing employees and treating them well." Employees’ actual experience often fails to match executive rhetoric. Just over half (54%) of these companies offer health insurance to employees, and less than a third offer training and career development for low-wage employees.

The dialogue between companies, shareholders and the public about the social role companies should play is not as open as companies might think. Sixty-five percent of business leaders replied that the public has “a right to expect good corporate citizenship" yet only 29% report that they to discuss corporate citizenship with stakeholders and only 21% report to the public on these issues.

The BCCCC/Hitachi study compares the expectations of executives and the public over the part companies should play in helping solve social issues. For example, 79% of the public surveyed believes that companies should be expected to manufacture their products in an environmentally and socially friendly way. Yet just 55% of executives agree.

Sixty-two percent of the public believes that corporations should be held responsible for reducing human rights abuses. Only 32% of executives agree. Another striking difference of opinion exists over the role companies should play in helping reduce the gap between the rich and the poor. Only 21% of executives answered that large corporations should help, while more than twice that percentage of the public holds this idea to be true (49%).

The survey also found that the response to the changing social contract varied by the size of the company. "Executives from medium-size companies seem most satisfied with the current social contract--50% of them see the existing social contract either as sound or as in need of some minor adjustments," reported Veleva. "Senior executives from small companies seem most dissatisfied with the social contract--only 32% of them see it as sound or in need of minor adjustments, while 66% believe it needs a major overhaul or serious changes to fix it."

The report was released as part of a well-attended webinar in December 2007 and interest in the survey has been extremely high, reported Veleva. For example, the Social Investment Research Analyst Network (SIRAN) is planning to present the data to its members. SIRAN, a network of 150 North American social investment research analysts from 30 investment firms, research providers, and affiliated investor groups, is a working group of the Social Investment Forum (SIF).

"In a lot of ways the media is already inundated with corporate citizenship talk - it's all the 'rhetoric' we're talking about in the report," Mark Popovitch, Senior Program Officer at The Hitachi Foundation explained. "We've really offered the report as a resource for the media to use to inform their coverage of corporate citizenship moving forward and provide perspective to the rhetoric coming out of corporate America."

The blog complements the survey. The BCCCC and The Hitachi Foundation are also presenting the information to business schools and groups about how businesses can adopt corporate citizenship principles.

"The Center's partnership with The Hitachi Foundation is an important part of this project," added Veleva. "This independent foundation is more than a funder and operates as a full partner as it uses the research to advance its objectives of enhancing the well being of economically and socially isolated people in US and its strong commitment to advancing corporate citizenship, business ethics, corporate philanthropy, and government governance."

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