Is it possible good deeds invite bad publicity? Can CSR efforts actually backfire?
A recent working paper published in the Harvard Business Review claims just that, using oil company spills and the subsequent media coverage registering no difference in sentiment as the evidence. In fact, the paper claims companies making strong corporate social responsibility claims often garner additional criticism.
From the author’s abstract:
We find the media far more likely to report accidents if they occur at a company with a superior CSR record. Rather than acting as an effective form of insurance, our results suggest that a strong CSR record can be a liability. Moreover, the tone of coverage is no less critical for organizations with a greener reputation.
Here’s the problem: Oil companies aren’t like your company, or mine. They are more like tobacco companies. Given their environmental records, it’s logical to be skeptical of their CSR efforts they so proudly espouse. When they stumble, of course they are going to draw more negative attention than those that weren’t bragging about their good works. It affirms what we already expected.
The author also claims “you cannot find a robust direct link between CSR and financial performance.” But this link exists. Consider the research findings outlined in Firms of Endearment regarding companies that have strong CSR programs:
These companies pay their employees very well, provide great value to customers, and have thriving, profitable suppliers. They are also wonderful for investors, returning 1025% over the past 10 years, compared to only 122% for the S&P 500 and 316% for the companies profiled in the bestselling book Good to Great – companies selected purely on the basis of their ability to deliver superior returns to investors.
To make a blanket statement implying “good deeds invite bad publicity” using oil companies equates the reputation of oil companies with those of every other company. It’s not a fair comparison, and to imply the findings from this research apply to any category takes the bridge too far — way too far.
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Image: Reuters/Lee Celano via The Washington Post