With a recession looming, some market watchers say corporate responsibility initiatives are on the chopping block. But the smartest executives see business benefit and competitive advantage in sustainability even as their companies begin to feel the squeeze. Here's why - and how you can take steps to stay in the game. By Kathee Rebernak

By now most of us think the U.S. economy is already in recession or is rapidly headed in that direction. Some of my colleagues think we’ve already hit bottom and are crawling back to stability. We hear almost daily from current and prospective clients that budgets for corporate responsibility (CR) efforts are tight or nonexistent. Those disciplines that don’t bring immediate, tangible benefit to the bottom line are the likeliest candidates for the ax; unfortunately for many companies, that means nascent CR initiatives.

Yet over the past several years countless presentations, blogs, and white papers have been devoted to convincing company decisionmakers of the business case for CR. In turn, literally thousands of reports, corporate ads, and company websites have declared companies’ unyielding commitment to CR. Why, then, the sudden concern over whether CR efforts will suffer in a recession?

Two reasons come to mind.

The first is a perception that corporate commitment to CR may be only skin deep. Generally companies do not change their core business strategy in an economic downturn. So it follows (doesn’t it?) that if CR principles are embedded in business strategy, neither CR initiatives nor their budgets should go by the wayside in a recession. In response to a wave of blog posts and articles on just this topic, Dave Stangis of Intel argues, “It might be fair to ask if a certain business, product line or initiative would be hurt by a recession - but the way you conduct business doesn’t stop in a period of uncertainty.” Stangis’s good point notwithstanding, many companies’ CR efforts are not so intricately interwoven into business strategy that they cannot easily be excised when the economy sneezes.

The second reason for concern is, in a word, myopia. All too often investors focus on short-term results, while, to be effective - and thus to realize any benefit for shareholders - CR efforts generally require long-term perspective and commitment. Investors who see such efforts as expenses rather than investments will view them with suspicion unless convinced of their (preferably rapid) return on investment.

It’s incumbent upon companies to address these concerns. They can begin to do that by (1) ensuring themselves and their stakeholders that their CR efforts are not merely lip service, and (2) quantifying the benefits - both tangible and not-so-much - of their initiatives in terms of long-term investment and ROI.

Here’s how you can recession-proof your corporate responsibility efforts:

1. Avoid the temptation to approach CR from a PR perspective. Consumers, employees, investors alike can smell a PR-generated CR effort from miles away - especially if the facts don’t support the hype. Key indicators: little relationship of CR efforts to overall business strategy (“easy wins”); an advertising/PR push that seems disproportionately larger than the impact of the initiative itself.
2. Understand that the whole is bigger than the sum of its parts. A comprehensive, integrated, and embedded CR effort will generate greater reputational and financial results than a few scattered initiatives that bear little relationship to each other or to the company as a whole.
3. Incorporate CR considerations/principles into all areas of business planning.
4. Tie CR performance to employee/manager compensation and advancement. This is one way to enlist your managers in beginning to quantify results of initiatives (see #6, below).
5. Tie CR performance to business performance. Easier said than done, and there’s no one-size-fits-all approach. Each company must figure out how to quantify the results of its CR efforts.
6. Take a longer-term approach. Allow a longer payback period for your ROI. Be courageous and communicate a longer-term perspective to your investors à la Marks & Spencer and Google.
7. Communicate your efforts in the context of your overall business objectives and strategy.

Connect the Dots

Integrated CR efforts create a kind of ripple effect: their results show themselves in greater customer loyalty, market share, ability to attract and retain talented and conscious (not to mention conscientious) employees, and access to capital. By allowing CR efforts to slip during a recession, companies may prop up EPS in the short term but will interrupt the ripple effect and, as a result, suffer on the inevitable upswing and beyond.

Those that continue to find creative ways to implement, integrate, and embed their CR efforts as part of business strategy will come out ahead both during and after leaner times. Companies that embed CR principles by involving each employee will engender a sense of purpose, direction, and loyalty - a particularly smart strategy at a time when fear, uncertainty, and low morale often dominate. What’s more, having many minds focused on finding new, efficient, and ecologically and socially sound methods of operation may generate surprising solutions to problems that dog companies in both up and down markets. (Note: Employees whose compensation and advancement opportunities are tied to CR performance may be more focused on such efforts than others.)

Even companies who succeed in embedding CR into strategy have to understand, in detail, how their CR initiatives, both individually and in the aggregate, produce that ripple effect and lay it out for investors and other stakeholders. In doing so, they will show their CR efforts to be both strategic (to extend the metaphor, more than skin deep) and farsighted. Employed effectively, this kind of communication has a multiplicative effect on CR efforts, closing the loop on a virtuous cycle.

In short, this is not the time to discontinue your CR efforts, whether in their infancy or years in the making. Continuing - or even stepping up - your CR efforts through a recession can mean the difference between staying strong or losing momentum and losing out.

__________

Kathee Rebernak is the founder and CEO of Framework:CR, a corporate responsibility consultancy that works with clients to improve and communicate corporate responsibility and financial performance.