Conversations with Disbelievers: Corporate Social Engagement Report

Conversations with Disbelievers
How and when can businesses “do well by doing good”?
This report for the first time brings together much of the available
quantitative evidence that addressing social challenges can help businesses
improve their financial bottom lines. Designed to be used by business
managers, nonprofit leaders, brokers and intermediaries, as well as students
and the research community, it provides practical guidance on how best to
use available evidence in encouraging businesses to address social objec-
tives. Organized to provide a ready reference to the key data and case
studies, it notes the potential weaknesses of the currently available evi-
dence, what types of evidence are the most convincing, and how this evi-
dence can best be marshaled and communicated effectively.
The report is essential for anyone wanting to persuade skeptics - and of
course for the skeptics themselves - of the financial benefits to companies
of effectively addressing social challenges as a core element of their busi-
ness strategy.
The Authors
John Weiser is a partner in the firm of Brody • Weiser • Burns. John
works with organizations to shape business strategies that achieve social
goals. He specializes in strategic planning and the development of busi-
ness/community partnerships. Contact: [e-mail] or
www.brodyweiser.com
Simon Zadek is Chair of the Institute of Social and Ethical
Accountability, having been Development Director of the New
Economics Foundation and Chair of the Ethical Trading Initiative until
the end of 1998. He is currently Visiting Professor at the Copenhagen
Business School. Contact: [email protected] or www.zadek.net.
Retail price: $40.00 (US).
For ordering information, please see www.brodyweiser.com or www.zadek.net.
Copyright ©2000 by The Ford Foundation • ISBN Number: 0-9705985-0-5
The preparation of this report was funded by a grant from the Ford Foundation.

I. Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
II.The Disbeliever’s Scorecard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
III. Quick Tour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
IV. What Are We Talking About?. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Defining Corporate Engagement . . . . . . . . . . . . . . . . . . . . . . . . 30
Defining the Components of “Measurement” . . . . . . . . . . . . . . . 33
V.The Numbers Warehouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
A. Measurements of Overall Business Effect . . . . . . . . . . . . . . . . . . . 39
Stock Price and Financial Performance . . . . . . . . . . . . . . . . . . . . 39
Reputation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Government Relations/Regulatory Oversight . . . . . . . . . . . . . . . 56
B. Measurements of Effect on Business Functions . . . . . . . . . . . . . . . 63
Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Workforce Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Marketing and Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Innovation and Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Diversity in Purchasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
C. Innovations That Expand The Market . . . . . . . . . . . . . . . . . . . . . 97
Financial Services Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Retail Site Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Homeowners Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Appendix A: Contacts for the Study . . . . . . . . . . . . . . . . . . . . . . . 122
Appendix B: Resource Websites . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Biographies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Table of Contents

2 / Conversations with Disbelievers

Executive Summary / 3
The purpose of this paper is to encourage business to deepen its
Corporate Engagement with communities. By Corporate Engagement
(CE), we mean activities that:
• Offer the potential of having a positive impact on low-income commu-
nities.
• Form part of an ongoing corporate strategy for community involvement
and enhanced business performance.
• Offer potential direct or indirect benefit to the corporation.
• Include both philanthropic activities and/or activities that tap into the
corporation’s core competencies and operations - its power to purchase,
develop products, invest, market, hire and train, and innovate.
This definition covers all businesses, all employees, and all types of com-
munities, including those close to business operations, distant communities
down supply chains, and “non-geographic communities”, i.e., communities
of interest.
To encourage business to deepen its CE, the paper reviews the quantita-
tive evidence showing when and how CE creates business as well as societal
benefits.The primary audience for this paper consists of people who seek to
persuade skeptics of the business benefits of CE.This can include fellow
managers, government officials, and nonprofit leaders.The motivation for
this paper has been the question: why is it that there are relatively few cor-
porations that have committed significant resources to CE, when there seem
to be so many studies that purport to show a clear business benefit?
Answering this question requires entering into conversations with disbe-
lievers - business people who are at best skeptical that CE can provide a
significant financial benefit to corporations.These conversations help illu-
minate why the currently available evidence is not persuasive, what types
of evidence are most convincing, and how this evidence can best be mar-
shaled and communicated effectively.
In conversations with disbelievers, we found that what some might con-
sider convincing evidence is often dismissed by business people for one or
more of the following perceived reasons:
• Information type (for example, survey data) is not deemed reliable
• Evidence is not considered relevant to key goals
• Sources of evidence are suspect
• Evidence does not address the business person’s underlying attitudes
I. Executive Summary