Tracking the Gap between Societal Expectations of Companies and Perceived CSR Performance

Femke de Man, Director CSR Research, GlobeScan
This article originally appeared in the online newsletter of the Center for Coporate Citizenship, Boston College, Carroll School of Management, September 2007

In 2005, GlobeScan’s annual survey of international public opinion on corporate social responsibility — the 25-nation CSR Monitor — identified an important societal trend: a widening gap between the public's expectations for CSR and the increasingly negative perceptions of industry CSR performance. This trend was found to be consistent across both developed and developing countries, likely influenced by worldwide media coverage of a range of corporate scandals such as Enron, WorldCom, and Ahold.

In 2007, GlobeScan reexamined this issue and found an interesting dichotomy between developed and developing nations. While the gap between expectations and perceived industry performance continues to widen in most industrialized nations, the gap is narrowing in developing countries, with people in these emerging markets being far more positive about corporate performance in the area of corporate social responsibility. 

Rising CSR Expectations

Since 2001, GlobeScan has been asking consumers across 25 countries to rate the extent to which large companies should be held responsible for a variety of different actions.

These actions include operationally oriented responsibilities—in other words, actions that are directly related to a company’s operations and that are seen as the standards companies should achieve in their normal course of business (e.g., not harming the environment, ensuring a responsible supply chain, treating employees fairly, having the same high standards wherever it operates, etc.).

They also include citizenship responsibilities: socially oriented actions that companies need not undertake in their normal business operations, but which can have a positive impact on people’s impression of the company (e.g., improving education and skills in communities where they operate, increasing global economic stability, reducing human rights abuses, helping to solve social problems, etc.). 

Overall, CSR expectations are universally high, with more than eight in ten people across all countries surveyed saying that companies should be held at least partially responsible for all 14 of the social, environmental, and economic actions tested.

Speaking generally, citizens in developed and developing countries have similarly high expectations when it comes to a company fulfilling its operational responsibilities, however, when it comes to citizenship responsibilities, people in Asia, Africa and Latin America are more likely than people in Europe and North America to hold companies responsible, potentially looking to business to contribute to areas where government support is perceived as lacking or ineffective.

When looking over time at how much the public holds companies "completely responsible" for the various corporate responsibilities tested, GlobeScan witnessed and reported a small but significant rise between 2001 and 2005 in the global public’s CSR expectations. In 2007, CSR expectations appear to have stabilized across most developed and developing markets - and expectations for companies have reached a plateau at relatively high levels. 

Perceptions of Industry CSR Performance

While CSR expectations have stabilized, the same cannot be said for public perceptions in developed economies of industry commitment to corporate responsibility: people in North America, Europe, and Australia are increasingly critical of corporate performance on CSR.

Since 2001, GlobeScan has been tracking global public perceptions of industry performance on CSR by asking people to rate various industry sectors according to how well they fulfill their responsibilities to society. Between 2001 and 2005, the CSR performance ratings given to most industry sectors exhibited a substantial decline in both developed and developing countries. (There are many country-by-country variations when it comes to sector ratings of each particular industry.) This year, however, we witness a striking divergence: while in most developing countries, industry CSR performance ratings have stabilized or even begun to increase again, this is not the case in most industrialized countries, where industry CSR performance ratings continue to fall. 

The fact that in industrialized nations, the gap between perceived performance and expectations continues to widen suggests that the highly demanding CSR environment in Europe, North America, and Australia will not recede in the short-term. The pressure for action will continue and legislation may well come to bear on certain key issues, as we now see emerging in the climate change debate.

Indeed, in the consumer realm, this pressure is already being felt, with people being far more likely than at any point in the past decade to demand more socially and environmentally responsible products, and where ethically oriented product initiatives and communications are having a beneficial impact on the reputation and business performance of certain forward thinking companies.

It is clear from these results that many consumers in industrialized nations are not aware of the efforts being made by many large companies in the field of CSR. The declining view of business underscores the importance of companies continuing to improve their CSR performance, while also improving awareness through effective communications on their social and environmental commitments and initiatives. 

Expectations in the Developing World

In developing countries, the gap between CSR expectations and industry performance has decreased over the last few years. Perceived corporate activity on social and environmental issues appears to be slowly meeting public demand in these regions, perhaps due to the less cynical outlook of many consumers compared to more developed markets.

Indeed, looking at the CSR performance ratings given to industry by consumers in developing countries, these ratings are much higher for nearly all industries compared to those given by consumers in more developed countries. This slow improvement in perceived industry performance should result in a business context requiring much less defensive positioning around social and environmental issues.

In the developing world, citizens' CSR expectations continue to rise in Brazil and China, deviating from the general pattern of stabilizing expectations and increasing perceived industry CSR performance. When it comes to perceived industry performance, however, the two countries differ. In Brazil, the ever increasing expectations around CSR are joined with an increasingly positive view of industry performance on CSR. In contrast, China follows the pattern of industrialized nations, with expectations continuing to rise alongside a decline in perceived industry CSR performance. 

The changes in attitudes related to CSR in China are remarkable. In a short period of time, Chinese expectations and perceived performance of companies has quickly converged with those of people in North America and Europe. As a result, we can expect greater pressures for CSR in China, making this a market deserving of greater attention by global companies.

GlobeScan Incorporated is a global public opinion and stakeholder research consultancy with offices in Toronto, London, and Washington. GlobeScan conducts custom research and annual tracking studies on global issues. With a research network spanning 60+ countries, GlobeScan works with global companies, multilateral agencies, national governments, and non-government organizations to deliver research-based insights for successful strategies.