Corporate America is playing the role of the Tin Man these days. It's had a heart all along - it just hasn't been showing it off.
Until now. Today's annual reports tout environmental policy. Web pages hawk corporate volunteerism. Stand-alone brochures detail philanthropic giving and other socially
conscious endeavors. And financial communications practitioners are largely responsible for cultivating these messaging strategies.
It isn't hard to figure out the motivation behind these increasingly popular communiqués. Consider the latest figures from the DC-based Social Investment Forum, which estimates
"socially and environmentally responsible investing" in the U.S. at over $2 trillion. No wonder companies are reaching out to share news of their own good deeds with investors and
potential investors.
"There are shareholders who do look very specifically for the social responsibility agenda and they do make value and buying decisions based on that," says Jacinta Gauda, a
senior VP with New York PR firm Golin Harris International.
"Proactive communication and merchandising certainly helps address that shareholder concern," she says. A brochure or section in the annual report "offers a way to collectively
bring all of these somewhat disjointed efforts together under an umbrella [to make a value statement]. Before this kind of communication piece, there was not a mechanism to tell
that story."
Ricoh Corp., a global supplier of copiers and office automation equipment, is one player that paints itself green all over the place. The corporate Web site (http://www.ricoh.com) has a front-page tab on environmentalism, and the firm has put out a CD-ROM touting its involvement in EnergyStar, a federal
energy conservation program. Furthermore, Ricoh's quarterly magazine for shareholders and employees includes an environmental story in every issue, and the annual report includes
a section on environmentalism.
"We honestly feel that customers and users and dealers take into account that we are working toward a cleaner environment," says PR manager Russell Marchetta. "If they see a
socially responsible company, they are going to look to that company before they look to someone else." The corporate quality assurance division puts together the environmental
program, and Marchetta promotes it, with help from Ricoh's PR agency, Ruder Finn.
Halos and Hucksterism
Proclaiming your company's social virtues can help win clients and investors - but it also can be a double-edged sword. Experts say corporate PR pros must walk a fine line if
they don't want to be seen as mere opportunists.
"Because the media and stakeholders are so skeptical of information coming from companies, any time they do have a story to tell, they will come under some scrutiny," said
Alyson Muzila, communications manager for the Boston-based Coalition for Environmentally Responsible Economies. "It is tough for companies to get that credibility even when they
are telling a good story."
So how can you get credit without irking the skeptics? Robin Matchett, corporate communications manager at the Stratham, N.H.-based shoe manufacturer Timberland, says third-party
endorsements are key.
Timberland's Social Enterprise Department puts out an annual report on social responsibility, and its investor relations department incorporates the same messages into the
company's standard annual report. Each piece makes use of testimony from third-party auditors and outside partners in the nonprofit world. "There are quotes from all those people
in there, and that does make it feel a lot more objective and balanced," Matchett says. "We want to let people know what we are doing in the community in a very humble way."
The other key to credibility: substance. As in all forms of PR, it's awfully tough to sell something you haven't got.
"I want to see a comprehensive report, not just a sound bite that says, 'Hey, we put recycling bins in the back of the building.' I want to see a full disclosure with numbers
and charts," says Jim Larson, an investment adviser with Northeast Securities Inc. in Minneapolis who specializes in socially responsible investing. "I want to see their Equal
Opportunity Employment numbers. I want to see how many women they have on the board and in senior management. I want to see what their plan is for working mothers. I want to
read about their relationships with the unions."
Some analysts and watchdogs ask for even more proof. "A good number of people in the social industry would want to see some kind of CPA authentication or verification of those
figures, as a kind of third-party confirmation," Larson adds. "For myself, I will go along with a fair amount of PR stuff, as long as I see a fairly broad effort by the
company."
Where to Put Your Marbles
Of course, the credibility struggle can be daunting and time-consuming. Which explains why some firms have chosen to pursue alternate routes to the same end (read: more
investment dollars). Take IBM, for example. The Armonk, N.Y.-based company touts its social accomplishments in print and online, but the object is not so much to sway investors
or clients as it is to pique the interest of media influencers. The theory is that people will believe the newspaper before they believe Big Blue.
"We have pretty much come to the conclusion that you [the company] cannot tell the story of what you have done. Someone else has got to tell that story," says Stanley S. Litow,
IBM's VP of corporate community relations.
And how can you get the media to pay attention to your company's good deeds (considering reporters will invariably prefer a gotcha story over a touchy-feely human interest
piece any day of the week)? Measurable outcomes. IBM gets the biggest bang "whenever we are able to get up and say that according to such-and-such authority, here are the actual
gains that this program has made, here are the results," Litow says.
"If a company stands up today and says, 'We are making the following grant,' that is not a good story - whether you give $10,000 or $10 million," he says. "Better to wait until
you can market your story based on tangible results."
(Gauda, 212/697-9191; Larson, 888/333-2166; Litow, 404/238-6311; Marchetta, 973/882-2075; Matchett 603/773-1174; Muzila, 617/247-0700) -Adam Katz-
Stone
Doing Well By Doing Good
Why are companies investing so much in glossy brochures and Flash-ified Web sites extolling their social activism and environmental responsibility? According to The Social
Investment Forum, social investment grew from $1.185 trillion in 1997 to $2.16 trillion in 1999. And the trend is still growing. The group's most recent report states that,
"investors are increasingly using both screening and shareholder advocacy to encourage greater corporate responsibility." The message: do good, or the money walks. And if you are
doing good, then by all means, do tell people about it. How? A few pointers, courtesy of Jacinta Gauda, a senior VP with Golin Harris International:
Context counts. Don't just think big picture. Make sure your story will play out at the local level.
Get specific. "Don't just talk about general things like 'values,'" Gauda says. "People need to see involvement in real and relevant ways." What big issues are important to
your shareholders and to the communities you serve?
Use visuals. They're still worth a thousand words. "Show pictures of employees and senior management being personally involved. This is not just about check giving, right?
This is about giving our time."
(Gauda, 212/697-9191)