Corporate Citizenship on the Rise

Barclays PLC completed a UK corporate first last Friday when the first page of its annual financial results was headlined 'citizenship' and did not mention profits or dividends.

Barclays PLC completed a UK corporate first last Friday when the first page of its annual financial results was headlined 'citizenship' and did not mention profits or dividends.

The report highlighted how Barclays contributes to growth in the real economy, what it does for charity, and how it treats customers.

Barclays citizenship highlights included a 30 percent reduction in banking complaints,improved customer service and 73,000 staff helping disadvantaged people in the communities.

Corporate citizenship is one of several phrases used by companies to describe their efforts to improve the state of the world. It is the latest term used by a growing number of companies following worthier terms such as 'corporate social responsibility'. Nowadays it has become de rigueur for any business that wants to be in good standing with the public to be able to describe its various good works, although some companies take this a lot more seriously than others.

The financial services sector, widely maligned for tipping the world economy into recession, has been at the forefront of companies investing significant resources and finance into social improvement programmes as it tries to restore its battered reputation.

But major global brands have to work harder to close the gap between their performance in the marketplace and their citizenship, according to a quartet of leading international marketing firms, which launched a Global Corporate Reputation Index based on consumer 40,000 interviews and a study of 6,000 companies, at this year's Davos forum.

Their analysis shows that good reputations are built over time and many of the companies who rate highest in the index are those that have the longest histories. In fact 20 of the top 25 companies were founded before 1950 and have an average age of over 85 years, with the oldest tracing its roots back to 1865.

Technology companies performed the best with oil companies and banks unsurprisingly at the foot of the table. The top companies continue to show significant gaps between their performance and citizenship scores suggesting there is still scope for improvement

All these efforts to be a good corporate citizen are not completely altruistic. Research from management consultancies and business schools around the world confirms that businesses which invest in their citizenship receive a better return on investment.

Greater scrutiny of corporate citizenship is set to increase as access to company information becomes easier via digital and social media. In addition, as it becomes increasingly hard to differentiate between product and service providers, citizenship will begin to rank alongside price as a major factor in buying decisions.

Already we have seen the rise of social entrepreneurs who create a social or environmental value alongside profit. They inhabit nearly every sector of the economy, from banking and insurance to energy and manufacturing. While most of these entrepreneurs fall into the SME category there is a widespread expectation that within the next 10 years the concept will gain significant traction with several multi-million pound businesses demonstrating real success.

While the move by Barclays to highlight its social credentials in advance of its financial performance may seem unusual, it signals a trend which other major corporations are sure to follow. Good corporate citizenship is no longer an option, it's vital for success.

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