What’s Next For CR? Thoughts and Predictions for 2015

By Shannon Schuyler, PwC

2014 was a landmark year. Megatrends like demographic shifts, technological breakthroughs and rapid urbanization collided with milestone events -- such as India’s 2 percent give-back mandate and the People’s Climate March -- to re-shape how the world views businesses’ responsibility in the marketplace.

I recently participated in a Twitter chat, on behalf of PwC and the PwC Charitable Foundation, with TriplePundit and Dave Stangis of the Campbell Soup Co. During the chat, we touched on these issues and how they will impact the way we think and act as responsible business organizations in 2015. While there were many important insights and trends, there are seven that I believe will transform the landscape in 2015.

1. Employee engagement gets personal

Employee engagement has long been on top of CEOs' agendas – but as millennials rise to management positions, employee engagement has become even more critical to successful business transformation. Millennials want their workplace to represent their values, which is why firms like PwC see greater retention and higher performance when their people are actively engaged in corporate responsibility (CR). According to a February 2014 PwC study, employees most engaged with their organizations put in 57 percent more effort on the job and are 87 percent less likely to resign than their disengaged counterparts. Millennials are proving that CR is not just something that aligns with company values; it’s a commitment that helps retain talent, spur engagement and promote employee success.

This Year: Expect the adoption of more sophisticated employee engagement strategies with a focus on personalization and mobilization. Companies will look to help employees define purpose across a variety of different levels. We are also likely to see deeper engagement strategies via pro bono and skills-based volunteering, as well as companies embracing digital innovation to drive scale.

2. Investment in youth education deepens

The Committee Encouraging Corporate Philanthropy’s 2014 annual giving report noted that 96 percent of companies support educational causes, and 28 percent direct the majority of their funding toward youth education, outpacing every other issue area. As the economy and the talent gap continue to be issues that are front and center for CEOs, companies want to invest in areas that have both short- and long-term benefits. In 2014, the “go local” movement continued to pick up steam across all areas of CR, as people want to feel tangibly connected to their decisions and actions. This trend also contributed to the rise of community investments.

This Year: Expect investment in youth education to continue to comprise a large portion of company giving strategies. Technology, digital tools and game-based learning are the wave of the future. These new teaching tactics can help to transform, revamp and retool the way students and educators approach learning, especially within challenging subjects like math and science, where U.S. youth typically lag behind those from other parts of the world. As budget issues continue to plague school districts in communities across the country, expect to see business play an increased role in investing in quality education programs.

3. Companies look at diversity in different forms

This year, diversity has dominated conversations from Washington to Wall Street. For the first time in history, the number of women in the U.S. Congress is more than 100, representing substantial progress for female leaders. While females comprise just 18 percent of overall boards, nearly a quarter of all new S&P 500 directors in the past two years have been women.

This Year: We’ll see more companies looking to address diversity in a variety of forms. From a talent perspective, CEOs want to hire employees who bring more to the table than ever before. In fact, according to PwC’s 18th Annual Global CEO survey, 85 percent of CEOs said they are actively searching for talent in different geographies, industries or demographic segments, and 80 percent are looking for a broader range of skills than they did in the past. Today’s business environment requires innovative thinking and the ability to examine issues from a range of perspectives. Companies want boards that are better suited to address evolving and increasingly complex business, regulatory and political environments.

4. Sharing economy and digital mapping tools become mainstream

2014 was the year of the so-called “sharing economy” – in which businesses or peers built on the promise of shared resources. Disruptive companies have become mainstream around the globe and continue to grow in popularity and size. These disrupters are radically shifting how consumers live, spend and interact with each other.

This Year: Expect to see an uptick in new organizations, tools and applications – such as innovative digital mapping tools to ease the targeting and sharing of resources – that enhance the value of the sharing economy. The challenge now is how to support the development and maturity of these creative companies and industries to bring them to scale. Those in the digital and social purpose worlds should be able to complement them.

5. Supply chain becomes a competitive advantage

As companies have grown increasingly reliant on complex global supply chains, business disruption, increasing costs and brand management have emerged as important concerns. But companies have started to integrate sustainability strategies to overcome supply chain vulnerabilities and create competitive advantages. More than two-thirds of supply chain executives surveyed in PwC’s 2013 Global Supply Chain Survey say sustainability will play an important role in managing supply chains through 2015 due to the potential to improve resilience, reduce costs and support growth.

This Year: Investors can expect to see increased collaboration at the supply chain level, leading the way for more sustainable sourcing. Industry leaders play an important role in setting the supply chain goals, such as greenhouse gas reduction targets and sustainable sourcing, that consumers and businesses want to see – creating a competitive marketplace advantage. Other supply chain risks – climate change, human rights violations and the use of controversial raw materials – may also come into play, as investors increase pressure to address potential supply chain risks.

6. Climate change becomes more inclusive

From start to finish, 2014 was marked by extreme weather patterns, lengthy droughts and dangerous storm surges that continue to showcase the effect of global climate change. The impact on business and the economy, coupled with increased consumer advocacy, has led to newfound interest in tackling climate change. In September during Climate Week, hundreds of thousands of demonstrators from around the world gathered in Manhattan to demand action ahead of a United Nations Climate Summit. PwC was among the businesses who signed the World Bank’s call to governments and business leaders to support putting a price on carbon to support the transition to a low-carbon economy.

This Year: Expect to see a rise in local government action to address the challenges posed by climate change. On the federal level, the new GOP leadership in Congress has pledged to thoroughly review proposed clean energy regulations, including the adoption and implementation of the EPA Clean Power Plan for power plants. On a global level, expect to see a crescendo of business engagement leading up to the United Nations Framework Convention on Climate Change later this year, which is seen as a critical opportunity to achieve a binding global agreement on climate. Further, U.N. member states are working with the business community to advance a series of sustainable development goals to grow economic, social and environmental advancement.

7. More companies embrace new reporting methods

PwC data shows that nearly two-thirds of investment professionals (63 percent) say that the quality of a company’s reporting could have a direct impact on its cost of capital. A separate study found that the same percentage of institutional investors say they are dissatisfied with the current level of corporate disclosure by U.S. companies on matters relevant to climate change, resource scarcity, corporate responsibility and citizenship. Feedback such as this has led companies to discover that corporate reporting should create a customized experience, which considers the many different ways people, companies and organizations engage with each other.

This Year: Financial reporting can be resource intensive for issuing companies and of suboptimal value to investors. Expect to see a newfound openness to revised standards and frameworks for reporting, such as the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) Guiding Principles.

Bottom Line: I’ve been closely following these seven CR trends throughout 2014, and believe these issues are prime for increased movement in 2015. What did I miss? What are your predictions? What’s next? Share your thoughts with me @shannonschuyler #pwcCR2015.

Image credit: Flickr/keiya

Shannon Schuyler is the corporate responsibility leader for PwC and the president of PwC’s Charitable Foundation, Inc.