The Lego Group, Ikea and Microsoft have been named as the most responsible companies by the UK general public, however 27% are unaware of how the organisations treat their workforce.
In a list of 150 reputable companies, Lego came out on top for the first time in three years, with a ranking score of 82.
Ikea followed closely behind with a ranking of 80.9, whilst Microsoft ranked third most responsible company with 78.6, according to the UK CSR RepTrak® 2016.
The system measures a company’s ability to deliver on stakeholder expectations across three dimensions of performance; ‘Citizenship’ or the support of good causes, ‘Governance’, the companies openness and ethical behavior and ‘Workplace’, which relates to fair employee rewards, employee wellbeing and equal opportunities.
Companies are ranked on a score from 0-100 and are grouped as Excellent (80+), Strong (70-79), Average (60-69), Weak (40-59) or Poor (Below 40).
Overall, the Consumer Product sector has the best perceived CSR practices (scoring 70.4), this was followed by Healthcare (69.7) and Industrial Products (69.5).
Financial Services (64.2), Transport (62.5) and the Energy (58.9) sectors are at the bottom of the ranking with the poorest CSR scores.
The research comes from leading reputation consultancy Reputation Institute, and is based on over 50,000 interviews with the UK general public.
The Burberry Group saw the largest improvement year-on-year, rising up the leader board by over ten points, but following the Volkswagen emissions scandal, the car manufacturer’s score dropped by 28.9 points overall, and by 37.7 points in the “Governance” dimension, the largest decline year-on-year.
Of the ten companies perceived to have the best CSR practices, John Lewis Partnership, fourth place, and Rolls-Royce Aerospace, fifth place are the only two that are UK based.
Kasper Ulf Nielsen, executive partner at Reputation Institute, said: “This reveals a lack of both emotional and rational connection with businesses which is unique to the UK.
“Across the world, companies in their home countries tend to have a stronger reputation, and this lack of reputation capital puts UK Public Limited Companies at a disadvantage in their home market.”
Lack of clear communication
The study reveals that 27% of the UK general public are unaware of how companies treat their workforce, and 22% do not know what businesses are doing in terms of Citizenship, whilst 18% are uninformed about Governance principles.
Mr Nielsen added: “The UK public are beginning to care more and more about businesses’ social and environmental footprints.
“Looking at the examples of Sports Direct and Volkswagen, arguably two of the largest reputational crises in the last year, both experienced reputational damage in terms of CSR, and both have seen a blow to their reputations alongside a significant financial impact.”
Following Sports Direct’s reputational crisis, the company has a weak CSR perception score of 53, and a score of just 43 for the “Workplace” dimension.
Strong reputable companies falling on CSR
Over a third of companies in the UK RepTrak® have significantly underperformed on CSR perceptions when compared to the overall emotional connection consumers have with the company.
Amazon has an excellent reputation score of 82, but their CSR index was 15.4 points lower at an average 64.8.
Daimler (Mercedes-Benz) and Aldi have suffered similarly, with Daimler having an overall score of 80.4 and a CSR score of 69.8 and Aldi having also having an excellent overall reputation score of 80.9 but a CSR score of 71.1.
Mr Nielsen said companies that struggle to come across positively in terms of Governance, Workplace and Citizenship and at risk of losing their reputation.
He added: “Weak CSR scores for companies who have strong overall reputations demonstrate that doing well remains difficult to communicate well enough for it to stick in the minds of consumers.
Why reputation matters
Reputation Institute’s research reveals that reputation drives business results, as the better the reputation, the more support a company gets.
For companies with an average reputation, only 12% would definitely buy the products, but this climbs to 28% if the reputation is Strong and increases to 76% if the reputation is Excellent.
Mr Nielsen said: “The impact reputation has on business success is massive, which is why the leading companies in the world are managing and measuring this asset in a systematic way,”
In the UK, consumers must consider companies’ reputations “Excellent” in order to have more than 50% of those surveyed claim that they would say something positive about a company, recommend its products, trust it to do the right thing, welcome it into the local community, and work for or invest in it.