Relevant to all industries, corporate social responsibility, or CSR, is interpreted differently according to the sector. However, whether the business is a new startup or an existing company trying to improve, there are some key themes that all organizations should be aware of.
CSR refers to the wider impact of a business. It consists of three elements, namely:
- Social
- Economic
- Environmental
In recent years, the way that corporations demonstrate their responsibility in these arenas has come under increased scrutiny. Now is the time for businesses all over the world, operating in every industry, to redouble their CSR efforts.
Whether they are championing women’s rights, attempting to eradicate poverty, or protecting the environment, companies are increasingly recognizing the need to prioritize corporate social responsibility, presenting a more attractive image to shareholders, employees, consumers, and the world at large to send their bottom line on an upward trajectory.
Social Aspects of CSR
Quantifying the impact of a company on social well-being can be more difficult to measure than environmental or financial aspects, since it is based on how a business affects people in society. Facets may include health include well-being, happiness, and engagement with local communities.
Economic Impact of CSR
Creating jobs, offering fair pay, and contributing to the local economy are some of the most important ways that a business can demonstrate corporate social responsibility. Taking positive action on environmental and social matters can also create significant financial rewards for companies in the form of reduced business overhead triggered by lower energy consumption or waste.
CSR and the Environment
From an environmental perspective, corporate social responsibility is particularly important, encouraging businesses to be mindful of how their activities affect the environment; spurring leadership to mitigate or offset the negative environmental impact of the business.
The Benefits of CSR
Embracing socially responsible policies and practices enhances a business’ ability to attract and retain customers, an aptitude that is integral to corporate success and business sustainability. When members of the public see that a percentage of a company’s profits are channeled towards causes that they feel an affinity with, this induces them to pay more for the products or services that the company offers.
Companies that are committed to supporting local communities generally experience increased foot traffic. For example, banks that support families in need with affordable loans are likely to experience an overall increase in business as a result of positive PR.
Positive Impact
CSR serves as a platform for companies and consumers alike to make a positive impact on both local and global communities. Businesses that implement strident CSR policies in line with their values benefit from a valuable opportunity to boost customer retention and loyalty.
In one recent study, 87% of American consumers agreed that they would be more inclined to buy from a brand that advocates for issues they care about. In the same survey, 76% of respondents said they would not buy from a company that they discovered supported an issue that went against their personal beliefs. Community-spirited businesses often enjoy a significant advantage over the competition, thanks to enhanced brand imaging.
Companies that prioritize corporate social responsibility also increase employee engagement, attracting workers who are keen to effect positive change in the world; people who care about more than just collecting a paycheck. With big companies, there is strength in numbers, and, collectively, employees can achieve impressive results. This in turn has a positive impact in terms of staff morale and productivity.
According to research from Harvard Business School, almost 70% of respondents said they would decline a job working for a company that lacked a strong sense of purpose. In addition, 92% of employees working at socially responsible companies said they would recommend their employer to contacts within their network who were seeking new employment.
Appealing to Investors
In addition to making businesses more appealing to customers, employees, and the community at large, demonstrating a well-honed CSR program also makes businesses more appealing to both current and future investors. According to CECP’s 2021 Giving in Numbers review, investors are playing an increasing role as key stakeholders in CSR. Just like customers, investors are scrutinizing businesses and holding them accountable in terms of social responsibility. A company that takes CSR seriously demonstrates that it is committed to more than just short-term gains, instead prioritizing the business’ long-term financial health and sustainability. CSR goes hand-in-hand with social, environmental, and governance metrics that help external partners and investors quantify the company’s social efforts, a key motivator for consideration and continued interest with many investors.
Finally, corporate responsibility opens up new market opportunities for companies. There are many markets that, as yet, have not been tapped into because, using traditional business logic, they have not been deemed “profitable.” With an increased emphasis on social activism, corporations can open new doors to neglected causes and areas. By considering social benefits in addition to profit margins, businesses can strike the right balance, simultaneously differentiating themselves from their competitors as organizations committed to more than merely making a profit, but creating a positive impact in the world.