With all this mention of bandwagons you’d have thought our blog had turned into a Gonzo report on the Kentucky Derby, but it hasn’t we swear! We keep mentioning it because its the go to thing of CEOs and decision-makers who eager to leap onto a bandwagon whenever a new corporate trend emerges. Unfortunately, they sometimes find that their quick action has led to a bad business decision. Apparently Disney made a bad one, but I don’t think anything could eclipse their worst decision: Cars 3.
CSR: The Trend That Benefits Businesses
The corporate buzzword which has dominated much of the 2010s is “corporate social responsibility.” CSR initiatives require that company operations promote the common good (environmental, social and/or economic) over and above what’s required by law – and the approach is really nothing new. Corporate social responsibility has been discussed, debated and implemented by various firms since the mid-20th century, with many other companies informally practicing their own forms of CSR over that time simply by “doing good.”
In the last decade, however, the number of entities codifying CSR in their corporate culture has soared. More than 90 percent of the world’s biggest 250 corporations now formally document their corporate social responsibility performance each year. Here are some major benefits to practicing corporate social responsibility
Brand Image and Customer Engagement
Companies spend inordinate amounts of money to build and promote their brands. Research has shown that one of today’s most effective branding strategies is to first integrate corporate social responsibility into the overall corporate philosophy – and then clearly communicate the brand’s environmental, social or economic policies to the marketplace. Timberland became a giant in the outdoors wear industry, largely due to sustainability initiatives which appealed to environmentally-conscious consumers. Ben & Jerry’s built its upscale ice cream brand on the company’s very public social activism.Customer engagement and loyalty rise significantly when the customer base understands and appreciates the alignment between a company’s values and their own.
Penetrating the Millennial Market
Statistics showing the importance of corporate values to millennial consumers are even more impressive. Marketers have found that the millennial market is often difficult to penetrate with traditional advertising approaches. However, millennials, as a group, are willing to overspend for products when they’re sold by environmentally- or socially-conscious companies. The Nielsen research discovered that nearly three-quarters of all millennials will pay higher prices for sustainable products, and more than 80% expect a company to publicly explain its approach to corporate social responsibility.
Attracting and Keeping Employees
Another nugget from the CSR research: younger workers vastly prefer to work for a socially-responsible company. A study done at the Macquarie Graduate School of Management found that more 90% of millennials believe it’s important that their employer is socially and environmentally responsible. Even more striking, more than half would take 20% less pay to work for a company that follows well-defined socially-responsible policies, and almost one-fifth of them would take a 40% smaller paycheck to work for such a company.
Research and anecdotal experience each show that employees are more likely to be fully engaged with their employer when there’s an shared organizational commitment to corporate social responsibility. They see their success and futures tied more intricately to the company, and are apt to make greater personal sacrifices to ensure the company’s success. Measurable increases in productivity and creativity have also been linked to strong CSR.
Not all of the benefits of corporate social responsibility are difficult to measure. One potential concrete and quantifiable benefit is substantial budgetary savings, particularly when a company commits to manufacturing sustainable products and energy conservation. Those policies, when executed properly, often provide organizational efficiencies which save “real” dollars, while building the firm’s CSR profile for both customers and employees as well.
A focus on sustainability may also lead to other financial benefits. For example, companies which formalize their corporate social responsibility policies show a commitment to long-term success and profitability; that’s a strong signal to risk-averse investors and lenders, who will be more likely to contribute capital or offer lower borrowing costs.