Why Should You Care About Corporate Social Responsibility?
By Tyler and Michelle Riddell
Corporate Social Responsibility (CSR) is one of the hottest topics in business today.
Companies all over the globe are talking about the importance of it in their businesses and communities.
They understand the impact of CSR not only on the communities they work and live in but also how it impacts the bottom line.
The one question that most companies have is, “What the heck is CSR and why should I care?”.
We are going to unpack what CSR is, why you need to care about it, and furthermore, how it can improve the bottom line of your business.
What is CSR?
Corporate Social Responsibility (CSR) is a way in which companies self-reflect on their role and impact within society.
There are a variety of examples available for what CSR is about, partly because the definition has evolved over the years.
Historically, companies believed that if they paid their employees enough, employees would donate to non-profit organizations and volunteer with these organizations.
Over time, companies have started to support community benefactors through large galas, fundraising and donation efforts, and community outreach efforts.
While we would love to say this has always been for ethical reasons, it has sometimes been used to deceive people or distract them from the truth of a company’s practices.
Unfortunately, for some individuals, the term CSR still has bad connotations. Bottom line, consumers are expecting more.
Consumers believe that simply donating to a cause denies companies and their communities from critical relationship opportunities and many times from being truly accountable for their CSR initiatives.
However, a new generation of consumers are holding businesses accountable and in the past few years, CSR has evolved even further.
Now more than ever, businesses are starting to understand their responsibility to acknowledge that they are a crucial part of the community.
From an academic perspective, we like David Chandler’s definition:
“A responsibility among firms to meet the needs of their stakeholders and a responsibility among stakeholders to hold firms to account for their actions” (2020, p. xx).
Did you see the word stakeholders in Chandler’s definition? This is intentional because corporations are not just meeting shareholders’ (one of a company’s stakeholders or owners) needs anymore.
This is a substantial mindset shift for all companies (large, medium, and small), and it is essential to fully understand the new definition of CSR.
There are other CSR definitions across the globe, but there is commonality in all of them.
They all focus on three key areas: sustainability, social impact, and environmental concern.
Sustainability
Sustainability is most often defined as “meeting the needs of the present without compromising the ability of future generations to meet theirs.”
The world’s resources are limited and finite and should be used conservatively or in a way that allows the next generation to make use of them.
One example of the fight for sustainability we see is companies reducing their environmental footprint by reducing the use of pesticides and utilizing growing methods that do not deplete soil richness.
Social Impact
The next focus of CSR is to positively trend in the area of social impact.
There is a growing trend of consumers buying products from companies that are making a positive impact in the world.
The center for social impact strategy reports that 90% of Millennials say they will switch to a cause-branded product when choosing between two brands of equal quality and price.
Even further, 51% of global consumers will pay extra for products and services committed to positive social and environmental impact.
Environmental Concern
Companies are being pressured more and more these days to provide their services and products with processes that help the environment more than hurt it.
This can be exemplified by a number of factors.
Circularity
This method encourages companies to reduce, reuse and recycle. Many companies, for example, are switching to full digital files and to processes that remove the need for the use of paper.
Reducing Pollution
Metal straws, biodegradable or multi-use bags, reusable cups, or bottles are just some examples of how companies are reducing their environmental footprint.
Mitigating Climate Change
Companies are installing solar panels on their buildings to reduce energy use. Green roofs or roofs that have essentially gardens or parks on top with plants and trees have been found to reduce the amount of heat emanating from a building. They also cool the building itself, reducing the amount of air conditioning and therefore, energy usage needed to sustain the building.
Land and Biodiversity Conservation
Have you heard of companies that are planting trees? Helping to restore lands previously made barren from corporations? Land and biodiversity conservation has become a large part of the social responsibility impact that consumers are demanding, especially from corporations that have previously not regarded the environment as a limited resource.
What is the Real ROI?
While feeling better about yourself and your business doesn’t immediately and directly equate to dollar signs, there is measurable value achieved by businesses that focus on CSR.
The bottom line is that well implemented CSR programs account for:
- 20% increase in sales revenue
- 10% increase in customer satisfaction
- Approx. 50% of people are willing to pay more for products and services
Frankly, 20% more revenue to your company from doing good in the world sounds like a wining strategy, doesn’t it?
How Can I Be more strategic with my Corporate Social Responsibility?
Our Corporate Social Responsibility services help companies build an actionable plan. We help you align efforts, engage stakeholders, and share stories to build your brand and business.
Are you ready to be more strategic with your Corporate Social Responsibility?
To learn more about our Corporate Social Responsibility Services, click below!
Reference:
CHANDLER, D. (2020). Strategic Corporate Social Responsibility: Sustainable Value Creation (5th ed.). Sage Publications.