The Value of Corporate Responsibility for Social and Business Impact
Corporate social responsibility (CSR) is necessary vocabulary in today’s corporate lexicon. Find out why CSR is becoming a focused, strategic business muscle that touches every major stakeholder while creating sustainable community impact.
People often think Corporate Responsibility is a company’s response when it’s asked to do the right thing. But corporate responsibility is quite the opposite of a defensive move. It’s about growth, common sense, culture, impact, and most of all, values.
Corporate social responsibility (CSR) is necessary vocabulary in today’s corporate lexicon. But what CSR really means within the walls of everyday corporate life remains subjective. As we shift toward more conscientious lifestyles, businesses are searching for a true understanding of the customer, partner, supply chain, and employee interpretation of purpose. Companies are exploring how purpose should manifest in business decisions, brand marketing, workplace values, and multi-sector partnerships. The shifts are promising: What was once narrowly considered a nod to environmental sustainability, supply chain management, water use, carbon footprints, and materiality indices, is now a multiplier for change. CSR, as a concept, is becoming a focused, strategic business muscle that touches every major stakeholder while creating sustainable community impact. CSR is here to stay. It makes business sense — and social sense. It is a corporate promise that is all about impact.
Problem-solving is sector-agnostic
The responsibility of changing the world used to lie with nonprofits. They were at the table first and have done the most to drive change. But today, problem-solving belongs to everyone. Gone are the days of bilateral or even trifecta partnerships. Multi-sector, collaborative CSR is gaining traction quickly. We are seeing media, governments, nonprofits (big and small), small businesses, tech startups, the entertainment industry, and multinational corporations all take their seat at the table to put their combined power behind urgent global challenges. In a world where the most prominent philanthropists are nations followed by wealthy individuals, the multi-sector approach may be the only way to solve many of the world’s problems.
It’s no longer just social responsibility
”Corporate responsibility” is a more apt description of the approach than “corporate social responsibility as it often involves functions that are simply about doing the right thing while making a profit. In this light, CSR means following a set of values that guide business decisions. This includes economic responsibility, gender equality, workforce ethics, consumer transparency, and legal compliance among other functions. For example, economic responsibility is about staying in business while still staying true to who you are as a brand — making a profit, paying employees fairly, supporting their families, delivering a quality product or service to customers, and if applicable, bringing value to shareholders.
According to Forbes, companies that invest in CSR initiatives paid no consumer product safety commission fines over the past three years and no FDA fines at all. They face 74% fewer employment discrimination cases, per dollar of revenue. And they deliver 8% higher return on equity than other companies. They also have an easier time recruiting, engaging, and retaining employees; they foster stronger brand reputations and inspire advocacy among consumers. They do better in nearly every way, in both the near term and long term.
Social impact can be a corporate goal
In taking on more responsibility, companies wield greater power to effect social outcomes beyond the walls of the business. Corporations that embrace CSR are led by impact-first thinking — not only impact in the business, but in the communities they support. A healthier, more vibrant world is, after all, good for business. Relationships with nonprofits, volunteers, partners, schools, supply chains, small enterprises, and more all define a corporation’s footprint on the health, economic opportunity, and future of communities. This is, in essence, a corporation exporting its business values to the community. Whether through volunteer time, donations, or in-kind support, CSR’s social side is proving that corporate impact is pivotal to businesses being accepted and valued in the world.
To that end, CSR often serves as the ethics gatekeeper, helping companies make business decisions that result in better social outcomes. Alberto Andreu Pinillos, global head of Organizational Development & Corporate Culture at Telefónica used the example of a textile factory collapse in 2013 and how it not only killed more than 1,000 workers but also affected the factory’s clothing partners because the collapse impacted the textile supply chain. By taking proactive steps to not partner with factories that allow for unsafe working conditions, those companies could have not only saved their supply chains but also, possibly, saved lives.
Make no mistake, this is still a business
It was once thought (and for some, still is) that filling the ethical and philanthropic duties of CSR cost a company more in the long run and that doing the right thing is less profitable than doing the bare minimum. Thankfully, there are countless examples that continue to prove that theory wrong. According to the CSR Resource Guide from Valor CSR, stock prices of companies with high social performance scores outperformed the lowest scoring companies by 6.24%. Even taking a stand on a divisive issue can prove profitable. In 2018 Nike unveiled a campaign featuring former NFL player and controversial kneeler Colin Kaepernick. The endorsement deal included a contribution to Kaepernick’s charity, Know Your Rights, which teaches youth self-empowerment, raises awareness on higher education, and educates participants on how to interact with law enforcement in various scenarios. While Nike’s campaign sparked an international debate, the brand saw a steep increase in revenue, surpassing all second-quarter sales expectations.
Blurry lines between purpose and global policy
As we saw with Nike, taking a stand can create newfound brand loyalty, but also brand advocacy (the Holy Grail of marketing goals), in which customers not only shop the brand but advocate for it. This led to increased market share among both athletic-wear shoppers and new customers outside the category — meaning people who don’t care about sports apparel may have purchased Nike just to show their support. It’s powerful stuff.
In general, we’re seeing more permeable lines between corporate purpose and policy issues. The time of the halo-effect public relations tactic of taking a public stance on issues has long passed. Consumers are demanding that companies address their role in the global fabric, and they’re putting their money behind those that do.
Companies are embracing CSR and delivering business and social impact in new ways. By flexing these new(ish) muscles, companies are bound to see and deliver meaningful change.