Why companies can no longer afford to ignore CSR
Corporate Social Responsibility (CSR) is about PR right? Well yes, and no… The truth is that there are numerous strategic reasons for companies to participate in CSR and the potential positive impact on the company’s bottom line can far outweigh the cost of investment. Conversely not investing in CSR can have a devastating if not fatal impact on a company. The reality is that it is no longer a question of “can a company afford to include CSR in their company strategy (and budget)?” but rather “can they afford not to?” Here are a few reasons why:
- Consumers are demanding it
Consumers have always enjoyed being associated with a product that had the moral or ethical higher ground but with Millennials and now Gen Z consumers entering the market it is increasingly becoming a primary requirement for purchase. The average consumer is aware that governments alone or their own individual contribution will not be enough to right the wrongs of this world, so they are using their combined consumer power to compel companies to wade in with their considerable resources and expertise.
Cone communications published a study in 2017 on CSR and some of the findings included:
- 63% of American consumers were looking to businesses to take the lead on social and environmental change.
- 78% of people wanted companies to address social justice issues.
- 87% of consumers said they would be willing to buy a product or service based on a company’s advocacy concerning a social matter.
- 76% of those surveyed said they would decline to do business with a company if it held views and supported issues that conflicted with their beliefs.
These sentiments continue to grow.
- Employees are demanding it
Prospective employees are increasingly considering a company’s social responsibility as a key factor in choosing an employer. One study found that the causes a company supports was considered the 3rd most important factor when evaluating a company after core product and its culture and ahead of office environment.
A good CSR programme can improve staff morale, builds loyalty, pride and promote cross departmental co-operation. Employees who participate in social volunteering programs develop leadership, innovation and communication skills.
- 55% better morale.
- 43% more efficient businesses processes.
- 43% stronger public image.
- 38% better employee loyalty.
- Investors are demanding it
Impact investing is the new catch phrase in investment circles. Investors look at what impact a company is having socially and environmentally as well as potential for financial return when assessing the viability of the company for investment. Some reports estimate that the size of the impact investing market will grow to over $500 Billion by 2020.
4. Governments are demanding it
Tax breaks for companies that participate in CSR and fines for companies that disregard social and environmental laws are one way that governments all over the world are incentivising CSR initiatives. Preferential consideration for government tenders is also often used to incentivise companies to participate in CSR projects.
- Your competitors are doing it
Involvement in social and environmental issues can be a key distinguishing factor for a company. If you are not at least in the game, you will be left behind. If you do it right, it could be the steppingstone to get stand out from your competitors.
These are all strategic reasons for having a CSR programme that will almost certainly impact your bottom line. There are of course other less measurable reasons for CSR such as:
- Giving you insights into the culture and challenges of the market you are selling in.
- Strengthening ties and relationships with business partners.
- By applying your companies applied resources and skills you can probably get many things done faster and at a better cost than a government or charity organisation thereby reducing the cost to society in general.
The truth is that CSR is no longer a ‘nice to have’ or knee-jerk reaction to negative PR, it the industry norm and no company can afford to ignore it anymore.
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