By: Caleb Meleka, Michael Henderson, Erick Cifuentes, and Chris Legette, Mason students in the School of Business
“Creating a strong business and building a better world are not conflicting goals – they are both essential ingredients for long-term success.” – Bill Ford
Corporate social responsibility (CSR) involves organizations doing their part to make the world a better place. Research shows that 70 percent of consumers “agree that large companies have a special responsibility for helping to make the world a better place”. The choice to be socially responsible may at first seem like a business cost, but it actually benefits the corporate bottom line because it strengthens relationships with consumers by benefiting them. Here is how corporate social responsibility enhances consumer well-being.
Any business that is working to be successful has to not only understand CSR, but also have a system in place to actively achieve it. When practicing CSR, companies integrate social and environmental concerns into their business operations and interactions with their stakeholders. The three basic principles of CSR are sustainability, accountability, and Transparency, according to Acting Colleges.org. The business and consumer relationship must feature these three principles for CSR to be successful.
The idea of CSR has been around since the time of Andrew Carnegie and John D. Rockefeller giving back to their communities. They did so more than a century ago, and the positive impact they made can still be experienced to this day, this Association of Corporate Citizenship Professionals article explains. CSR came more into the mainstream when Howard Bowen published the book “Social Responsibilities of a Businessman” (1953). Bowen wrote a statement regarding corporate social responsibility that popularized the term and got more organizations involved in CSR. Grinnell College mentions that Bowen’s statement, “The obligations of businessmen to pursue those policies, to make those decisions, or to follow those lines of action that are desirable in terms of the objectives and values of our society”, has been used as a mission statement for many companies and is a big reason why many companies started implementing more CSR policies.
The Business Impact of CSR
Consumers shopping for everyday items can be overwhelmed at times because of the different choices with which they are faced. Consumer spending in the final quarter of 2021 was $13818.36 billion, according to 2022 data on consumer spending in the United States. What makes us become loyal to one brand and not just go with the cheaper alternative? Customers feeling more connected with an organization leads to more revenue and profits. A 5 percent increase in customer retention produces more than a 25 percent increase in profit, a Bain & Company report reveals. When companies promote their CSR work, that is a great way to keep customers engaged and loyal. Companies involved in CSR strive to have a positive impact on all aspects of society, including economic, social and environmental. The idea that a consumer knows that a company they spend money on will put extra money toward making the world better than the day before helps improve the relationship between the business and its consumers. CSR enhances an organization’s brand image, engagement, and morale.
Is there a company you like and want to know how they are involved in CSR? You can do so by visiting the company’s website or even researching articles about that company online. Seeing the good actions companies do for society can help you resonate with the company and motivate you to keep doing business with that company.
The Consumer Impact of CSR
When consumers see that a company is doing their part to give back to society or to stop an injustice, they become more loyal, engaged, and invested in the company. A strong example of a company that has a good relationship with their consumers due to their CSR work is Patagonia. A poll ranking from The Harris Poll ranks Patagonia number 1 in “Corporate Reputation”. The area they have chosen to make a change in is sweatshops. Patagonia makes a written promise to treat and pay workers well and the suppliers they partner with are up to the same high ethical standards that they set for themselves. This is something that can resonate with consumers, motivating them to buy Patagonia products.
CSR Value
CSR is becoming more and more prevalent in today’s work culture, as those entering the workforce are looking to work for employers who are socially responsible. By 2025, 75 percent of the workforce will be millennials. Originally most workers were focused on stability and high pay when searching for jobs but that mindset has started to shift toward focusing on how organizations are socially responsible, as more millennials graduate and enter the workforce. This is causing a shift in the way some companies operate as they try to stay competitive in the hiring market.
The Kenexa High Performance Institute conducted a study that showed companies who are committed to CSR had an average return on investment 19 times higher than companies that did not. This helps illustrate how in recent years CSR has become more important to companies to thrive not only internally but externally as well. This change is mostly attributed to millennials, as it’s been shown that a company’s social impact is one of the main factors they look for when looking for an employer or for a company to support. Research from Sustainable Brands features statistics proving how millennials value CSR in determining a career. 75 percent of millennials would take a pay cut to work for a socially responsible company, 76 percent consider a company’s social and environmental commitments before deciding where to work, and 64 percent won’t take a job if the potential employer doesn’t have strong corporate responsibility practices.
Many companies now value CSR. A majority of them now have some sort of CSR program in place, along with a mission or vision statement that they support by putting CSR in action.
Additional Resources
Learn more about CSR in this Business News Daily.com article and this Harvard Business Review article.
Learn more about how CSR contributes to employee well-being in this Forbes.com article.
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