Corporations have a variety of constituents to whom they must be accountable, and corporate social responsibility (CSR) is the term that describes practices of accountability to all of a business’s associates for the social, economic and environmental impacts of its activities. Otherwise known as good corporate citizenship, CSR is often undertaken by larger corporations that have grown to the point where their activities have a substantial impact in these areas, and they have the resources to give back.
U.S. citizens generally prefer to do business with companies that share their values, or at least, do not actively engage in harmful activities that conflict with their values. Corporate social responsibility acknowledges this preference through many forms, including environmentally safe practices, charitable giving, employee volunteerism, product and service donations and social/political engagement. Over time, these practices define an organization’s place in society and how it interacts with its people, shareholders, customers, surrounding community and society at large.
CSR enables companies to align with their constituents’ ethos, especially at a time of unprecedented outsider visibility into corporate activities through digital channels, including social media. Moreover, consistent corporate citizenship positively impacts brand image, corporate culture and societal well-being. This article explores these benefits.
Impact on Brand Image
Corporate social responsibility is inextricable from a company’s reputation, especially among the younger generations that are increasingly socially conscious. According to a 2021 IBM study, 84% of global consumers consider sustainability important when choosing a brand.
A corporate focus on CSR is essential to good public relations; few initiatives related to products and services can have such a positive impact as driving positive social, economic and environmental changes. When companies promote a positive CSR agenda through online content, including employee-generated videos and blogs, they create opportunities to reach a much wider audience. That audience often includes the media and government entities, further promoting companies showing goodwill through annual awards, positive press and accolades.
From a consumer perspective, choosing which companies to do business with in a hyper-crowded market often comes down to research on the causes a company stands for, as there is so much parity in product and service levels in many sectors among larger competitors. Social media is a driving force, with consumers finding out about the companies they choose through social links from people they know to positive CSR activities, rather than through traditional advertising and marketing.
Impact on Internal Company Culture and Morale
Nielsen’s global CSR report shows that 67% of respondents prefer to work for socially inclined companies. For many Millennials and Gen Z professionals, a company’s mission, tied to its demonstrable CSR initiatives, is what drives them to seek employment with an organization, to remain engaged and satisfied, and to stay loyal. Younger workers value taking pride in what their employer stands for; it boosts their morale and makes them feel more connected to their organization and their coworkers. It gives them a sense of purpose.
A Harvard Business Review survey shows that 90% of executives believe a strong sense of purpose drives employee satisfaction and investment in their organizations. In addition, a Benevity Engagement Study of Fortune 1000 companies found that turnover dropped by 57% in the employee group most deeply connected to their companies’ giving and volunteering efforts.
Impact on Societal Well-Being
A consensus among younger workers is emerging, with 94% of Gen Z professionals believing their companies should address social and environmental issues. Likewise, among consumers, with over 70% being willing to pay extra for products and services that contribute to positive change.
Corporate concern for social issues like racial equality, environmental issues including fossil fuels and climate change and economic issues like equal pay for men and women all have huge impacts on the well-being of society. In fact, without corporations doing their part to foster positive change, it is quite easy to imagine our society devolving into chaos.
Corporate Role Models
Each year, the list of corporate role models with inspirational stories grows. For example, the Chicago-based biopharmaceutical company Abbvie has donated substantial funds for researchers to investigate neglected diseases and even collaborated with competitors to get low-cost medical products to underserved countries.
Starbucks has reached a milestone of 100% ethically sourced coffee by forming a global network of farmers and providing them with 100 million trees by 2025.
Cisco has beaten its million-ton emission reduction goal using 100% renewable energy, and Google is now the world’s largest corporate purchaser of renewable energy.
Leaders in virtually every sector are engaged in impressive CSR efforts and have demonstrable successes to show for their efforts.
For prospective and current MBA students, the good news is clear: you will be graduating into a corporate world populated by organizations that now share many of your values. Find a corporation that aligns with the issues that matter most to you and your daily work will contribute to positive social, economic and environmental change.
Learn more about Lamar University’s online MBA program.