It’s no secret that businesses are primarily motivated by money. Virtually every corporate decision is strongly influenced, if not fully determined, by a financial cost-benefit analysis. Until recently, most business leaders assumed that corporate social responsibility (CSR) was an expense that had no financial upside. Yet, as covered in a prior post, studies have established that CSR drives higher employee attraction, retention and engagement - all of which help the bottom line. Furthermore, another post on this site linked CSR to customer spend and loyalty. If all of this is true, CSR would be expected to lead to better financial performance. Is there evidence that it does?
There is! A 2020 study involving over 250 European companies, for example, concluded that “companies pursuing CSR policies financially outperform their peers.” What’s more, this positive impact holds up even during periods of economic crisis. Similarly, 2019 research conducted out of the University of Chicago discovered that a $1,000,000 investment in CSR will likely be pay off for companies with as few as 411 employees. Put another way, it appears that investing $2,400 per employee in CSR is profitable! Furthermore, a 2016 study found that CSR is linked to lower investment risk and higher stock returns.

It’s no wonder, then, that many leading brands - including Deloitte, S&P Global and UPS - pursue meaningful CSR. CSR seems to the new secret sauce for financial success. To make the business case for your company’s CSR, download “Making the Case for Socially Responsible Business” by ACCP or contact us!

After another year of uncertainty, we are now at the beginning of 2022. While many embark on new resolutions to be outside more, exercise more, or make more time for family, businesses also have the opportunity to start new ventures. Here are three reasons why corporate social responsibility (CSR) should be a new year’s resolution for your company:

1. Employee attraction and retention: Amidst a wave of resignations, employee retention is increasingly important. As Millennials and Gen Z’s take over the workforce, employee expectations shift from monetary criteria to purpose. Millennials, who will make up 75% of the workforce by 2025, have been found to be more loyal to their company if it helps them give back to societal and environmental issues. Gen Z, who will make up 30% of the workforce in four years, put even more importance on the incorporation of CSR at their workplace. Overall, companies with a drive for purpose have 40% higher employee retention than those who don’t. This year, choose to adapt your company values to the new working class.

2. CSR and financial returns are not mutually exclusive: Once you start offering your employees more meaningful work, the financial returns will follow. Gallup finds that the vast majority of workers are not engaged at work, meaning they are not willing to work more than the job minimally requires, and that the costs of such disengagement are substantial. One study found that CSR increases employee engagement by 20%. How does this produce financial return? Externally, effective CSR initiatives can increase customer satisfaction which in turn increases sales, leading to higher financial returns. Leave the myth that CSR sacrifices financial return back in 2021.

3. Be more attractive to investors: Creating genuine CSR initiatives can build trust with existing investors, attract new ones and improve stock performance. According to a 2016 Alflac report, CSR initiatives are correlated with a corporate culture “less likely to produce expensive missteps like financial fraud.” Investors are looking for sustainable financial returns with minimal risk. Purpose-driven companies are less risky in the eyes of investors. This year, take the step to become more trustworthy in a way that benefits the world, you and your investors.
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In short, there’s not much we can be certain about in the new year but we can feel confident that CSR will help future-proof our business.