In recent years, there has been a push toward corporate social responsibility (CSR) and related ideals like conscious capitalism. These models of thought embrace the idea that companies can act as a force for good in the world. For example, corporations can establish policies, procedures and practices that promote environmental sustainability, social justice and similar progressive ideals.
The benefits of corporate social responsibility are numerous. Environmentalism or social justice are not the only causes being advanced. Rather, the benefits of CSR also extend to the company itself and its employees.
- What Is Corporate Social Responsibility?
- Cost Savings Is One of the Major Benefits of CSR
- Innovation as a Benefit of Corporate Social Responsibility
- CSR Promotes Brand Awareness and Brand Differentiation
- How CSR Can Improve Your Bottom Line
- Corporate Social Responsibility Allows Companies to Attract Top Talent
- How CSR Promotes Higher Levels of Employee Engagement
- CSR Today
What Is Corporate Social Responsibility?
Corporate social responsibility, also known as corporate citizenship, is a model of doing business that encourages companies to be mindful of the impact they have on the surrounding environment and community. The principles of CSR state that companies should establish practices that have a positive impact on the environment and all members of society, including both internal and external stakeholders.
For example, a coffee chain might embrace CSR by ensuring that all of the coffee it buys is ethically and sustainably sourced. It might even commit to planting trees to offset its carbon footprint and require green building practices for its stores.
It’s important to note that CSR doesn’t just promote environmental responsibility, but also social responsibility. For instance, that same coffee chain might establish a program that allows its employees to earn degrees for free or at reduced cost. It might also pay its employees to perform a certain number of community service hours each year, and it may commit to providing living wages and healthcare benefits to all workers.
Cost Savings Is One of the Major Benefits of CSR
At first blush, it might seem like embracing the ideals of corporate social responsibility isn’t fiscally practical. After all, it costs money to send employees to school, plant trees and purchase environmentally sustainable ingredients. Yet, the benefits of corporate social responsibility do indeed include lower costs and higher revenues. Here’s how:
- Prices – Companies may offset the costs of CSR by implementing reasonable price increases on products or services. Consumers are often willing to pay more for brands that demonstrate a commitment to responsible practices.
- Overhead – Certain CSR measures can reduce overhead. For example, switching to more energy-efficient equipment, installing green energy alternatives, and reducing packaging on consumer packaged goods (CPGs) are all effective ways to cut recurring costs.
- Talent – Employees often prefer to work for companies that demonstrate a commitment to environmental and social responsibility. As a result, managers can enjoy reductions in costs related to employee turnover, such as downtime, recruitment, onboarding, training and the new employee learning curve.
Some executives may initially shy away from the principles of CSR because they worry that it may cut into their bottom line. However, closer scrutiny of the subject reveals that CSR is actually aligned with smart business practices and can lead to higher profit margins.
Innovation as a Benefit of Corporate Social Responsibility
Corporate innovation is absolutely crucial for a brand’s success. Innovation is what enables companies to set themselves apart from their competition. It’s also what allows companies to keep up with the times.
Companies that fail to embrace change and constant innovation may well find themselves out of business. Consider Blockbuster, the once-ubiquitous video chain. When Netflix began mailing those red envelopes with DVDs directly to consumers, Blockbuster became irrelevant.
Netflix wasn’t content to rest on its laurels, however. It would go on to once again adapt to the changing times and transition to a streaming service business model rather than a mailed DVD model.
This example speaks to the critical importance of innovation for a company’s ability to not only survive, but thrive. What does this have to do with corporate social responsibility? Put simply, the benefits of CSR include greater innovation.
CSR both depends on and drives innovation because it encourages executives and employees alike to embrace out-of-the-box thinking. When a brand identifies itself as socially responsible, it naturally follows that the brand will need innovative solutions to uphold those ideals while generating higher profit margins.
Shopify, for example, developed an innovative solution during the height of the pandemic by providing a platform for retailers to be successful online in the midst of a time when people were not physically shopping. Through innovation, Shopify was able to promote business that may not have been able to continue during the pandemic.1
CSR Promotes Brand Awareness and Brand Differentiation
Corporate social responsibility is beneficial in and of itself. However, companies can get more bang for their buck when they inform consumers and other stakeholders (such as investors) about their commitment to ethical practices. This may mean distributing messaging about steps the company has already taken to become more sustainable, as well as its plans for becoming even more socially responsible moving forward.
Along with increasing brand awareness, the benefits of corporate social responsibility can also include brand differentiation. Companies can set themselves apart from their competitors by developing products and services that are socially responsible. As a result, executives can expect to see higher revenues and greater long-term growth potential.
How CSR Can Improve Your Bottom Line
In essence, CSR can constitute its own form of marketing. Many consumers respond well to brands that are known to be environmentally sustainable. In fact, almost 70% of consumers aged 18 to 73 have stated that they think it’s important for brands to be mindful of their environmental impact. Of the 69% of consumers who have expressed a willingness to pay more for recycled products, more than half have said they will adjust their purchasing choices to reduce the impact on the environment.2
Corporate Social Responsibility Allows Companies to Attract Top Talent
When pondering the benefits of corporate social responsibility, many companies first consider the public-facing aspects such as higher sales and greater brand awareness. Yet, there is another perk of CSR to consider. Companies that have established a reputation for being forward-thinking, responsible stewards of the environment and of society as a whole are more likely to attract top talent.
A company’s employees are its most valuable asset. However, it can be difficult to attract intelligent, hard-working and productive employees if the company has a poor reputation — no matter how many office perks it offers. Employees and job applicants tend to respond well to companies that offer paid volunteer time and that demonstrate a commitment to investing in continuing education and professional development. When a company fully embraces the principles of CSR, it is more likely to have its pick of the talent that comes knocking on its door.
How CSR Promotes Higher Levels of Employee Engagement
Not only does corporate social responsibility encourage a higher caliber of job applicant, but it can also encourage employees to become more engaged and invested in their work. CSR can improve employee retention rates, boost morale, build loyalty and increase motivation. An engaged, happy employee who takes pride in their work is more likely to be a highly productive employee.
What’s more, engaged employees can be more likely to embrace an intrapreneurial mindset (i.e., an entrepreneurial mindset in an employee). Employees with this approach to their work can help drive the company’s growth by developing innovative solutions, suggesting improvements and, in general, serving as a steward of the brand.
Corporate social responsibility is slowly being replaced with new terms, such as conscious capitalism which places emphasis on higher purpose, stakeholder orientation, and conscious leadership and culture. Even though the term is becoming outdated, the values and principles of CSR are timeless and can still be applied to organizations today.
Whether you wish to excel as corporate executive or are interested in nurturing your entrepreneurial dreams, you can find a degree program that’s right for you at Grand Canyon University. The Colangelo College of Business offers a number of undergraduate and graduate degree programs that embrace the ideals of servant leadership, professional ethics and values-driven business acumen. Click on the Request Info button at the top of your screen to begin planning for your future at GCU.
1Fast Company, The 10 Most Innovative Retail Companies of 2021 in February 2022
2Barron’s, Two-Thirds of North Americans Prefer Eco-Friendly Brands, Study Finds in October 2021
The views and opinions expressed in this article are those of the author’s and do not necessarily reflect the official policy or position of Grand Canyon University. Any sources cited were accurate as of the publish date.