The Returns From Corporate Social Responsibility

One of the topics I’m most passionate about in business is corporate social responsibility. Until now, I have written and spoken about this topic with varied reactions from people. Most often, the reaction is something like “corporate social responsibility or philanthropy is nice and good to do, but how does it really tie to a business in a tangible way?” No one in my audience ever totally discards the concepts I talk about, because to do that would be somehow inhumane or insensitive. But there is always a segment of people who are skeptical about its real impact on the business itself. Business people are capitalists, right?Do you want to learn more? Visit corporate social responsibility.
I have tried to make the argument many times that there are both subjective gains to companies doing right by their employees, customers and the broader business and social community AND objective gains in the form of increased revenue, customer loyalty and an enhanced corporate image measured by public relations value. Until now, I hadn’t seen many actual studies which measured this effect. I think most everyone would agree that the subjective or intangible virtues of corporate social responsibility are evident. It is the objective or tangible assertions which are questioned and which skeptics point to.
Enter a recent study I read done by Advertising Age, in the consumer goods retail sector. The study measured the effects of four dimensions of Corporate Social Responsibility including environmental friendliness, treating employees fairly, community support & philanthropy, and sourcing from local providers. The results showed that subjectively all four dimensions positively influenced consumers’ attitudes towards a retailer or business. This isn’t surprising.
Objectively, two of the four – environmental friendliness and community support – built only goodwill with no direct effect on sales. But, initiatives that related directly to the products and people that consumers face yielded both goodwill and a higher share of wallet. In fact, this greater economic return was significant: 10% to 15% greater as a matter of fact!

The other interesting finding of the study was that the benefits of a corporate social responsibility program were very direct: consumers patronize the responsible business more because they see personal benefit that resonates with their own values. In fact, there is less sensitivity to price increases seen by companies that engage in aspects of corporate social responsibility because consumers believe any increases are “fair” and can better be attributed to positive motives rather than simply price gauging.