Why Corporations Should Care About Being “Socially Responsible”

Posted by Kristen Barnett on 4/5/17 12:21 PM

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As a proponent of “Corporate Social Responsibility” (CSR), it was great to know “Lewis Fowler” lived and breathed being “socially responsible”, but wondered if other companies, even companies with documented CSR programs, lived and breathed their CSR solutions. 

The Merriam-Webster definition for Corporate Social Responsibility is: “The belief that a company should take into account the social, ethical, and environmental effects of its activities on its staff and the community around it”. The term for Corporate Social Awareness has changed over various decades from Corporate Giving, Altruism, Sustainability, to Social Responsibility, but one question has never changed in Board Rooms across America is….

Why should corporations care about being “socially responsible”?

The CSR Naysayers Believe:

The largest companies who support Corporate Social Responsibility are also the biggest offenders of good business practices. Nike, for example, was sued for a misleading public relations campaign focused on human rights and social issues when faced with criticism of working conditions in one of their Southeast Asia factories. Then, of course, there is Enron who we all know communicated “Corporate Social Responsibility”, but was the posterchild for what not to do. At times, Time magazine and other publications have joined the naysayer bandwagon highlighting CSR’s flaws. Flaws such as company’s incorporating CSR into their values and by-law statements, but not embracing the values of what it means to be “socially responsible” or anchoring “social responsibility” into their culture. In other words, companies who give financially to various causes, but never engage staff in giving back or being socially responsible, social responsibility becoming more of a PR stunt than a true value statement, believing social responsibility should remain an individual belief system not a Corporate value, and wondering why corporations are required to “give back” when they already support the economy through corporate spend and hiring and retention of employees.

The CSR Advocates Believe:

There is no longer a concern whether companies invest in “Corporate Social Responsibility” since 90% of companies now participate in CSR initiatives compared to 74% in 2008, but to what degree do they invest and why is it important for companies to invest their time, energy, and resources?  In the past, we’ve seen companies such as Nike and Enron give lip service or be ingenuine to what many executives today say is the key to the future or key to their success. With social media outlets like “JustMeans Insights” and the “Good Guide” who rate companies on “social responsibility” and the below quotes about sustainability from executives like William Clay Ford Jr. from the Ford Motor Company and Jim Owens from Caterpillar – companies can no longer stay in the shadows on whether “Corporate Social Responsibility” is the wave of the future.

“Creating a strong business and building a better world are not conflicting goals – they are both essential ingredients for long-term success”
- William Clay Ford Jr. Executive Chairman, Ford Motor Company.

“In the next decade, the most successful companies will be those that integrate sustainability into their core businesses” 
- Jim Owens, CEO, Caterpillar

The Question “Why”

Yet, the question remains “why” do Executive Chairmen and CEOs consider “Social Responsibility” as a key to their success or the key to a company’s future?  In the past many companies attributed “giving” back as a feel-good activity and simply something they should do, but were not required to do. However, these days, the statistics and trends tell a different story. “Corporate Social Responsibility” has a direct impact to a company’s bottom-line. It is a game-changer whether companies not only include CSR as part of their values, but they talk the talk and walk the walk. As an IO Sustainability Survey of 10,000 consumers across the United States, Canada, Brazil, the United Kingdom, Germany, France, Russia, China, India and Japan stated there are significant reasons “Why” Corporate Social Responsibility is important and significant examples of how well adopted CSR programs have shown return on investment.  Below are key indicators from the survey results:

Percentage of Participants from the Survey

 

20% of….

  • Consumers not only proactively seeking out products and services they feel are responsible every time they shop, but also encouraging others to do the same

35% of….

  • Employees saying they’d be willing to take a 15% pay cut for a company who believes and lives “Corporate Social Responsibility”

45% of….

  • Employees being willing to take a 15% pay-cut for a company who makes an environmental or social impact

58% of….

  • Employees who are willing to take a 15% pay-cut for a company who holds their same social and ethical values

80% of….

  • Those surveyed considering social and environmental issues when deciding where to work, what to buy, where to shop and which products and services to recommend to others.

90% of….

  • Consumers worldwide switching to brands that support a good cause, given similar price and quality
  • The consumers surveyed being more willing to trust and have loyalty to socially responsible businesses compared to companies that don't show these traits.
  • Consumers saying they want to see more of the products and services they use supporting corporate social responsibility
  • Millennial's believing business success is measured by more than just about profits.

There was also a recent study of 200 companies with successful “Corporate Social Responsible” programs, who mentioned receiving, in addition to the benefits from the I/O Sustainability survey, the below benefits:

 

  • an increase of market value to 40-80% higher than their peers' and competitors' market value
  • doubled the probability of receiving investment grade ratings
  • added a price premium of as much as 20%
  • saw a 7.5% increase in employee engagement
  • showed 13% higher productivity than other companies
  • B Corps (For Profit organizations who meet social responsibility standards) showed growth from 205 B Corps in 2009 to 2,048 B Corps across 50 countries.

 

  • reduced share price volatility by 2-10%
  • reduced systematic or market risk by 4%
  • lowered staff turnover rates by 25 to 50%





 

In summary, the “why” question is simple. Not only can a value-driven, culturally embedded CSR program have positive, heart-felt impact for employees and program recipients, but there are now proven metrics that CSR initiatives can improve the customer experience, corporate brand, employee engagement, employee productivity, who a company hires, how a company is perceived, who consumers decide to do business with, and long-term loyalty. It can also expand target market size, incentivize customers to pay premium prices, and be a competitive advantage.  So, the real question is not should corporations care about “Corporate Social Responsibility” programs, but is your company “socially responsible?”

At Lewis Fowler, we emphasize and promote Corporate Social Responsibility throughout multiple engagements throughout the year.  We have supported organizations such as the American Diabetes Association, Girls Inc., Project Management Institute and Children’s Hospital.  Our mission is driven by our ‘4 C’s’ (Clients, Consultants, Capabilities and Community), which ‘Community’ has been a foundational element of our company since 2002.  We encourage our team members to take part in their community, either with our organization, our clients organizations or through their own personal development by giving back.  Partnering with local non-profit organizations and donating their time to those in need are just a few ways we promote and perform Corporate Social Responsibility, paving the way to continued empowerment through giving back to the community.

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