Despite recent research, evidence exists socially responsible companies may benefit from sharing what they’re doing

stock-photo-csr-corporate-social-respons-1286460-1-244922-edited.pngWith corporate social responsibility reporting now a standard practice globally for large and mid-cap companies — roughly three-quarters of the organizations KPMG spoke to for its 2017 study issue CSR reports — it’s clear CSR efforts are something companies believe people are interested in hearing about.

For years, a number of organizations have viewed CSR initiatives as a way to build trust and establish stronger relationships with external parties — particularly consumers. 

Nine in 10 consumers expect companies to address social and environmental issues, and 84 percent say they seek out responsible products whenever possible, according to a global Conn Communications/Ebiquity survey.

A recently published study, however, suggests corporate social responsibility policies could actually have a negative impact on an organization’s bottom line.

According to Florida Atlantic University’s College of Business, which conducted the study, focusing on CSR programs that benefit community engagement, diversity, the environment, human rights and employee relations can result in foregone investment opportunities that, in the long run, may lead to losses for socially responsible companies’ shareholders.

That’s a sobering thought. Because the study singled out CSR’s potential financial impact on shareholders, some organizations may be left wondering if continued CSR efforts will reduce future opportunities to obtain capital and support.

While the study undoubtedly raises some valid questions, your company may still find value in continuing its current CSR initiatives. Corporate social responsibility policies can, in many instances, provide certain intangible benefits — including:

stock-photo-happy-young-business-man-wor-1594532.pngCSR programs may help spur sales

Consumers feel so strongly about CSR that they’re prepared to actually penalize companies they view as irresponsible. A 2016 Aflac survey found 75 percent of consumers say they’re likely to take a negative action toward irresponsible companies, ranging from social media posts to organizing boycotts. Businesses that are seen as being not socially responsible companies stand to lose as much as 39 percent of their potential customer base, and one in four consumers will tell his or her friends and family to avoid a company that’s seen as not being responsible.

Corporate social responsibility policies can help companies recruit talent

 Employees, too, value CSR efforts. A Nielsen survey found 67 percent prefer to work for socially responsible employers. 

Some investors may actually favor companies that have CSR initiatives

Despite Florida Atlantic University’s findings, other studies — including Aflac’s — have found investors often support CSR. Eighty-three percent of professional investors are more inclined to invest in the stock of a company well-known for its social responsibility, Aflac found, because they view those endeavors as an indication greater transparency and honesty exists in operations and financial reporting, resulting in lower risk. 

Many CFOs and investors believe CSR efforts can have an impact over time

Although no consensus has emerged to define how CSR programs create shareholder value, executives, investors and regulators, according to a report from McKinsey, have become increasingly aware CSR efforts can mitigate corporate crises and enhance company reputation. Seventy-four percent of respondents said CSR initiatives provide a substantially positive or positive long-term contribution to shareholder value.

Our blog post on companies that have successfully implemented corporate social responsibility policies provides several specific examples of what organizations are doing to give back to their communities and the public at large.

For more information about being socially responsible, view our posts on the effect corporate philanthropy programs can potentially have on retention, 4 ways to make HR processes more green and how focusing on elements that inspire company pride — such as an investment in sustainability — can help drive engagement.

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