What Are the Biggest Benefits of Corporate Social Responsibility?
It shouldn’t come as too much of a surprise that consumer trust in the biggest businesses and corporations is at an all-time low. Roughly “ 40% of Americans say they have little or no confidence in big business, up from just 24% in 1985. “
This, of course, was the peak of the Reagan era, when consumers (and voters) were eagerly endorsing free-market ideas, backing deregulation, and willing to put their trust in businesses to create jobs and drive growth.
Fast forward to the present day and it appears an increasing share of consumers have lost their faith in businesses to behave responsibly. The last 20 years have seen countless examples of avoidable crises or controversies, whether its unscrupulous use of user data, a full-blown recession, or yet another ecological disaster — so many caused by businesses putting profits over everything else.
This transformation of consumer attitudes is beginning to take effect, especially as new challenger brands rise up with corporate social responsibility built into their business model. This means, that being perceived as a force for good that doesn’t just prioritize revenue, may actually affect your business’s bottom line.
In this article, we’ll explore the myriad ways you can foster corporate social responsibility and build it into the identity of your brand. We’ll also discuss how this can benefit your business in a marketplace where consumers are increasingly concerned about these issues.
What is Corporate Social Responsibility?
Corporate social responsibility can broadly be defined as when a business measures its success by parameters other than profit, growth, or even brand recognition.
Businesses that are socially responsible are essentially self-regulating, building issues such as the environment, poverty, equality, diversity, and inclusion into their business mission. They ensure that everything they do is ethical, fair, and beneficial to the communities they work and interact with.
In essence, these businesses are thinking about and trying to work towards the greater good, rather than just making more money or pleasing their shareholders.
The Pyramid of Corporate Social Responsibility
One popular framework for corporate social responsibility is the eponymous pyramid of corporate social responsibility, developed by Archie Caroll in 1979. Carroll literally wrote the book on this issue and his pyramid continues to be used as a guide for how businesses should work through their responsibilities to their local community, society, and the environment — as well as their clients, customers, and employees.
Economic responsibility sits at the base of the pyramid, which essentially covers a business’s duty to stay profitable and to continue surviving. It’s an important stepping stone — not only to serve its employees and service providers with income but simply because the proceeding levels can not be accomplished if the business does not exist.
The next level is a company’s legal responsibility to obey the existing regulations and laws of the nation or region that they operate in. One step above that is ethical responsibility, which represents the duty to self-regulate and go above and beyond the legal requirements to ensure practices are fair and ethical. The pyramid is topped off with philanthropic responsibility — which represents not only doing what is ethical but trying to improve conditions and striving for the greater good through activities that are unrelated to profit.
It’s by no means a perfect framework — indeed, there’s a worrying insinuation that a business’s survival comes before its legal requirements. Regardless, it demonstrates a popular way of staging different duties depending on the size and reach of the business in question.
Another increasingly popular — and more current — way of providing a framework for social responsibility is B Corp certification.
What is B Corp Certification?
Developed by non-profit organization B Lab, which works to transform “the global economy to benefit all people, communities, and the planet” — B Corp Certification is a “designation that a business is meeting high standards of verified performance, accountability, and transparency on factors from employee benefits and charitable giving to supply chain practices and input materials.”
In order to be B Corp certified, a business or organization must:
- Achieve a score of 80 or above in a B Impact Assessment and pass a risk review. Multinationals must also meet “baseline requirement standards.”
- Change their “corporate governance structure” so that it is accountable to all stakeholders instead of just shareholders.
- Be transparent by allowing their performance in B Lab’s standards to be publicly available.
How Focusing On Corporate Social Responsibility Can Benefit Your Brand
Being socially responsible — accountable to those stakeholders who rely on your business or are impacted by its actions, ensuring your business does not damage the environment, and promoting fairness, equality and inclusion are all things that, in an ideal world, would be done automatically.
But the realities of business, as demonstrated by Carroll’s pyramid, mean that survival is a consideration that trumps all others. Furthermore, individuals within a business who must strive towards targets and achieve certain goals may rightly be asking how corporate social responsibility will affect their bottom line.
It’s a sad truth that, until the whole global economy is recalibrated to prioritize more than just profit and share value, many businesses will feel social responsibility is an extravagance they cannot afford.
But structuring your business to be more socially responsible isn’t just good for helping you sleep guilt-free at night — there are demonstrable benefits to becoming a more ethical, fair, inclusive, and environmentally conscious business.
So without further ado, let’s explain how.
1. It can power new campaigns & drive engagement
Unlike people, brands are given a license to boast to their heart’s content whenever they do anything remotely altruistic. For businesses that are already in the public eye, new practices aimed at becoming more socially responsible often attract attention from news providers and can provide an excellent source of free exposure.
So, putting your latest initiative at the heart of your brand identity or as the focal point of a new campaign can be a great way to drive engagement and interest in your brand.
However, remember that faking it isn’t an option. Nothing could be more harmful to your brand than disingenuously promoting your business as socially responsible when it isn’t. Consumers are more engaged with causes related to equality and the environment than ever before — and your brand will be gleefully torn to smithereens in the court of public opinion if you attempt to “greenwash” it.
It’s also important to remember that consumers are more concerned with real action rather than words or gestures — only 25% of US citizens surveyed in 2020 wanted brands to make statements in support of racial justice compared to 37% who wanted a commitment to equal pay and hiring. So, when planning a campaign around corporate social responsibility, make sure your initiative is more than just a pledge or statement.
2. It can help your brand stand out from the crowd
As consumers become more and more concerned with a variety of causes, they’re eager to see these attitudes reflected in the brands that they interact with and purchase from. As a result, a number of brands have carved out a niche for themselves by making their status as a socially responsible business the foundation of their brand identity.
As already mentioned above, this can be a great way of building a newsworthy campaign, but for many brands it also allows them to stand out from the crowd and differentiate themselves from their competitors — typically bigger brands with more resources at hand.
The travel industry is a great example of this where a range of new brands have emerged to cater to travelers’ increased concern over the sustainability of their vacations and the impact it has on their destination. Brands such as Intrepid (a certified B Corp), responsible travel, and bookdifferent.com are all examples of travel brands that cater specifically to those looking to reduce their impact whilst traveling.
3. Retain customers and foster loyalty
Research shows that “87% of Americans are more likely to buy a product from a company that they can align their values with”. By embracing corporate social responsibility, you can add another reason for customers to choose your brand over the competition.
While it’s true that the values of those 87% of Americans likely differ in sometimes quite stark ways — showcasing the good that your brand is doing doesn’t need to be a political gesture. Supporting the communities that you work with and impact, being transparent and fair, and not destroying the environment are hardly divisive issues.
So, don’t be afraid to embrace these changes and foster a loyal base of customers in the process.
4. It can improve your employer branding
Attracting the right talent can be an uphill battle at the best of times but prospective employees (especially those from Gen Z) are anything but unscrupulous and the reputation of your business and brand may deter top talent.
“82% of Generation Z workers, according to Allegis Group, consider CSR a major factor when deciding where to work, while a further 66% of them would “take a pay cut to work for a more socially responsible company.”
It’s not just younger workers who feel this way, indeed, 75% of Americans reported that they “would not take a job with a company with a poor corporate responsibility reputation.”
If you want to attract the best talent, then offering them a competitive salary is only part of the equation. As people have become more aware of the consequences of corporate irresponsibility, fewer than ever before are at ease working for companies that are deemed to be doing more harm than good to the world.
The gathering momentum around corporate social responsibility and the growth of B Lab’s B Corp Certification are signs that a paradigm shift may be taking place. Indeed, more and more of us are looking back on the mistakes and crises of the last 20 years and longing for businesses to take more responsibility — even if the law doesn’t compel them to do so.
The belief that this all amounts to spending your budget on policies that won’t affect your bottom line is categorically false. Your brand represents everything your business does from the product it sells to the quality of your customer service to the impact of your actions. And by taking steps to become more socially responsible, you’re ultimately making your brand healthier in the long run.
Originally published at https://latana.com.