Since the 1950s, corporate responsibility has been the means by which the public can hold companies accountable for their actions.
Corporate social responsibility is increasingly more important today and can take on various forms – including pro-bono work, product donations, financial contributions, employee community service days, eco-friendly practices, and many more creative ways by which businesses, small and large, can give back to their communities.
While it’s inarguable that most corporate responsibility efforts benefit society, it’s helpful for company leaders and business experts to evaluate how these initiatives also positively impact the companies that carry them out. The following are five major ways in which responsibility for corporate actions contributes to the triple bottom line.
1. Positive Press and Reputation Building
One of the most powerful effects of sustainable, responsible business is its ability to quickly generate positive publicity for an organization. In addition to press and social media coverage, many major business awards assess corporate citizenship when choosing companies to recognize.
On the other hand, organizations that fail to take responsibility for corporate actions can severely damage their reputations. Consider the annual Public Eye Award, which names companies that demonstrate poor ethics, cause environmental damage, and commit human rights violations.
While these positive and negative assessments were previously only discussed among industry professionals, today’s climate of social media coverage often puts an organization’s ethical standards directly in front of consumers.
2. Consumer Appeal
As corporate responsibility initiatives have become more common, consumers are increasingly interested in patronizing businesses that support causes they value. In fact, according to a Nielsen study, most consumers polled across 60 countries said they’d pay a higher price for goods sold by socially responsible companies.
Business leaders can benefit from partnering with charities that are important to its customers. For example, an outdoor sports and recreation store that donates a percentage of its revenue to wildlife and forest preservation is not only remaining true to its brand, but it’s helping solve a global issue that is likely a priority for its consumer base.
Consumer appeal often increases when a customer’s behavior is directly linked to charitable efforts. This is the case with companies like TOMS, Warby Parker and Yoobi – which donate one product for every product purchased. This direct link between a purchase and a charitable donation provides greater motivation for customers to spend money, connect with the brand, and develop loyalty.
3. Talent Attraction and Employee Retention
Consumers aren’t the only people drawn to an organization’s commitment to improving the world. Increasingly, talented professionals , especially those looking for business management careers, consider whether a company’s core values match up with their own when they apply for jobs. Many organizations usually more than make up for the time and money spent on community service with higher earnings that result from top talent recruitment.
Corporate responsibility also plays a major role in employee satisfaction and retention rates. When a company’s leadership involves employees in making decisions about which charities to serve or how to help them, it gives employees a greater sense of investment in the organization.
Another major way corporate responsibility leads to greater employee satisfaction is during team or company-wide service outings. These opportunities allow employees to take a break from the office and hone different skillsets. Service days also provide great bonding opportunities during which various teams and departments can have meaningful interactions that improve relations back at the office.
4.Stronger Client and Community Relations
In general, seeing one company do charitable work can inspire other organizations to follow suit, both on a local and a more global scale. This gives savvy corporations the opportunity to work with other companies – which could include potential clients or collaborators – and develop valuable relationships while contributing to the greater good.
One way company leaders can put this into practice is by working with multiple organizations in a competition to raise the most money or accumulate the highest number of volunteer hours. Similarly, companies can sponsor and organize days of service that involve entire communities. These events not only increase the positive impact a company has, but they serve as great opportunities to network, connect with other professionals and set the groundwork for future collaborations.
Community-based service events also allow employees and community members to have meaningful interactions, giving the business greater recognition and positive associations with its potential customers.
No business leader would deny that a company’s ultimate goal is to make money. While focusing on corporate responsibility can come at a cost, it can also have a positive net effect on a company’s bottom line. All the previously mentioned benefits – reputation building, customer appeal, talent retention and increased connections – can significantly improve a company’s financial health.
However, responsible choices on their own can also be favorable for a company’s bottom line. For example, transitioning from paper reporting to a fully digital system reduces a company’s impact on the environment while cutting administrative costs over the long term. Other similar choices include switching to environmentally friendly lighting options, using solar power or operating in a green certified office building.
Sometimes a business’ corporate conscience and sustainability efforts can ensure its own future survival. For example, farming and fishing companies that rely on natural resources can adopt more sustainable practices that won’t destroy the land or deplete marine life populations. This change is not only good for the environment but it’s a valuable investment that sets the groundwork for a company to successfully operate for years to come. Indeed companies can do well by doing good—specifically by adopting the broader perspective of serving all stakeholders rather than merely the shareholders.