Through our entrepreneurial work we’ve seen knowledge gaps when it comes to the C-suite and corporate social responsibility (CSR), especially in terms of revenue and employee engagement. Elizabeth David-Dembrowsky and Ford founded Righteous Causes, an organization connecting social impact entrepreneurs with angel investors and consultants. It’s an ecosystem for mutual benefit, one that’s backed by the research, which shows a positive relationship between simultaneously embracing both social responsibility and a firm’s financial performance.
When it’s done with intention and strategic thought, social responsibility is an effective way for businesses to improve their employee relationships, brand perception, and to ultimately bring in more money. Struggling to adopt corporate social responsibility as a core part of your business? Here’s some things we’ve learned over the years that can shed some light on CSR’s impacts:
- Responsibility Ties into Revenue
According to a research study from Babson College and corporate partners, researchers found corporate social responsibility increased the market value of a company by up to 6% during a 15-year period. And this growth potential was higher than the firm’s competitors when it developed relationships with partners such as social and environmental NGOs.
There might be situations where companies sacrifice short-term profits for sticking to their corporate values. However, these CEO-level decisions pay off in terms of brand recognition and impression, employee appreciation, and improved customer loyalty. And all those lead to increased profits. In other words, it’s playing the “long game” while making choices toward a better world.
- Employees Want Responsibility-Focused Employers
A Forbes article titled “The Future of Work: Corporate Social Responsibility Attracts Top Talent” notes research showing 53% of workers desire “a job where I can make an impact.” Interestingly, the research also found most workers entering the market would also consider taking a pay cut if it meant achieving their impactful goals.
Employees want to see their companies engage with honest and impactful corporate responsibility. If they think the efforts are “lip service,” then they won’t respect the company’s mission, and will lose some engagement with their jobs. And we all know how disengaged employees can derail an organization’s financials and brand. Encouragingly, a Gallup poll from May 2020 found increasing numbers of engaged U.S. workers, with 38% involved in and enthusiastic about their work. The survey found many employees appreciated their employers’ efforts during COVID-19, which included transparent communications and a perception of companies caring about employee well-being. Companies that support environmental and social justice causes also report increased employee engagement and retention levels.
- The World Needs Impactful Change
Growth in social endeavors and social entrepreneurship is important to tackle myriad challenges, from income inequality to reducing carbon footprints. The U.S. and the world need corporate partners’ active involvement to push change forward. During the ongoing COVID-19 pandemic, measurable corporate responsibility efforts are needed to keep people employed, drive medical breakthroughs and support distance learning. Google committed an initial $100 million to various COVID-19 efforts and other firms used their existing foundations to support food drives and other initiatives. Companies continue to play a significant role in tandem with government efforts to improve communities locally and nationally. The world’s big problems need impactful and intentional efforts from companies of every size, not just deep-pocketed technology giants.
- The Intentional and Mindful Approach Pays Dividends
Lilah Kalfus, a consultant on the Righteous Causes team, completed a thesis titled “The Business Case for the B Corporation Certification: An Empirical Study on the Relationship Between Social and Financial Performance.” Her work examined the positive financial performance for benefit corporations, which was correlated to the firm’s intentional and mindful approach. Her research notes these companies excel because they put people, the planet, and profits on the same level, which adjusts their thinking and strategies.
We see this mindset creating more diverse types of value for an organization’s customers, employees, and investors. The intentional approach also helps companies avoid any accusations of “greenwashing” or other superficial ploys because leadership is invested in affecting change. It’s the outlook we’ve created with our companies—building engaged and actionable ways to improve the world.
Companies that take a broader perspective to CSR will encourage innovation and year-over-year increases in socially responsible efforts. And these efforts go into a feedback loop where the company makes more money, the employees are more engaged, and then the firm can add in additional efforts. For the longer term, we recommend C-level management move away from the term “CSR” itself because it sometimes denotes a “side project” or a reactionary approach. Instead, social responsibility should impact every business decision, with companies not simply opting into social responsibility but using it as a constant guiding principle.