The Business Value of CSR

Corporate social responsibility (CSR) has become a pretty common element among medium and large companies, especially those who have, or who aspire to have, a global presence. A 2017 KPMG study found that, in every industry they examined, at least 60% of companies surveyed included CSR information in the corporate reports.

Why? A view expressed by many employees and corporate leaders is that they feel a moral obligation to give something back to their communities. DBS Bank, for example, says it’s important to be “addressing the myriad social challenges associated with a rapidly-growing Asia.” This is a common sentiment: people want to do what’s right.

Still, not everyone has accepted that idea, either historically or today. The economist Milton Friedman wrote in 1962 that “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits,” and there are still many who would agree with that. After all, if 60% of companies in an industry think CSR is important enough to be reported, that means 40% don’t, and that’s a lot.

If you think that CSR should play a role in your company’s strategy, but you worry that the moral arguments will not gain acceptance, consider making your arguments based on business value instead. Consider:

Employee engagement Employees who are engaged in their work perform better; engagement is often the difference between getting the bare minimum and getting someone’s best performance. Offering your employees the chance to be part of something more than just a revenue-generating machine can increase their sense of connection to the company, even if they aren’t directly involved in the CSR work themselves. It’s hard to put a specific value on employee engagement, but when it goes up, then individual performance typically goes up, and that leads to better business performance.

Recruiting Just as your current employees can be motivated by your CSR work, so too can your potential employees find it an attractive part of the job. CSR can enhance your employment brand, helping you to stand out. It can also connect you to communities of possible candidates; conducting programs in local schools, for example, links you to your potential future workforce. Whether it’s judging science fairs to find your future researchers, or donating automobile engines for vocational classes for future mechanics to entice future mechanics to your car dealership, you can get a head start on recruiting by reaching out earlier.

Development opportunities While some efforts may simply involve donating money, other may consist of projects and other hands-on experiences. This offers a great opportunity for potential future leaders to work on some of their skills on a low-risk active learning environment. Even though you want your CSR plans to be successful, if someone is going to do poorly in a leader development exercise, it’s better to do so when the risk is to a volunteer project rather than to your quarterly sales target. Your employees can have the chance to learn about budgeting, logistics, project management, and leadership, without the expense of classroom training or the risk of failure on the job.

Support your employees Sometimes your efforts may directly support your employees, their families, or particular causes that affect them. This can be especially helpful in lesser developed countries with quality of life challenges. When CSR directly impacts your people, they can develop a stronger bond to your company, improving not only engagement and retention but also the “net promoter” factor, in which current employees talk up your company to other potential employees.

Reputational insurance CSR can help you build a store of goodwill in case something goes wrong later, or even help you avoid things like government regulation or public pushback against your initiatives. It’s probably no coincidence that the industries in KPMG’s survey that had the highest CSR reporting rates are Oil & Gas, Chemicals, and Mining, sectors that are more likely to have a more negative impact on the environment. Your consumer brand can be greatly enhanced by your CSR efforts.

Even if you want to pursue corporate social responsibility programs for purely altruistic reasons, the people who control your time and money may not be similarly driven. It helps to find the business value of CSR so you can make your case and do the things you really want to do.