Putting a Price on Ethics Why Corporate Social Responsibility Pays

18 April 2016

Image from Pixabay.

In the past it has been common for people to dismiss corporate social responsibility as a fad with no substance behind it – a form of "hypocritical window-dressing,” as the esteemed economist Milton Friedman referred to it in a 1970 article in The New York Times.

Friedman might have a Nobel Prize to his name, but more and more companies are now beginning to see the importance of corporate social responsibility. Over the last few decades, corporate social responsibility has developed into something that all businesses need to pay attention to, and is essential from an ethical standpoint. Businesses can have big impact on the wider community, and have a duty to behave in a way that accounts for this.

But corporate social responsibility is also an opportunity. A study by researchers at Harvard Business School has demonstrated that firms that invest in environmental, social and governance issues experience improved stock market performance and profitability further down the line. In other words, corporate social responsibility is profitable as well as ethical.

How? Here, we explore this by looking at some of the ways in which corporate social responsibility can benefit businesses.

Corporate Social Responsibility is Cost-Effective

Put simply, many corporate social responsibility initiatives – particularly those aimed at promoting environmental sustainability – are also massive cost-savers. According to figures published by the World Wildlife Fund (WWF) and CDP (formerly the Carbon Disclosure Project) in The 3% Solution, investing in green interventions can lead to returns of 233%.

Whether it’s cutting waste, using less paper, or reducing your company’s energy and water bills by investing in greener technologies or promoting greener behaviours, the bottom line is that all of these practices will save your business money – while also benefiting the environment.

And even small changes can lead to big savings. A supplier rationalisation within the OCS Catering business has led to a saving in miles travelled to deliver food to OCS catering contracts. Over the course of the year 2014/5 this saving was calculated as being well over 500,000 miles. At OCS, we regularly deliver significant cost savings to our clients by making their businesses more sustainable.

Corporate Social Responsibility Builds Consumer Confidence

Another major way in which corporate social responsibility pays is that it builds public confidence in your business. Customers are increasingly on the lookout for an ethical purchase and, according to one survey, 77% of consumers feel it is important for companies to be socially responsible.

What’s more, customers are also increasingly educated about the impact that different companies are having on the wider world. This is especially true in the digital age, when almost all information is available at the touch of a button and news spreads online like wildfire thanks to the power of social media.

The PR value of having a comprehensive corporate social responsibility policy is clear. Consumers are more likely to trust a business that they perceive as behaving ethically, and are more likely to engage with that company. According to YouGov statistics, 7 out of 10 Brits say they like shopping with companies who ‘visibly give something back to society’.

Corporate Social Responsibility Boosts Employee Morale

A motivated employee is a productive employee – and creating a better world is something that most employees feel passionately about. According to one survey,nearly half of Brits want jobs that have a positive impact on the world.

Employees want opportunities to do something positive in their job, and a strong corporate social responsibility policy can help them achieve this. From giving employees paid time off to volunteer, to organising a series of fun internal charity fundraising events, employees are more likely to feel happy in their job, and their company in general, when it’s allowing them to do good.

In addition, a clear corporate social responsibility strategy is a good tool for attracting new talent. This is particularly true among the younger generation, with 62% of British millennials claiming that they want to work for a company that changes the world for the better. If you want your business to keep pace with the times, this is not an area it pays to neglect.

We trust that it’s now clear why investing in corporate social responsibility is profitable for business, as well as positive for the world.

If you’d like to learn more about the business benefits of sustainability, download our free eBook The ‘Convenient’ Truth About Sustainable Business: Why it Pays to Be Green. It offers a concise, easy-to-read summary of the environmental and financial benefits of reducing your company’s carbon footprint, and outlines several different ways in which this can be achieved – from reducing waste to improving energy efficiency.