Do Good, Be Great: 5 Competitive Advantages of Corporate Social Responsibility

Nov 14, 2017

The advantages of corporate social responsibility go far beyond the causes that you're trying to support. Here's how it can help boost your brand too.

Suzie BlaszkiewiczSenior Analyst

Never has the term win-win rang more true than when it comes to corporate social responsibility. Commonly abbreviated as CSR, the advantages of corporate social responsibility go far beyond the organizations, charities, and environmental causes that these initiatives aim to support. When done properly, a CSR strategy can have benefits for both your business and the greater good.

According to a recent Gartner report (available to clients), creating an effective corporate social responsibility strategy can benefit your business in five different areas:

  1. Brand awareness

  2. Customer loyalty and trust

  3. Customer engagement

  4. Customer advocacy

  5. Employee engagement

Below, I’ll go through each of the advantages of corporate social responsibility that can come from a properly executed strategy.

What makes CSR work?

Before I dive too deep into the advantages of corporate social responsibility, it’s important to note that if your company isn’t doing corporate social responsibility for the right reasons, it can actually backfire. CSR needs to make sense within the context of your business, as well as with your customers and stakeholders.

Volkswagen's woes

Take Volkswagen as an example of corporate social responsibility gone wrong. The company knowingly dodged emission controls and promoted “environmentally friendly” cars that were anything but, in order to position themselves as the world’s leading carmaker.

Once the jig was up, things did not go over well; its CEO resigned, and the company’s stock lost 25 percent of its value (not to mention the damage to the environment caused by circumventing regulations). In this case, the company put its own interests in front of the environment, deliberately hurting its brand reputation in the process.

Abercrombie & Fitch's fiasco

Abercrombie and Fitch’s CSR efforts are another notable failure. The company, which claimed to support “human rights, invest in our associates, and give back to our communities” faced huge backlash when its CEO was accused of saying that its clothing was reserved exclusively for thin and beautiful people.

These accusations were completely contradictory to its corporate mission, and caused huge backlash against the brand. Here, this contradiction between the brand’s image and the CEO’s opinions were misaligned.

In order to be able to do CSR correctly, you need to consider your brand’s identity, your customer personas, and your marketing strategy to ensure that each one is aligned with your CSR efforts.

Now that we’ve seen how CSR done poorly can hurt a brand, let’s see what the advantages of corporate social responsibility are, when done properly.

Advantages of corporate social responsibility

1. Brand awareness

Research has shown the positive relationship between CSR and brand awareness. In fact, according to Harvard Business Review, over 42 academic studies have shown positive correlations between social enterprises and financial performance. As one report from Havas Media Group notes, these “purpose-driven” brands– those whose functions go beyond just making money– outperform the stock market by 120 percent.

In this context, corporate social responsibility can be used not only as a powerful marketing tool, but also a sharp brand positioning tool. The best types of CSR engrain initiatives into the brand story and become part of the business. Warby Parker is a great example of a “purpose-driven” brand that gets recognized for its initiatives as much as its products, which are inextricably linked. The eyeglass company has a “Buy a pair, give a pair” program, where it donates a pair of eyeglasses to those without access to eyecare for every pair sold.

2. Customer trust and loyalty

Consumer trust for and loyalty to brands isn’t what it used to be (hence the success of popular reviews sites like Amazon, Yelp, and TripAdvisor for third-party opinions). According to a study done by Nielsen, however, 62 percent of global consumers see brand trust as one of the top sustainability factors for making purchasing decisions. For brands to be able to elicit trust and loyalty, CSR initiatives can help raise the bar of trust.

In fact, Edelman’s 2016 trust barometer shows that 80 percent of people expect brands to make a positive social impact while still pulling in revenue. Havas Media Group also did a study ,covering 700 brands in 32 countries. It found that while just 32 percent of people trust a brand, 54 percent trust the ones that are socially or environmentally responsible.

This trust includes things like transparency about where your products came from (Starbucks), the environmental impacts of your company’s production (Innocent Drinks), or the calculable results of your company’s CSR efforts (Apple).

3. Customer engagement

Customers want to feel like they’re contributing to the greater good, even if they’re just buying a product or using a service. By having a socially responsible company, your customers can feel as if they are participating in the charitable efforts that your company supports, whether actively or passively.

Nielsen’s study of 30,000 consumers in over 60 countries highlights some of the most important factors to consumers when making a purchasing decision, including:

  • A product's health and wellness benefits

  • A product made using fresh, natural, and organic ingredients

  • The company being known to be environmentally friendly

  • The company being known for its commitment to social value

  • Packaging that is environmentally friendly

  • The company being known for its commitment to the local community

All of these factors were among the most important noted for consumer engagement and, along with brand trust, play a pivotal role in which brands consumers are choosing to associate themselves with.

4. Customer advocacy

As social media continues to play a big role in advocacy marketing, corporate social responsibility acts as fodder for customers who want to spread the word about their responsible and sustainable purchases. This is especially true for customers who are willing to spend more on products from companies with a notable CSR strategy.

Notably, Nielsen’s report highlights the 66 percent of consumers who are willing to spend more on a product that comes from a company committed to positive social impact, trumping even the depths of their own pockets. Aside from just money, however, advocacy and CSR is about providing customers with the opportunity to talk about your brand, whether that be via word-of-mouth or in the online space.

Running campaigns to help promote CSR initiatives can be an especially effective way to encourage customer advocacy. Environmentally friendly plant-based cleaning company Seventh Generation has done a good job of creating customer advocacy with its #ComeClean campaign.

Together we care for our kids by sharing tips and demanding stronger regulation. #HealthyBabyHome#generationgood

- Seventh Generation (@SeventhGen) November 9, 2017

The campaign aims to educate consumers and encourages them to participate in the movement to, for example, help pass the Cleaning Product Right to Know Act, which would require companies to come clean about which ingredients they’re using in their cleaning products.

5. Employee engagement

Probably one of the most tangible advantages of corporate social responsibility is the effect it can have on employee engagement. For current employees, it helps them stay productive and engaged in the workplace; for potential candidates, it’s an added incentive to join a company.

According to one recent academic study, engagement is a critical factor for keeping employees productive and positive in the workplace; disengaged employees cost the US economy roughly 450 billion annually in decreased productivity. While employee engagement worldwide sits at 15 percent (33 percent in the U.S.), CSR initiatives have shown some of the most positive results for maintaining employee engagement.

A study by Hewitt Associates shows that employees whose companies are engaged with CSR initiatives are more likely to say good things about a company, stay with a company, and even work harder to overachieve in their daily roles. IBM is one organization who has taken this idea to new heights, offering a program that rewards high performing employees with a month abroad on a variety of philanthropic endeavours. This type of rewards system not only attracts top talent and satisfies skill and career development for employees, but it also helps thousands of communities in need.

Start creating your social impact strategy

Corporate social responsibility isn’t just about doing good, but the motivation behind doing it should start there. Once you’ve established a purpose behind your CSR efforts that’s aligned with your company’s values, you’ll be able to develop a CSR strategy that benefits your employees, your customers, and society at large. A good CSR strategy will:

  • Create brand awareness around your company with a "purpose-driven" brand.

  • Gain consumer trust and loyalty through your brand's initiatives.

  • Engage customers by making them feel as if they're participating in charitable causes or contributing to sustainable practices.

  • Create customer advocates that are proud to spread the word about your brand.

  • Engage employees and retain top talent with your advocacy efforts.

If you're ready to get begin your own CSR journey,

start by building your own CSR strategy.

About the author

Suzie Blaszkiewicz

Senior Analyst