How CSR Impacts Businesses: A Guide For Corporations
Corporate social responsibility (often referred to as the shortened ‘CSR’) is a practice followed by many companies where they work to improve society in some form. CSR is often seen in terms of philanthropy, environmental leadership, ethical labor practices, and economic responsibility.
If you’re wondering how CSR impacts businesses—particularly the businesses that enact these practices in the first place—the advantages are expansive.
In this complete CSR guide for businesses, we’ll dive deep into the benefits of corporate social responsibility—everything your company needs to know on the topic to maximize the effectiveness of your efforts—exploring the following topics:
- FAQ: How CSR Impacts Businesses
- Key CSR Statistics Businesses Should Know
- 4 Top Benefits of CSR for Businesses
- 5 Examples of Businesses Doing CSR Right
Ready to get up to speed on socially responsible efforts and see what you can do to bring your business to the next level? Let’s begin!
FAQ: How CSR Impacts Businesses
Does your company have an existing CSR plan in place, or are you looking to dive into strategic corporate social responsibility for the first time? Either way, you’ll likely have some questions regarding the practice.
Let’s walk through five questions and answers that are often pondered by corporations such as yours!
What are the main components of corporate social responsibility?
Corporate social responsibility is an overarching term used to describe a wide range of corporate efforts that are designed to make the world a better place. Most CSR initiatives will encompass these key values:
- Social — The “social” component of corporate social responsibility refers to a company’s impact on its community and the individuals within. Businesses following this practice should work to bring a positive net impact to people as a whole.
- Environmental — Environmentalism is another key pillar of CSR. Rather than the people within the communities in which a business operates, environmental practices highlight the importance of preserving the ecosystems themselves. Historically, corporations have been responsible for the vast majority of global emissions and other causes of climate change. Now, many businesses are working to reverse the damage through environmentally-friendly initiatives in the way they manage operations.
- Economic — CSR also incorporates responsible economic business practices where companies give generously to their communities, often in terms of nonprofit donations, fair wages, and more. The idea behind economic responsibility is that the #1 goal of a business should not be to funnel as many dollars as possible into the pockets of investors and other shareholders. Instead, companies should bring economic benefit to all stakeholders—including employees, customers, suppliers, and overall communities.
Some CSR efforts may incorporate elements from multiple categories, too!
For example, a company financially contributing to an environmentally-focused nonprofit (whether through grants, matching gifts, etc.) can fall under both environmental and economic responsibilities.
How can a company become more socially responsible?
There are tons of practices that businesses of all shapes, sizes, and sectors are adopting in order to increase their level of corporate social responsibility. Here are a few things a company might do:
- Offer competitive wages and benefits packages to employees.
- Provide generous parental leave, tuition reimbursement, and retirement benefits.
- Participate in workplace giving programs such as matching gifts and volunteer grants.
- Support philanthropic causes in the form of monetary and in-kind donations.
- Use recycled materials while also producing goods that are also recyclable.
- Reduce carbon emissions from business operations.
- Keep up with and pay corporate taxes dutifully.
The tactics you choose to employ at your business can also play a role in the benefits you see overall. For example, prioritizing staff wages and employee benefits can have a significant effect on the company’s internal culture and team member engagement. While this will likely also result in improved consumer relations (i.e., buyers like to shop with businesses they know treat employees well), the impact seen might be lesser as compared to that of the employees.
And the same is true the other way around! Producing ethical goods with sustainable practices can bring positive results to both consumers and employees, though consumer relations may see a larger, more tangible impact in terms of sales.
What is ESG and how does it compare to CSR?
There are a lot of acronyms in the corporate world, as you surely know. As a refresher, CSR refers to corporate social responsibility.
Now, here’s another one you might hear, especially in conversations about social responsibility: ESG.
ESG stands for environmental, social, and governance, and is a measure of the extent to which a business makes a positive impact on society beyond its own shareholders.
While the two ideas go hand in hand, they’re not entirely synonymous. One of the largest differentiators between the concepts is that CSR is a business model used to hold a company accountable for its actions to society, while ESG is a quantifiable measurement of a company’s social impact outcome.
How can I get my employees to participate in CSR?
Positive employee relations can be a top motivator of corporate social responsibility efforts in companies. But did you know that the employees themselves can actually participate (and benefit) as well? These employee-driven programs can even see increasingly positive internal results!
For example, employees who participate in a company’s matching gifts or volunteer grant programs benefit from knowing their own nonprofit donations or volunteer hours are making even more significant impacts on charitable causes that they care about. Plus, they know their employers are making an effort to support their favorite charities as well.
So how can you drive participation in these programs once they’re up and running? Here are a few ideas:
- Promote new and existing CSR initiatives to employees, including specific instructions on how to get involved.
- Highlight your company’s social impact efforts during conversations with candidates and new hires.
- Gamify CSR with interactive elements such as badges, rewards, trophies, and more for top participants.
- Encourage friendly competition among employees to see which teams or individuals are the most CSR-involved.
- Set company-wide goals for participation, along with company-wide benefits for reaching those goals.
- Empower employees to suggest new ideas and feedback for existing efforts in order to continually refine your corporate social responsibility.
Workplace giving efforts, in particular, enable businesses to empower employees with hands-on roles in the company’s CSR. When employees feel they have a direct say in their employers’ social impact efforts, they’ll be increasingly aware of the efforts in place, and more likely to be highly engaged with the business.
What are new CSR trends that businesses are adopting?
As the world is changing, innovative technologies are developed, and new social, environmental, and economic needs arise, the CSR movement will continue to evolve. Here are a few things you can expect to see in the near future!
Many companies are transitioning to more employee-driven CSR programs—especially when it comes to philanthropy. In fact, our research reports that over 39% of companies aim to expand their workplace giving initiatives in the next two years!
Additionally, more and more companies are wanting to take a stand on social issues and other current events in the past few years. Though these issues may sometimes be controversial, a 2020 research study reported that nearly 60% of consumers expect the brands they support to have a position on topics such as racial discrimination, social justice, climate change, income inequality, and more. 50% of survey respondents even reported conducting online research to see how a business reacts to social issues before making a buying decision!
Not to mention, Diversity, Equity, and Inclusion (or DEI) continues to see significant growth at the forefront of many businesses’ practices. As a result, companies are placing a higher emphasis on developing an inclusive and diverse workplace that’s welcoming to people of all races, genders, religions, sexual orientations, ethnicities, socioeconomic statuses, disabilities, and more.
Key CSR Statistics Businesses Should Know
There are tons of reasons why a business might participate in corporate social responsibility—many of which boil down to the effects seen by the company’s employees and consumers alike.
Here are some key facts and figures that help communicate the implications of CSR:
How CSR Impacts Businesses’ Employees
(Sources: Double the Donation and re: Charity)
71% of employees state that it’s very important to work at a company that partakes in philanthropy.
More than 54% of employees who are proud of their company’s contributions to society report being fully engaged in their job.
77% of employees reported a sense of purpose as part of the reason they selected their current employer.
Nearly 2/3 of young employees won’t take a job at a company with poor CSR practices.
55% of employees would even take a pay cut to work for a socially responsible company.
Engaging in socially valuable efforts can reduce staff turnover by approximately 50%.
93% of employees believe companies must lead with purpose.
How CSR Impacts Businesses’ Consumers
(Sources: Harvard Business School and ViewsForChange)
72% of consumers believe companies should have a legal responsibility to society.
77% of consumers are motivated to purchase from companies committed to making the world a better place.
Over 90% of consumers worldwide are likely to switch to brands supporting a good cause.
More than 66% of consumers would pay more to socially and environmentally responsible businesses.
Creating value for the customer, positively impacting society, and inspiring innovation and positive change are the three highest-ranking components of a company’s purpose.
88% of people want to know about a company’s CSR efforts.
4 Top Benefits of CSR for Businesses
Beyond the ideas of basic altruism, corporate social responsibility tactics also provide participating companies with powerful business benefits. Consumers, employees, and other essential shareholders will be more inclined to support your efforts, and you’ll see impactful results such as these!
1. Unique marketing opportunities
Cause marketing (or cause-related marketing) is a form of CSR in which a business supports a charitable cause while receiving strategic marketing benefits from the relationship. These types of CSR campaigns often involve a company offering to give a certain amount of money to a nonprofit organization in response to increased sales results (for example, 10% of a company’s profits may be donated to charity or a business may donate $1,000 for every 100 products sold).
When done well, cause marketing enables consumers to feel good about their purchases to socially responsible companies. As a result, the consumers are willing to pay a higher price, switch brand loyalties, or increase quantities of their purchases due to it benefiting a good cause.
So for your business, not only will you have the opportunity to participate in charitable efforts, but you’ll also gain more customers and more dollars toward your bottom line.
2. Increased employee engagement
The fact is, people want to work for companies that they feel good about contributing to. When an individual knows that their efforts at a business help drive social good, they’ll be driven to produce elevated results in their roles. And for that reason, there’s a significant positive correlation between employee engagement and corporate giving.
Pride in the company, along with belief in senior leadership, are some of the most essential drivers of employee engagement levels—and luckily, both components see benefits from social responsibility as well.
When employees are particularly engaged, the company will also see high levels of productivity, increased retention rates, and more.
3. New talent attracted to your team
Just like effective CSR efforts drive existing employees to want to do more in their roles at your company, the same efforts can also be used to attract new employees to the team.
As a result, many HR representatives are prioritizing corporate social responsibility in their recruiting efforts and within conversations with prospective candidates. Individuals looking to join a company that participates in CSR will be drawn to your business, and you’ll have a competitive advantage against other potential employers.
4. Improved internal company culture
Companies partaking in CSR also tend to have more positive internal cultures, which, of course, helps drive increased levels of engagement and retention. Company culture is more of an abstract concept and often incorporates the attitudes and behaviors of the business, its leadership, and its employees altogether.
Let’s take a look at a few examples to see how this works. Here are three types of CSR initiatives that can bring about a positive business culture:
- Group volunteer opportunities. Picture this—your company is looking for a fun out-of-office team-building activity to boost morale and get staff members better acquainted with one another. You reach out to a local food pantry and decide to organize a company-wide volunteer excursion. Employees come out to participate one Saturday afternoon and get to spend time with their colleagues in an informal setting which helps strengthen relationships while enabling your team to make a positive impact on your community.
- Annual giving campaigns. Imagine that, once a year, your company hosts an annual employee giving campaign benefitting your neighborhood animal shelter. Employees are encouraged to bring in pet supplies and cash donations, and you turn it into a competition between departments. Whichever team collects the most for the shelter receives a prize, while a sense of friendly competition brings the business as a whole closer together.
- Fundraising events. Let’s say a nonprofit is hosting a 5K event to raise money for their medical research. Your company decides to get involved, forming a team of employee team members willing to collect pledges and participate in the final event. Staff participants get to know each other throughout the fundraising process. Individuals share tips and tricks to drive total donations and help reach a company-wide goal. You participate in the event and, after the walk, celebrate your success with a pizza party!
Utilizing philanthropic initiatives as a way to build a positive company culture is a common practice for many businesses. But remember, the most successful efforts involve hands-on involvement by leadership as well.
When employees see their management and company leaders participating, they’ll be more inclined to do so themselves. And when individual team members get involved, the company’s culture is more likely to benefit.
5 Examples of Businesses Doing CSR Right
Looking to get started with CSR efforts but not sure how to begin? Get inspired by these popular companies who have exemplified what it looks like to be socially responsible and philanthropic (while also remaining profitable!).
When it comes to philanthropic corporations, Gilead Sciences has led the pack for several years in a row. This biotechnology company contributes an average of $400 million each year to nonprofit causes, which comes out to a total of nearly 3% of their pre-tax profits. Plus, they offer a matching gift program for current full-time employees, agreeing to match donations of up to $2,000 per year to most nonprofit organizations!
They’ve also published a number of lofty goals to further elevate their CSR by 2030—including achieving net zero operational greenhouse gas emissions, ensuring 100% of their packaging is recyclable, eliminating all unnecessary plastics, and significantly increasing Black, Hispanic, and female representation in the company.
Johnson & Johnson
Johnson & Johnson has prioritized reducing their company’s impact on the planet over the last three decades by highlighting the importance of sustainable business practices. One key pillar of this effort was accomplished by harnessing wind power to significantly reduce pollution from their operations and ultimately offering up a renewable (and economic) alternative to traditional electricity.
In addition to the company’s environmental efforts, Johnson & Johnson also donates generously to many nonprofit organizations, including schools, health and human services, civic and community organizations, and more. Much of this funding is contributed through workplace giving programs as well, matching team member donations at a 2:1 rate up to $20,000 per employee per year!
Google is another example of a highly regarded business with multiple effective CSR efforts in place. As a result, the company has earned the Reputation Institute’s highest CSR score, due in part to its philanthropic initiatives, renewable energy projects, and environmental impact reduction.
Not only do their data centers use 50% less energy than other comparable institutions, but they’ve also committed more than $1 billion to develop environmental efforts in the future. Plus, they have a generous donation-matching program, offering up to a $10,000 gift match for full- and part-time employees.
One example of a business hosting a successful cause marketing campaign as a component of an overall CSR strategy is Lyft. Through their recent partnership with organizations like Bread of Life, United Way, and the National Council on Aging, Lyft offered free rides to essential workers and vulnerable populations through an initiative called LyftUp during the COVID-19 pandemic.
With this model in place, Lyft has elevated its brand reputation as one that cares about the underserved in its communities, thus driving popularity and sales.
Ben & Jerry’s
Since 1988, Ben & Jerry’s has been known for being a particularly outspoken advocate for all sorts of social causes. The company has partnered with nonprofit organizations such as 1% for Peace, Farm Aid, Children’s Defense Fund, Rock the Vote, Alaska Wilderness League, MyClimate and NativeEnergy, and many more to provide aid for social, environmental, economic, and scientific causes.
They’ve also launched more than one ice cream flavor dedicated to their favorite social causes, which include their “Save Our Swirled,” “Empower Mint,” “Justice ReMix’d,” and “Peace Pop.”
Corporate social responsibility is often framed as a win-win-win situation because companies, nonprofits, and the greater community each benefit greatly from its existence. As you consider how CSR impacts businesses like yours, think about all the good you can do in the world as well!
Ready to learn more about the benefits of corporate social responsibility and philanthropy to businesses like yours? Check out these other guides:
- Why Workplace Giving Matters for Nonprofits + Companies. Workplace giving brings the advantages of CSR to the next level by prioritizing employee participation in philanthropy. Not to mention, nonprofits benefit from increased funding as well!
- Corporate Giving and Matching Gift Statistics [Updated 2022]. These powerful facts and figures about corporate philanthropy, matching gifts, and other giving programs should inspire your team to make an even more significant impact.
- Corporate Philanthropy: The Ultimate Guide to Giving. Interested in diving deeper into corporate philanthropy for your company? This complete guide to corporate giving shares key details about types of programs, business impact, and more.