THERE IS AN UPDATED VERSION OF THIS ARTICLE: 7 Research-backed Reasons Your Business Needs to be Socially Responsible
The era of the social enterprises is upon us. More so than ever before, the most successful, respected, and desirable businesses exist to do much more than make money; they exist to use the power of business to solve social and environmental problems.
Study after study has shown that socially responsible businesses (aka social enterprises) not only provide sustainable business models, but also have improved marketing, employee recruitment, employee satisfaction, legal treatment, customer loyalty, brand perception, and richer partnerships.
The top five reasons to have (and/or work for) a socially responsible business are:
(And if you need help implementing them at your company, join Corporate Impact Teams)
want demand their company to be socially responsible
Five years ago, it was considered good if a company simply did not harm the environment. However, times have changed, and now employees demand that their company do more than simply not be bad. They need to do good, too. According to Forbes:
- 32% of employees would seriously consider leaving their job if their company gave no / little money to charity;
- 65% would seriously consider leaving their job if their company harmed the environment;
- 83% would seriously consider leaving their job if their employer used child labor in sweatshop factories.
Furthermore, a landmark international Corporate Social Responsibility (CSR) study of human resource practitioners conducted by the Society for Human Resource Management (SHRM), reveals that CSR practices are seen as important to employee morale (50%), loyalty (41%), retention (29%), recruitment of top employees (25%) and productivity (12%).
2. Consumers expect better business practices (and will pay for it)
Just under a year ago, a study was published showing that the average consumer will drive en extra 11 minutes to buy a product that supported a cause. Since then, more data has been released supporting the fact that consumers will adjust buying behavior from average companies to socially responsible companies. According to the same article by Forbes:
- More than 88% of consumers think companies should try to achieve their business goals while improving society and the environment;
- 83% of consumers think companies should support charities and nonprofits with financial donations.
The important consideration is that consumers know that the corporation is making donations out of its own pocketbook, not asking for donations by its consumers. In fact, 35% of consumers dislike being asked to donate money at the checkout counter.
3. It creates competitive immunity (and makes your business more sustainable in the long-term)
According to the Harvard Business Review,
“Strategy… is about choosing a unique position – doing things differently from competitors… These principles apply to a company’s relationship to society as readily as to its relationship to its customers and rivals”. Furthermore “CSR can be much more than a cost, a constraint, or a charitable deed—it can be a source of opportunity, innovation, and competitive advantage.“
In addition to helping companies differentiate themselves in an already crowded marketplace, social responsibility also inspires innovation within corporations thereby developing longer-term immunity and business sustainability.
4. Capitalism is evolving, and society is, too
Even investors are pulling away from companies that don’t do go. This was recently evidenced when investment firms and stockbrokers pulled money away from BP due to its operations in Alaska. In addition to market reactions, society as a whole is also evolving. In the article titled The For-Benefit Enterprise, Hareed Sabetti notes that new trends are supporting these businesses, including “Public policy, financial markets, accounting standards, and professional services.” As a result, Hareed predicts that
“We will see the emergence of a fourth sector of the economy, interacting with but separate from governments, nonprofits, and for-profit businesses. The rise of that sector is likely to reshape the future of capitalism.”
As the market evolves to support these for-benefit enterprises, early-movers and leaders have the most to gain from this shifting system. In other words, the sooner companies shift to being socially responsible, the more successful they will be in the future.
5. It is a moral imperative
“When a well-run business applies its vast resources, expertise, and management talent to problems that it understands and in which it has a stake, it can have a greater impact on social good than any other institution or philanthropic organization.“
No matter the lens that you view a social enterprise through, they are becoming increasingly popular and beneficial. Whether it is a new or existing business, the future success of it will be increasingly tied to its ability to do good through its day-to-day operations. So in the words of Hillel the Elder, “If not you, who? If not now, when?”
Since businesses have the greatest potential to improve the health of our planet and citizens, as they become prosperous, they have a moral obligation to improve the conditions of a system that has helped them succeed.
Want guidance to incorporate corporate social responsibility in your company? Join the MovingWorlds Institute