Can Brands Benefit From Corporate Social Responsibility initiatives?
Most times, when we hear the term, Corporate Social Responsibility (CSR), especially in this clime, pictures of employees cleaning the streets near their base of operation, or the donation of a renovated or newly built road by a company, or the beautification of a roundabout, or on a grander scale; donation of a hospital ward, or renovation of a block of classrooms in a school or the donation of a lecture theatre to an institution of learning, readily come to mind. All these can qualify as CSR initiatives. However, there is more to CSR than the ‘one off, photo-ops’ that most brands engage in, in this part of the world.
Social responsibility means that businesses, in addition to maximising shareholder value, should act in a manner that benefits society. Socially responsible companies should adopt policies that promote the well-being of society and the environment while lessening negative impacts on them. Companies can act responsibly in many ways, such as promoting volunteering, making changes that benefit the environment, and engaging in charitable giving. Consumers are more actively looking to buy goods and services from socially responsible companies, hence impacting their profitability.
Social responsibility is not new to Nigerians but the scale and scope of CSR has gone down, to the point that consumers (public) are now resigned to seeing very few big brands engage in occasional ‘Corporate Philanthropic Responsibility’. This is actually only one of the four types of CSR initiatives, the other three being Environmental, Human Rights and Economic. These occasional philanthropic gestures are often backed with the glam of publicity, and one ends up with the impression that it is more for the cameras than for the cause.
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Is CSR for all brands?
I dare say that there are different ways to the customers’ hearts and pockets. It can’t be gainsaid that most brand handlers wish they had to spend little or nothing to become market leaders. There is a local maxim that says ‘you spend money to make money’ and that implies that every kobo spent on CSR and other marginal initiatives can deliver more to the brand, on the long run. CSR, like many other indirect windows, offers brands ‘indirect’ opportunities of connecting with consumers, leveraging relationships and getting the desired result of market share.
In 2011, Professor Michael Porter of the Harvard Business School put forward a radical proposition to global corporations. He says, “Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center”. Porter’s theory of “shared value” takes the concept of corporate social responsibility further. He argues that companies should use their interactions with society – and more importantly address society’s problems – to drive new business opportunities and create a source of significant untapped profits.
“Corporate social responsibility encompasses not only what companies do with their profits, but also how they make them,” according to a definition from the Corporate Social Responsibility Initiative at Harvard’s Kennedy School of Government. “It goes beyond philanthropy and compliance and addresses how companies manage their economic, social, and environmental impacts, as well as their relationships in all key spheres of influence: the workplace, the marketplace, the supply chain, the community, and the public policy realm.”
Can CSR increase brand profits?
Studies have shown that brands that fully integrate CSR into their operations can expect good financial returns on their investments. Brands integrating CSR have shown to increase sales and prices as well as reduce employee turnover.
One of the reasons why brands increase profits when incorporating CSR into their business model is because customers pay attention to the way brands react to social and political issues, and will often boycott companies with negative values. Brands utilising CSR promote values, which ultimately increases customer traffic, thus increasing company profit.
What are the benefits of CSR for brands?
While it is a reality that businesses operate with the goal of maximizing profits, it is still essential that they maintain a good relationship with the social environment that they operate in. Businesses that can demonstrate reliance on society and invest in their social responsibilities seem to have a greater chance of success, which is where social responsibility comes into play.
Some benefits of CSR for brands include:
It can improve your company’s profit margins. Brands that are socially responsible are demonstrating their ethical practices in how they conduct business. Customers are highly aware of local, national and global issues, and their buying decisions are influenced by these issues, resulting in them buying more from companies that show concern and display positive actions over issues that resonate with customers.
It may boost the brand’s public image. Companies understand the importance of the public, especially targeted audiences, and having a positive perception of them as well as their social responsibility to the public. Delivering high-quality products and services at a good value, excellent customer service, after-sales support, and being involved in civic causes all demonstrate how the brand cares about its customers, and the environment as a whole. Brands with good CSR policies tend to get more as well as better media coverage, which advertises the company and improves brand image.
It can improve the attractiveness of your business to investors. Potential investors use a company’s social responsibility as a part of the criteria for deciding whether to invest in the company or not. This is important especially in this era of globalization and attracting necessary external funding. Many start-ups can relate to this.
Last line: Corporate Social Responsibility doesn’t have to be grand but it should resonate with a message that says―clearly and loudly― “customers and the society are at the centre of all that we do.”