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The common misconception is that CSR is charity. Corporations aren’t mindful of the fact that CSR is actually a business investment. Read more here.

JUNE 27, 2018

It’s easy for people to shrug off a corporation actively seeking to do good in the world as a desperate attempt for favorable PR to disguise their true intentions: making a profit. And they’re not necessarily wrong. Every company wants to be profitable, that’s no secret. But oftentimes, many companies don’t truly have a grasp on what it means to be socially responsible and a good corporate citizen in a way that can combat this cynical viewpoint. The common misconception is that CSR is charity, and consumers tend to roll their eyes at this sort of forced goodwill. Meanwhile, corporations aren’t mindful of the fact that CSR is actually a business investment that can sometimes lead to bigger profits when done correctly while, of course, contributing some much-needed good into the world and helping society for the better.

Therein lies the rub. Making money while helping people is perceived as fundamentally selfish in most cases. It’s a long-held, cynical view of the world that has been reinforced time and time again by the greed that corrupts many a people and business. But that’s not a universal inevitability, especially when you look at a corporation’s role in being a good citizen. And make no mistake, whether you agree with it or not, legally corporations are people.

The Cynicism Contaminating Corporate Social Responsibility and Citizenship

That means just like the rest of us, they can choose whether or not to be socially responsible citizens. But unlike humans, corporations need one thing and one thing only to survive: profits. So, to disparage a company for being socially responsible in ways that will bolster their bottom line would be akin to blaming a person who chooses to recycle and compost for continuing to breathe while doing so. You’re essentially faulting each party for doing good while they keep their survival instincts at heart. That’s not selfishness, that’s self-preservation. If a company isn’t making money (or a human isn’t inhaling oxygen), then they won’t be around to actually affect change in the world.

And that’s the whole point of corporate citizenship—this idea that they have obligations to society as a whole, and not just to themselves or their customers. This is usually accomplished by taking a stand on an ethical or social level and responsibly working toward change that will benefit society as a whole, be it protecting the environment or advocating on behalf of people’s rights. Of course, by integrating this mentality into an overall business model, corporations can do good while growing, scaling and driving profits, even if the jury is still out on just how beneficial CSR is to a company’s bottom line.

For example, a study conducted by Bank of America found that healthcare, consumer and tech goods companies scored highly on environmental, social and governance (ESG) but underperformed their peers in the short-term. That in and of itself is proof that some altruism does inform a company’s reasoning to be socially responsible. The silver-lining is that these same companies with higher ESG scores were generally more stable and typically ended up providing higher future returns throughout all industries. Still, the mixed results about whether CSR boosts a bottom line causes a majority of investors to disregard these initiatives, seeing them as invaluable.

The Cynicism Contaminating Corporate Social Responsibility and Citizenship

This notion is flat-out wrong. While embarking on CSR and becoming a good corporate citizen may not yield immediate dividends, it can incite benefits down the road. Millennials overwhelmingly prefer companies and brands that take an environmentally-friendly and socially responsible stance. In fact, 81% expect companies to pledge a commitment to corporate citizenship, and nearly two-thirds would take a pay cut to work for a socially responsible organization. These expectations and concerns around CSR can influence how much money a consumer is willing to spend as well. Nielsen found that 72% of Generation Z and 51% of Generation X would pay more for services and products from a company that embodies CSR.

What company can argue with customers on this? After all, they are always right. And if they’re willing to pay more money to a competitor that goes out of their way to do good at potential risk to their bottom line, that certainly would appear to mitigate those concerns from a money-making standpoint. It turns out there is a cure to the inherent cynicism contaminating the heart of CSR, and that’s just to go out on a limb and try to be a responsible corporate citizen that gives back or helps people in some way, shape or form. If not, the tide of consumer favorability could turn on you rapidly, and nothing is a greater detriment to a bottom line than that.

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