In Good for Business: The Rise of the Conscious Corporation, we wrote:
Devising a new blueprint for the successful corporation of the future is not just about corporate responsibility or paying attention to the triple bottom line of “people, planet, and profit.” Nor is it simply about finding new ways to engage consumers and become a more integral part of their lives. It is about all those things—and a lot more.
We believe the most successful corporate brands of the future will have a larger presence in both the consumer’s private life and in the public sphere. They will assume a bigger cultural role and will behave in a way that is decidedly human, using the best connotations of that word. And they will make these changes not merely out of a sense of altruism or fear of regulation or other consequences, but because this new way of envisioning and conducting business is in the best long-term interests of the company, its stakeholders, and its corporate brand.
Euro RSCG research supports this view. Looking at the U.S. findings from the agency’s Future of the Corporate Brand study, we see evidence of consumers’ rising interest in socially responsible brands. For instance:
• 80 percent believe that, as consumers, they have a responsibility to censure unethical companies by avoiding their products.
• 65 percent have made a purchase decision based on a company’s conduct.
• 80 say corporate reputation on social and environmental responsibility is a key driver of confidence.
• 69 believe the most successful and profitable businesses in the future will be those that practice sustainability.
• 86 percent say it’s important that companies stand for something other than profitability.
In a later agency study, The Future of Value, 82 percent of the U.S. sample agreed: “To be successful, corporations of the future will need to show a more ‘human’ face (e.g., by caring about people—employees, customers, suppliers—and taking a more active role in community and social causes).”
Now new research from Kusum Ailawadi and Jackie Luan of the Tuck School of Business confirm the link between corporate social responsibility and profitable growth. Among their findings:
• All four dimensions of CSR performance–environmental friendliness, treating employees fairly, community support, sourcing from local growers and suppliers–positively influence consumers’ attitudes toward a retailer. And initiatives that relate directly to the products and people consumers face (e.g., local suppliers, employees) bring both goodwill and a higher share of wallet from consumers.
• If a retailer is able to improve consumers’ perceptions of its fair treatment of employees by one point on a five-point scale, the consequent increase in share of wallet is approximately 1.7 percentage points. The gain from a similar improvement in local sourcing is even more pronounced at more than 2 percentage points. These numbers appear small, but they represent a sales lift of 10 percent to 15 percent for the average retailer in the study.
• Consumers patronize socially responsible companies because they see personal benefits from the CSR initiatives and because the initiatives resonate with their own values.
In an article in Ad Age, the authors conclude:
What does it all mean? Engage in meaningful CSR. Integrate your CSR efforts into consumers’ direct experience with your brand, and monitor their response to make sure your initiatives and your message resonate with them. Recognize that just because you spend money on CSR initiatives does not mean the consumer will think it’s fair to charge higher prices. But don’t shy away from CSR initiatives that have real meaning to consumers even if they are expensive, because the returns in customer loyalty are substantial enough to more than cover those costs.
To read the complete article, click here.
Good for Business: The Rise of the Conscious Corporation (Palgrave Macmillan) was written by Andrew Benett, Cavas Gobhai, Ann O’Reilly, and Greg Welch.
