Corporate Social Responsibility (CSR) and Reputation

What is CSR, and why is it important?

Corporate social responsibility is the accountability that companies—especially corporate giants—must have to minimize their negative effects on the environment and do good for society as a whole. It is a way that a company can hold itself responsible not only to itself but its stakeholders and the public.

Millennials are placing a higher priority on social responsibility than previous generations, showing a progressive inclination to favor companies that care about social issues, fair trade, sustainability, and the like. Plus, it’s not just one generation. Research shows that 74% of Americans think companies have a responsibility to be leaders and changemakers. As CSR increases in importance, the effect it will have on your corporate reputation continues to grow.

What are the four types of social responsibility?

Social responsibility is a broad term for different types of humanitarian action. The four pillars of corporate social responsibility are:

• Philanthropy: Using strategic gifts to help people solve long-term problems and raise the welfare of others.
• Labor ethics: The treatment, diversity, and satisfaction of your workforce.
• Environmental conservation: An in-depth analysis and awareness of your environmental footprint and the efforts to reduce the impact that exceeds governmental regulations (after all, no one is going to pat you on the back for simply obeying the law).
• Volunteerism: The donation of time, resources, and talent to create a direct and immediate impact and support a workforce that becomes involved in charity and the community.

The Purpose of Corporate Social Responsibility

Depending on who you ask, you might get different answers as to what the main purpose of corporate responsibility is.

From a business perspective, the main function of corporate social responsibility is to improve your corporate reputation and increase the value and standing of your company or brand.

Looking beyond the financial benefits, the deeper purpose of CSR—and the reason it’s an effective strategy—is that CSR focuses the actions of the company on the best interests of the consumers, the community and the world. CSR is a powerful way for successful corporations to give back to the consumers and communities that built and supported the business. It’s also important for your employees because it gives them pride in their company and this reflects in their approach to their work and how they present the business publicly.

However you choose to view it, corporate social responsibility plays an undeniable role in your corporate reputation and, ultimately, your bottom line.

Illustrated relationships between CSR, customer satisfaction, customer attitude, and corporate reputation

Examples of Corporate Social Responsibility

So, what is a good example of what a socially responsible company looks like?

To start, they’re genuine. Even if the motivation for CSR is the financial bottom line, today’s global leaders are executing authentic and impactful efforts to:

• Help the underserved
• Improve labor practices
• Mitigate climate change
• Embrace fair trade
• Fund medical research
• Engage in charitable giving
• Volunteer in the community

Philanthropy in CSR

The majority of large, well-known companies handle their corporate philanthropy via in-house programs. These programs incorporate donation matching, stakeholder incentives to participate in international outreach, global product and service donation or price reduction, grants and scholarships, and volunteerism.

For example, Google.org, the philanthropic arm of the media giant, uses allocated funds and technical support to help charities and organizations. Recently they announced a $5 million grant to the National 4-H Council to expand computer science skills and education to underserved youth.

You can demonstrate your dedication to your social responsibility by enforcing stricter standards for the businesses and sectors you deal with and invest in. Look for investment opportunities in areas such as environmental protection tech, environmental community education,  renewable energy, or humanitarian innovation. Consider implementing a program to employ veterans or local unsheltered individuals. Use your company’s strengths to find a synergistic connection with the community you are helping. This will not only be an authentic outreach but will leverage your own assets and abilities to their greatest potential.

Another way to expand your philanthropic arm is to match your employee’s charitable giving. Many companies will work directly with causes and charitable organizations, and if an employee donates to that group, the company will match the amount or more.

This type of CSR investment will bring big returns both directly and indirectly through increased consumer support and adoration, plus the moral and positive effect on employees.

Labor Ethics in CSR

Embracing fair trade and improving labor policies for all levels of your corporate structure is a vital part of your CSR. In today’s hyper-connected world, the way you treat your employees is one of the most scrutinized aspects of your business. Word travels fast and far about company policies toward workers.

Improving working conditions can be as simple as making your facilities more comfortable and appealing. Here are some ways to improve labor conditions at your company:

• Offer as much paid parental leave to both parents as you can afford.
• Allow remote work when possible.
• Regular team-building events and activities can do wonders for your employee satisfaction.
• Offer perks, including memberships and entertainment packages.

For many families, parental leave is one of the most important factors when choosing what work environment to join, and companies are taking notice. For example, Netflix offers 52 weeks of paid parental leave to the birth parent and non-birth parent (which includes adopted children), one of the longest leaves in all of corporate culture. In comparison, the median parental leave at other major tech companies is 18 weeks.

While every company can’t afford policies like Netflix, it’s about creating an environment that takes care of your employees and ensures workers feel cared for. The more people-centric you can be as a business, the better your company will be perceived by your stakeholders.

Environmental conservation

This is one of the biggest opportunities for developing CSR. Encourage environmental awareness throughout your ranks, but remember that businesses, not individuals, are responsible for virtually all global emissions.

That’s why it’s so important to address the issue as a company. Evaluate your operations on every level and identify opportunities for:

• Increasing sustainability
• Improving packaging
• Reducing plastic
• Incorporating wind and solar energy
• Using biodegradable materials
• Minimizing paper waste, move toward a paperless office
• Reducing power usage
• Implement a recycling program

It doesn’t have to just be about having an eye toward recycling or thoughtful resource use. Pledge to work with green-conscious vendors.  Research who you are working with and make responsible decisions based on sustainability efforts and see if they align with your company’s vision and values.

Consumption and opportunities will vary for every company. Something as easy as switching to LED bulbs can make a measurable difference. Even adding plants and greenery to your office can help. It creates a more comfortable and lush working environment, and according to scientific studies, indoor plants reduce 87% of indoor air pollutants within 24 hours.

Volunteerism in CSR

Offer your employees incentives to participate in your corporate volunteerism. Some creative ideas include:

• Paid time off for volunteering
• Rewards for charitable donations
• Contests
• Team building volunteer events
• Reduced product or service prices to local charitable organizations

Companies can also organize their own events, such as beach clean-ups, community give-backs, or other environmental volunteering events. Invite the community to your events to spread awareness of your CSR improvement. Not only are you helping the community and environment, but these create fun team-building events that will fill your employees with pride not only in themselves but in their employer… you.

Benefits of CSR to Stakeholders

The primary benefit of improving your corporate social responsibility is the improvement in your corporate reputation.

Improving your corporate reputation, in turn, has significant and far-reaching benefits, including financial impacts such as reducing employee turnover, raising productivity levels in the workplace, broadening your audience, and increasing consumer trust.

CSR also improves your reputation by creating a safety net of positive perception and online information. This safety net helps diminish the effect of negative online information and can protect your business against the fallout of a reputation crisis.

For example, a study from the University of California, Berkeley, showed that firms with better CSR ratings maintained higher stock prices after product recalls than firms with lower scores.

In short, your efforts will be observed by the public, and they will be more likely to give you the benefit of the doubt if something goes wrong. Your CSR gives you a track record to show that a misstep was an aberration and not a company’s usual way of doing business. Everyone makes mistakes, and the public is more likely to forgive when they see that you have a high level of CSR.

Benefits of corporate social responsibility

• Lower employee turnover
• Greater consumer trust
• More company recommendations
• Improved brand sentiment
• Higher sales and increased revenue
• Decreased reputation damage after a crisis
• Improved online search results/online reputation
• Improved recruiting ability
• Increased customer loyalty
• Reduced operational costs
• Increased access to investment and partnership
• Increased company value

Corporate social responsibility statistics

• 92% of consumers have a more positive image of companies that support social issues and environmental efforts
• 63% of the public would give socially responsible businesses the benefit of the doubt during a crisis
• 87% will purchase a product because a company advocated for an issue they cared about
• 66% of consumers are willing to pay extra to patronize companies that are committed to CSR
• 3.2X increase in trust when a company’s reputation score goes from average to excellent

Avoid greenwashing

Make sure that you aren’t just paying lip service to charities and environmental actions or causes. If you aren’t being authentic, it might be considered greenwashing.

Greenwashing is the creation of the appearance of CSR for a company that is not improving its environmental or social impact. For example, a business might claim to be green because they offer online services, even though the energy usage created by those services contributes to climate change. This façade can and will backfire when consumers learn that their support for your company was misguided and are unlikely to ever trust your brand again. Greenwashing is inadvisable and wasteful, especially considering the cost of real CSR can typically be worked into your existing budget on any scale.

A prime example of greenwashing gone bad was a recent effort to plant 6,000 trees in England that resulted in a host of dead trees and greater damage to the local environment. While one might think that planting any trees would be a positive, a lack of thought and research did great damage to an already carbon-negative area in what many considered a publicity stunt.

Make sure you not only put forth the effort to do the right thing, but research what you are doing and understand it. You don’t want what should have been a philanthropical act to turn into a crisis management situation.

How to maximize your benefits

Don’t be afraid to broadcast your corporate social responsibility. Use social media, blogs, and other media to highlight your improvements, actions, and investments. Approach it not as a marketing tactic but as an opportunity to encourage more social responsibility.

One possible approach is to drive and publicize initiatives for local food banks, shelters, schools, and senior care centers. You could also post flyers and create a designated section of your website for your social responsibility and show visitors how they can also help.

The idea is to fully integrate your corporate social responsibility into your business’s values and culture. Furthermore, you can encourage your customer base to join you in your missions, which will create even more awareness while simultaneously investing your customers in your brand.

CSR FAQs

What is CSR strategy?

Designing a strategy for corporate social responsibility is similar to creating any other business strategy. Start with your long-term vision and define your short and long-term goals, including deadlines. Be flexible but focused on progress. CSR will look different for every company or brand, but every business can implement and benefit from a CSR strategy.

Is CSR a business strategy?

Due to its undeniable benefits, CSR is often thought of as a business strategy for larger companies that have grown enough to invest heavily in what is essentially a massive marketing tactic. However, at its roots, corporate social responsibility is simply a strategy to make your business genuinely better by holding it accountable for its role in and impact on society. As the real value of your business increases, you reap the benefits that come with running a better business.

What is greenwashing?

Greenwashing is a term used to describe the creation of the appearance of CSR for a company that is not actually improving its environmental or social impact. Greenwashing is inadvisable and wasteful, especially considering the cost of real CSR typically can be worked into your existing budget on any scale.

About the author

Kent Campbell is the chief strategist for Reputation X, an award-winning reputation management agency based in the San Francisco Bay Area of California. Kent has over 15 years of experience with SEO reputation management, Wikipedia editing, review management, and strategy. Kent has helped celebrities, leaders, executives, and marketing professionals improve the way they are seen online. Kent writes about reputation, SEO, Wikipedia, and PR-related topics, and is an expert witness for reputation-related legal matters. You can find Kent’s biography here.

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