More companies now give increased attention and funding to corporate social responsibility (CSR). They understand that social responsibility can win media attention, public respect, and customer loyalty. New research also shows that socially responsible companies enjoy superior financial performance.
The study by researchers at George Washington University and Northwestern University determined that firms with high environmental, social and governance (ESG) scores outperform firms with low scores in terms of shareholder value and employee satisfaction.
Researchers scored publicly traded companies on ESG practices and levels of employee satisfaction. Data on firm ESG performance was collected from ESG ratings from MSCI Inc. and employee satisfaction scores were obtained from Glassdoor.com. The data was then measured against the companies’ financial portfolios.
Key findings include:
- Firms with high ESG performance and employee satisfaction significantly outperformed portfolios of firms with low ratings on both topics by 5.61%.
- The portfolio of firms with high ESG performance and employee satisfaction outperforms the firms with low ESG performance and high employee satisfaction by 2.75%.
- Firms with high ESG performance and employee satisfaction outperformed the firms with high ESG performance and low employee satisfaction by 5.64%.
“Overall, our results demonstrate that ESG coupled with employee satisfaction is a valuable signal to predict stock returns and these findings may have implications for asset managers who integrate ESG factors into their portfolios,” the researchers conclude.
Previous research also supports the business value of CSR.
Consumers like Social Responsibility
Many consumers prefer to patronize socially responsible corporations rather than donate to charities, often because it’s easier. An earlier Aflac survey showed that:
92% of millennials are more likely to purchase from an ethical company,
69% of consumers are likely to purchase stock in a company well-known for its ethical standards, and
81% of consumers are more likely to purchase from corporations with active year-round philanthropic efforts, as opposed to only in times of need.
In addition, according to a poll by Futerra, around 88% of consumers say they’d prefer to purchase goods and services from companies that share their values on social responsibility.
Recognizing that social responsibility supports long-term business performance, companies are allocating bigger budgets to the community engagement team, according to The CEO Force for Good, produced by the CECP in association with The Conference Board. Companies are elevating titles, roles and responsibilities of the giving officer, and ensuring that both employees and customers are able to show their commitment to giving back through the brand.
“With employees and customers increasingly rewarding responsible businesses, companies are underpinning their business strategies and brands with purpose,” says Jonathan Spector, CEO of the Conference Board, in a press release. “The data show those efforts starting to pay off, so it’s no surprise to see companies doubling down on their community engagement by expanding teams and giving department leaders more of an audience with the CEO.”
The research findings highlight the critical role of public relations teams that typically lead and promote corporate responsibility programs.
Tips for PR
To promote corporate responsibility, experts offer these recommendations.
Highlight company values. Honoring your company’s values is one of the simplest ways to ensure that your CSR practices are seen as genuine. Look to your company’s mission statement and consider the ideas the company was founded on when deciding on your CSR strategy.
Publicize your work. Aggressively publicize the company’s cause marketing. Emphasize the cause, the charity and the measurable impact to avoid being perceived as self-promotional.
Avoid overselling. Overselling can lead to misleading CSR claims. Publicizing a company and its products as environmentally friendly when they’re not, a deceptive practice known as greenwashing, can backfire and cause reputational damage and even regulatory penalties if green claims are false.
Let others tell your story. Let the charity announce your corporation’s donation or other aid, advises Kelsey Hawkins, a content marketer and media specialist for North American Van Lines. Review it, but don’t be heavy-handed in laying on the praise for the company. Guide the charitable organization on other ways to publicize the grant, such as internal newsletter, social media and blogger outreach. You can then encourage employees and others to share their experiences through curated videos or social media posts.
Consider employees’ views. Supporting charities or causes that employees already care about helps sustain interest.
Share your concern. Sharing news about a problem on social media and your company blog can prompt donations.
Measure CSR programs. Recording and measuring CSR activities helps companies make better decisions about which social initiatives to support, improve the efficiency of their CSR programs, and convince skeptical stakeholders of the value of the efforts. Some possible metrics to track include positive mentions on traditional and social media, new customer acquisition, and lifetime value of customers or clients acquired through CSR. To easily assess CSR strategies, seek a media monitoring and measurement service that can create customizable PR measurement dashboards that integrate earned media, owned media and social media into a single visual display.
Bottom Line: Research reveals a clear connection between corporate social responsibility (CSR) and above-average financial performance. Corporations with strong records of social responsibility tend to perform better. That places the onus on PR teams to advance and publicize their organization’s corporate giving programs.
The article was first published on Oct. 19, 2016, and updated on July 7, 2020.
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William J. Comcowich founded and served as CEO of CyberAlert LLC, the predecessor of Glean.info. He is currently serving as Interim CEO and member of the Board of Directors. Glean.info provides customized media monitoring, media measurement and analytics solutions across all types of traditional and social media.