Study Reveals Impressive Financial Value of CSR
15 July 2015 at 11:23 am
Well-designed Corporate Responsibility programs lift sales, improve employee productivity and boost shareholder value – increasing revenue by as much as 20 per cent – according to a new study.
Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility , sponsored by Campbell’s Soup and technology firm Verizon and authored by IO Sustainability and Babson College also found that CSR programs could command price premiums up to 20 per cent and increase customer commitment by as much as 60 per cent.
The study assessed over 300 studies and analysed the results and determined the financial and business related value that CSR delivered.
"The value and return on investment of CR programs have long been disputed, with companies questioning the business value of them," study author Steve Rochlin said.
"Project ROI effectively reframes the debate and shows that the issue is not whether companies should have CR programs, but how well they design them to achieve their goals."
According to the study, over a 15-year period, companies with effective CSR programs had on average increased shareholder value by $1.28 billion.
There was also an increased potential valuation for companies with strong stakeholder relationships of 40 per cent to 80 per cent.
Companies with a strong CSR commitment could also see increases in employees' productivity by as much as 13 per cent. In addition, those companies could experience reductions in turnover by as much as 50 per cent, with workers willing to take up to a five per cent pay cut to work for a company doing CSR well.
"For too long, companies have kept CR in a silo and viewed it as a compliance and contributions function. Project ROI shows that companies need to integrate CR as a driver of financial and wider business value. This means aligning CR with core business strategy," Stephen Jordan, co-CEO of IO Sustainability said.
According to the study, CSR nurtures, grows and protects brand and reputation value, potentially by up to 11 per cent of a company's total value.
"By quantifying the effect of CR on customer engagement and loyalty, Project ROI's results give companies the freedom to take an entrepreneurial approach to CSR that could produce innovation and breakthroughs,” study co-author Professor Richard Bliss said.
"Today's consumers are more educated, aware and connected than ever, and they are fully aware of corporations' sincerity and authenticity when it comes to their commitment to CR.
“Companies that fail to recognise CR's power beyond the shopping aisle are taking a myopic view. CR is a formidable influencer of trust, affinity and loyalty. Companies must participate in CR with authenticity and transparency, or risk doing more harm than good to their reputations.
“We believe this study will stimulate conversation among the C-suite, small business owners, CSR influencers and academic communities, and we look forward to participating in that conversation.”