Corporate social responsibility is no longer driven only by philanthropy and regulations, but by profit, a new study says.
More than two in three of the 250 global business executives surveyed in a recent study by the IBM Institute for Business Value say they have adopted socially responsible practices in the hopes of generating revenue.
Another 54 percent say they believe such initiatives contribute to their competitive advantage.
The study, “Attaining Sustainable Growth Through Corporate Social Responsibility,” attributes these trends to better informed customers.
Greater accessibility of information and networking opportunities online have made it easier for consumers to become sensitized to a broad range of issues, from climate change to product safety, the study says.
Three-quarters of business leaders surveyed say scrutiny of advocacy groups has increased in the last three years, and in turn, the information businesses disclose about the origin, composition and impact of their products and services also has grown.
Yet fewer than a quarter report truly understanding customers’ social worries, the study says.
Developing such an understanding, however, may be vital to a company’s future competitiveness.
“It’s not only critical for businesses to keep up with the emerging demands of their stakeholders, but to build CSR into the core of their business strategy,” George Pohle, vice president and global leader of IBM’s Business Strategy Consulting Practice, says in a statement.
“That way CSR is not viewed as a discretionary cost but an investment that will bring financial returns,” he says. “And since customers are changing buying behavior as a result of CSR, the financial impact can be dramatic.”
Companies reap the maximum benefit from social responsibility initiatives when they align all their activities in key sectors with their core business strategy, the study concludes.
These activities include focusing on legality and compliance, strategic philanthropy, values-based self-regulation and efficiency and growth.
Leadership in such initiatives should come not only from executives, but also from junior employees, consumers and business partners, the study says.
Survey participants included senior executives and strategists from the banking, chemicals, consumer goods, electronics, energy, retail and automotive industries worldwide.