Corporate Social Responsibility is an incredibly broad principle of business that means something different to every company. The impact a company has, both positive and negative, on its stakeholders, community and environment varies greatly from firm to firm. The industry that a company does business in, its size and its geographic location just begin to scratch the surface of what goes into an impact profile. A commitment to Corporate Social Responsibility (CSR) policies is essential to building positive brand equity with their customers.
Broadly, CSR refers to the policies, practices and procedures a company has in place to hold it accountable to both its stakeholders and society at large. It is self-accountability that defines this principle. Company-wide CSR policies are not imposed by any governing body. By definition, CSR is how a company goes above and beyond the regulatory bare minimum to further societal goals. That may be environmental stewardship, commitment to fair labor and supply chain practices, exceptional treatment of employees or an emphasis on community development.
CSR Principles Will Pay Off for Brands in 2021 and Beyond
There has been plenty of research done about the emphasis consumers put on brands they feel are committed to philanthropic engagement. One study in particular points to the importance of a brand’s CSR policies during times of crisis. In 2017, researchers with the American Finance Association found that firm’s’ reputation aided greatly during the financial crisis of 2008-2009.1 Their study argues that during times when individual corporations, and markets at large, face scrutinization of overall trustworthiness, consumers are more likely to aid brands that possess high levels of social capital to weather market volatility. Looking at 1,673 non-financial firms, the researchers found companies with high CSR rankings had 4-7% higher stock returns than those with average or below average ratings.
As marketers, we strive to learn from the past and fit those lessons into the context of our current business environment. While financial markets are certainly performing better than during the housing collapse 12 years ago, a number of factors are shaking current consumer trust, including: scrutinization of large tech companies, political division and general economic uncertainty. At the same time, we have seen companies go above and beyond to contribute to the good of society. For example, Louis Vuitton used their perfume manufacturing capacity to produce hand sanitizer and Nomad Goods shifted from selling accessories for iPhones to producing face masks. This kind of commitment to goals outside of just making profits has a great positive effect on corporate reputation which we know is tremendously important today.
A study from the University of Sydney in Australia2 points to how reputation impacts how much clients are willing to spend on a product. Their research which focused on television brands, found that these individuals were willing to pay as much as 22% more for a product from a brand with higher CSR rank than another. Associate Professor of Marketing Paul Burke, who co-authored the study, had this to say about CSR in marketing, “Companies need to work hard to communicate that they are environmentally and socially responsible, support good causes, have a positive work environment, and excellent leadership and do their best to mitigate brand damage.”
Communicating CSR Policies to Consumers
The first and most important thing to keep in mind when communicating elements of your CSR plan in a marketing mix is authenticity. Focused CSR messaging cannot be just words. In the digital age, consumers have more access to information about the brands they interact with than ever before. Customers want to be able to see for themselves these principles in action. For this type of messaging to truly resonate, it must be a lived principle for the entire company. That starts, for companies of all sizes, with taking the time to strategize how your brand engages with its stakeholders and community.
At Voom Creative, an element of all branding projects is identifying the various stakeholders that interact with a brand. Understanding the impact a company has on its environment, community and employees is pivotal. It ensures all those who come in contact with your brand leave with a positive experience. Agencies like Voom Creative know both how to build out a corporate social responsibility program, and effectively communicate those initiatives to your customers, resulting in deep, authentic relationships that will help carry your brand forward long into the future.