Businesses are beginning to recognize the increasing importance of corporate social responsibility (CSR) in the current market, and the effect it has on the bottom line. As consumers become more invested in CSR initiatives, ethical corporate behavior is emerging as a key value driver for consumer goods, and companies that do not actively demonstrate their dedication to building a better world may see their bottom lines suffer.
The Purpose of a Corporation Is Shifting
Founded in 1972, the Business Roundtable (BRT) lobbies for public policy that is advantageous to corporations, and since 1978 they have periodically issued the Principles of Corporate Governance, which includes language on the purpose of a corporation. Until now, each version since 1997 has stated that corporations exist principally to serve their shareholders.
On August 19, 2019, the BRT released an updated version of their Principles of Corporate Governance. Backed by almost 200 of America’s most powerful CEOs, the new Statement on the Purpose of a Corporation shifts corporate responsibility away from shareholders to refocus on “all of [their] stakeholders,” including customers, employees and the planet.
Although this statement is largely symbolic, it is indicative of the shift occurring in how CEOs and other members of the business community think about the relationship between corporations and society.
Many Successful Businesses Are Prioritizing CSR
Many successful businesses are capitalizing on this shift in perceptions. The UN Global Compact, known as the “world’s largest corporate sustainability initiative,” has more than 13,000 signatories, adding more than 1,000 signatures a year since 2016. Participating organizations have committed to, “align strategies and operations with universal principles on human rights, labour, environment and anti-corruption, and take actions that advance societal goals.” The number of CSR reports published has also increased, with 86 percent of S&P 500 companies publishing CSR reports in 2018 — up from 72 percent in 2013.
Increasingly, corporations across the globe are actively pursuing CSR initiatives that go above and beyond stakeholder expectations. Industry giants such as Google, Apple, Starbucks, Coca-Cola, Timberland and Ikea are among those corporations, with CSR and sustainability programs that not only offset their own emissions, but go beyond minimum requirements to address pressing social issues such as climate change and diversity.
Read about the current leaders in corporate social responsibility by downloading the 2020 Top 100 Corporate Social Responsibility Influence Leaders List.
Consumer Behavior Is Shifting Toward Sustainability, Fair Trade Products & Conscious Services
The overall shift toward sustainability, fair trade products and conscious services has, in large part, been heavily influenced by younger generations. Millennials in particular are driving corporate social responsibility, with nine in 10 millennials willing to switch brands to one associated with a cause, or make personal sacrifices to impact social issues they care about. In order to capture the growing buying power of individuals born between approximately 1981 and 1996, corporations are being forced to recognize the return on investment CSR activities and ethical business practices offer. From reusable packaging to corporate activism, new expectations for corporate behavior are affecting the way consumers buy and, by extension, the way companies conduct business.
The Assent Platform collects, manages and centralizes corporate social responsibility data for greater transparency, empowering businesses to use their CSR programs to gain a competitive edge. To find out more, contact us today.