Why Social Responsibility Matters to Businesses

Why Social Responsibility Matters to Businesses

Companies are increasingly ramping up their focus on social responsibility, whether its championing women’s rights, protecting the environment, or attempting to obliterate poverty, on local, national, or global levels. From an optics perspective, socially responsible companies project more attractive images to both consumers and shareholders alike, which serves to positively affect their bottom lines.
Customers Matter

Embracing socially responsible policies goes a long way towards attracting and retaining customers, which is essential to a company’s long-term success. Furthermore, many individuals will gladly pay a premium for goods, knowing that part of the profits will be channeled towards social causes near and dear to them.

Companies can likewise witness increased foot traffic if they enhance the local community. For example, banks that dispense loans to low-income households are apt to see an uptick in business, as a direct result.

Other Key Practices

Socially responsible companies tend to attract employees who are eager to make a difference in the world—in addition to simply collecting a paycheck. With large companies, there is strength in numbers, where collective employee efforts can achieve substantial results, which increases workplace morale and boosts productivity.

Community-oriented companies often enjoy a leg up on their competition, as well, thanks to superior brand imaging. For example, Tesla Inc. (TSLA) CEO Elon Musk has successfully attracted environmentally-minded consumers, with his line of cutting edge electric-powered cars and green automotive products.

Examples of Corporate Social Responsibility

Coca-Cola Company (KO)

In 2010, Coca-Cola started the 5by20 initiative to empower women across the globe, announcing the following:

The Coca-Cola Company’s global commitment to enable the economic empowerment of five million women entrepreneurs across the company’s value chain by 2020.

The Bottom Line

Socially responsible companies cultivate positive brand recognition, increase customer loyalty, and attract top-tier employees. These elements among the keys to achieving increased profitability and long-term financial success.