Why Social Responsibility Is Important 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.
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.
Retaining Top Talent
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 in turn increases workplace morale and boosts productivity.
Helping Companies Stand out from the Competition
Community-oriented companies often enjoy a leg up on their competition, 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 Coca-Cola Company’s global commitment to enable the economic empowerment of five million women entrepreneurs across the company’s value chain by 2020.
Visa Inc. (V)
Through its Financial Inclusion program, Visa has developed innovative ways of bringing digital cash to places in the world where the financial infrastructure doesn’t exist or for people who don’t have access to the financial system, like residents of many third-world countries. The company stated:
Today, about half the adult world lives in the informal economy, dealing exclusively in cash. To be one of these estimated two billion people is to face financial barriers that make life risky, expensive and inefficient. Financial Inclusion helps put people on a path out of poverty, creates productive, empowered citizens, fosters business opportunities and fuels economic growth.
The Bottom Line
Social responsible companies cultivate positive brand recognition, increase customer loyalty, and attract top-tier employees. These elements are key towards achieving increased profitability and long-term financial success.