Economic Uncertainty Calls for Strategic Corporate Social Responsibility

Jonathan Pelosi
May 20, 2009 — 2,835 views  
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During these times of economic uncertainty, corporate social responsibility (CSR) initiatives are unlikely to rank very high on CEO and Senior Management's priority list. Traditionally perceived as the right thing to do, companies philanthropic contributions and environmental mandates have rarely been treated as much more than a prerequisite towards earning their obligatory social license to operate.

A recent study conducted by Imagine Canada states that the annual median philanthropic contribution of Canada's largest corporations is $340,000. Upon consideration of the magnitude of such denominations, executive leaders may begin to ask themselves, "Shouldn't my organization be making a greater effort to leverage its CSR efforts in order to create a favorable return on investment?" After all, according to Imagine Canada's study, of the 79% of corporations who report having regular and ongoing programs for their charitable contributions, only 27% reported that they measured the business benefits of their contributions. And if there is any doubt as to whether or not strategic CSR is beneficial to an organizations bottom line, consider the following statistics gathered by Edelman in a study involving 6000 consumers across 10 countries:

• 80% of consumers feel that during a recession, it is still important for brands and companies to set aside money for social purpose • Nearly 7 in 10 (68%) consumers around the world say that during a recession they would remain loyal to a brand if it supports a good cause • Consumers say that if two products are of the same quality and price, commitment to a social purpose (42%) trumps factors like design/innovation (30%) and brand loyalty (27%) when choosing one brand over the other

Cone Inc., a cause brand strategy firm, put these statistics to the test in 2008 by conducting an experiment with 182 consumers. The consumers were split into two groups and were given one magazine with generic retail advertising and a second magazine with cause-related retail ads. After reading both the magazines the consumers went shopping; all of the brands associated with a cause sold better than the others. One brand of shampoo linked to a cause saw 74% higher sales, and a toothpaste brand was up 28% with a cause-related ad. Many CSR programs are developed and designed specifically for marketing purposes, but new research makes a compelling case for the business value of internal (employee) stakeholder engagement in CSR.

Consider the implications of Cone's 2007 Millennial Study, with respect to organizations CSR strategies and their other key stakeholders, their employees:

• 61% of millennials (born between 1979-2001) feel personally responsible for making a difference in the world, of that percentage, 78% believe that business has a responsibility to join then in the effort • 93% say it's important for their companies to provide them with opportunities to become involved in social issues • 89% of those familiar with their companies Cause programs feel a strong sense of loyalty to their employer

The importance of engaging employees with their companies' social initiatives has been further validated by the recent announcement that Hewitt's 2010 Best 50 Employers in Canada ranking will be placing an added emphasis on evaluating an organizations ability to engage their workforce in their CSR practices.

From increasing sales to improving employee attraction, retention, and productivity, the business case supporting strategic corporate social responsibility is compelling indeed. However, it is worth emphasizing the word "strategic". If your social contributions are going to impact your bottom line, as well as the communities in which they're focused, you can't simply throw charitable dollars in various directions and hope for the best. During these tumultuous economic times, businesses should take a step back and ask: "Is there any way we can make our charitable contributions work harder for us?" At a recent Business for Social Responsibility conference, Jeffrey Immelt, the chairman and chief executive at General Electric was quoted: "The most important part of corporate social responsibility is 'corporate'; you have to make money. The economic crisis doesn't represent a cycle; it represents a fundamental reset." Immelt, a strong supporter of CSR, isn't saying that the days of social responsibility are numbered; instead he brings attention to the importance of leveraging your CSR efforts by strategically aligning them with your business objectives, engaging your key stakeholders, and by being more accountable and transparent.

Immelt is not alone in his thinking. The CECP (Committee Encouraging Corporate Philanthropy)has interviewed numerous CEO's, including those of some of world's largest corporations, and the outcomes of the interviews clearly demonstrate that the most prevalent themes regarding strategic CSR include employee engagement, CEO leadership, alignment with business strategy, and measurement.

Despite the fact that the majority of CEO's are well informed as to the business benefits of strategic CSR, according to a recent McKinsey Quarterly survey, fewer than 20% of organizational leaders claim they are very effective at aligning their business goals with their philanthropic strategies.

With these facts in mind, an obvious question is raised; why aren't today's executives doing more to leverage their social contributions? The answer is relatively straight forward - they're trying to. However, aligning social strategy with business objectives and engaging stakeholders in the process isn't exactly an afternoon assignment. In Imagine Canada's latest Signature Research Report corporations across North America revealed the following challenges that organizations face when designing and implementing their CSR programs:

• Evaluating their contributions, the impact they make, both socially and on their business • Implementing community investment policies throughout their entire organization • Engaging their key stakeholders • Measuring the effectiveness of their programs

Not surprisingly, these challenges also mirror some of the previously mentioned key success factors towards ensuring a successful CSR strategy - a strategy that will allow your corporation to better weather this economic storm and let you answer a resounding "Yes!" the next time someone asks whether or not you are effectively leveraging your CSR efforts in order to create a favorable return on your social investment.

If you would like to learn more about how to maximize the return on your organizations social investments, additional resources are available at

About the Author

As a Managing Partner at ORENDA (, the CSR consultancy, Jonathan is directly responsible for designing and implementing revenue growth strategies as well as overseeing the day to day operations of the company's sales organization...learn more at

Jonathan Pelosi