The business case for CSR initiatives: Why CSR may be aligned with profits

  • by

When considering the broad range of CSR initiatives, justification for implementing the policies generally falls in two areas – the moral case, and the business case. The moral case is that it is the right thing to do – businesses should be aware of their impact on society. The business case is that it will also help the profitability of the firm.

This article focuses on the business case – why above and beyond the moral justification, implementing CSR initiatives may also be in the interest of the company’s profits. 

The business case for CSR

Help gain customers

One justification for CSR initiatives is that they may help attract or retain customers. Individuals like to be associated with firms that do good (or want to avoid firms that are seen as bad). Being regarded as a leader in CSR initiatives can help attract customers to the firm. 

While it is easy to see the benefit of attracting customers when selling direct to final customers, even in B2B settings having a positive CSR reputation may help. Your business customers may themselves care who they are associated with – if only because of their own concerns for not wanting to be associated with firms that have a bad CSR reputation.

Help gain and retain employees

Beyond helping to gain customers, CSR initiatives can also be an important component in attracting and retaining employees. Working for a firm that they consider is having a positive impact on society may be a key component that influences where people want to work. 

Reduces the possibility of fines or additional scrutiny

Making your own commitments to CSR initiatives voluntarily may also help avoid regulatory scrutiny that forces changes. Rather than having changes enforced on a firm or industry, preemptive changes may help prevent changes to laws that specifically look to enforce changes. 

Improvements may improve overall efficiencies

A final reason for CSR initiatives is that they may also lead to broader improvements to the overall operations of the company. Improvements to track and improve the sustainable sourcing in the supply chain may lead to broader improvements being made in the process. Improvements to reduce electricity consumption will also lead to savings in your energy costs. There may be some improvements that have a quite clear financial return on their investments.

Final thoughts: Having a social goal may also increase your own motivation

A final dimension to consider when considering CSR is whether it will improve your own motivation for your business. While many founders start businesses based on financial goals, having another dimension that helps justify your business can help increase your own passion for your firm.