Monday, February 18, 2008

Corporate Social Responsibility Pays

If you need proof that paying attention to corporate social responsibility creates value in your company... look no further! Two studies have just come out that prove just that.

The Economist Intelligence Unit's report, "Doing good: Business and the sustainability challenge" [PDF], surveyed 1,254 senior business executives to find out how, if at all, stock performance correlates to CSR performance:
"There is a link between corporate sustainability and strong share price performance. In our survey, companies with the highest share price growth over the past three years paid more attention to sustainability issues, while those with the worst performance tended to do less. Causality is difficult to establish, but the link appears clear: the companies that rated their efforts most highly over this time period saw annual profit increases of 16% and share price growth of 45%, whereas those that ranked themselves worst reported growth of 7% and 12% respectively. In general, these high-performingcompanies put a much greater emphasis on social and environmental considerations at board level, while the poorly performing firms are far more likely to have nobody in charge of sustainability issues."

IBM's "Attaining Sustainable Growth Through Corporate Social Responsibility," surveyed 250 business leaders and found that 68 percent of them are currently engaged in CSR practices, and shows that they can be potentially revenue-enhancing operations.

"A growing body of evidence asserts that corporations can do well by doing good. Well-known companies have already proven that they can differentiate their brands and reputations, as well as their products and services, if they take responsibility for the well-being of the societies and environments in which they operate. These companies are practicing Corporate Social Responsibility (CSR) in a manner that generates significant returns to their businesses."

The CSR Value Curve (pictured above) shows how IBM is tracking organizations as they learn to integrate social responsibility into their value chain. It just makes sense! Organizations that think more holistically about risk avoidance and are open to new means of value creation are going to be more successful. Period.

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