SR Continues to Deliver Strong Returns


Times are tough and budgets are tight. Companies need to think about sticking to their knitting and getting back to fundamentals. This is no time to be thinking of corporate social responsibility, right? Not so fast.

A recent study conducted by TNS shows that 54% of Americans say “engaging in responsible social conduct makes good business sense for major corporations.” In other words, corporate social responsibility is a matter of sticking to the basics. Americans are not naïve. They know that corporations survive on profits. But equal numbers of Americans (39%) agree with each of the following statements:

•    A corporation’s most important responsibility is to deliver good products/services to their customers and profits/dividends to their shareholders.

•    Major corporations have a responsibility, beyond what they are legally required to do, to engage in practices that benefit society, even at the expense of profits/dividends.

In other words, it is not either profits or corporate social responsibility. It is both.Almost three in 10 Americans think that the government needs to regulate large corporations more so they will be more socially responsible. This is not good news for business. It is better to be responsible than to have responsibility legislated.
Finally, the American public does not see CSR as a value-added attribute. Only 15% say they will pay more for goods or services from companies who are good corporate citizens, meaning that CSR is an expectation.
But there are rewards for being socially responsible. TNS studied how Americans viewed the corporate social responsibility of 80 well-known corporations. Among the highlights:

•    Out of 18 CSR dimensions, the top three most highly correlated with corporate reputation are:

❑    Does not mislead consumers in its advertising and marketing;
❑    Company’s senior management behaves in an ethical manner;
❑    Does not tolerate bribery or corruption by its employees or representatives;

•    All 18 CSR dimensions are strongly correlated with perceptions of trust and favorability;

•    There is a strong correlation between favorable scores on CSR dimensions and likelihood to recommend a company’s products/services (see graph). Similarly high correlations can be found for likelihood to recommend employment and the company’s stock; and,

•    Finally, all companies are not created equal in terms of CSR. There is tremendous variation in reputation and evaluations across CSR dimensions by industry (see table).

Simply put, there are tangible rewards for doing good. And there is a specter of legislation/regulation if companies fail to heed the public’s call for socially responsible behavior from major corporations. 

This article was written by John Gilfeather, an EVP at TNS. He can be reached at john.gilfeather@tns-global.com.




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