Why is corporate social responsibility important?

The days of operating solely for profit are long past, with every year showing a greater emphasis for corporations to include meaningful social responsibility measures in their business strategy. Essentially, this means ensuring that a business operates in an ethical and sustainable way. This can take a variety of forms, such as a concerted consideration for workers’ rights, environmental sustainability and the wider community.

When we ask why corporate social responsibility (CSR) is so important, our first instinct is that it is simply the right thing to do. But besides this, there are very important reasons why retailers, in particular should commit to a robust and meaningful CSR strategy. Let’s take a look at the benefits with solid examples of effective CSR and practical guidance for implementing CSR in the retail industry.

Benefits of retail corporate social responsibility

The current globalised retail environment is exceptionally competitive, with brands from all corners of the world competing for market share against a backdrop of a challenging economic climate. One area that retailers can use to compete more effectively is CSR. Here are a few ways that CSR can help retailers gain a competitive advantage:

Improved brand perception 

Powerful CSR helps people see your organisation as a force for good in society, connecting your brand with meaningful causes. This is especially true for brands appealing to younger generations, with 90% of Gen Z shoppers (a group with $500 billion in buying power) saying that companies must help with societal and environmental issues and 75% of them performing research on an organisation’s CSR initiatives before committing to a purchase. Therefore, a good CSR strategy builds good faith with the public, improving the wider perception of your organisation in comparison to competitors.

Patagonia, a USA outdoor products manufacturer and retailer, has been an exceptional example of this, continually building on the CSR successes. 10 years ago, they said they’d work on reducing their environmental impact – this led to a sustainable supply chain, introducing repair and resale services for old products, eco-conscious food lines, and even a commitment to avoid producing apparel for companies that don’t share their values. All this resulted in large amounts of free press. Marks & Spencer’s Shwopping initiative has achieved similar results in terms of public image, collecting over 35 million items for Oxfam since 2008.

Improved bottom line 

Consumer values are changing to support sustainability, ethics and sustainability. When products are honestly and clearly linked to these values through the CSR strategy, consumers are prepared to pay more for them, choosing them over and above products without these connections. In fact, global research has shown that consumers in both older and younger generations are actively making the choice to buy more sustainably, and that one-third are prepared to pay a premium for these products. A YouGov poll found that 74% of shoppers ‘would be happy to pay an extra 5% for their clothes if there was a guarantee that workers were being paid fairly and working in safe conditions.’

One great example is the change occurring in the fashion industry. Giants like Nike, Ikea, Gucci, and others have all successfully used sustainability to improve profits by introducing green product lines, introducing transparency into manufacturing, and other measures – all of which have resulted in considerable profitability. The top 10 green retailers in the world generate over $100 billion from green business lines, with stock outperforming conventional competitors by 11.7% per year.

Increased consumer engagement 

In today’s connected world, engagement is key to fostering a sense of brand loyalty and customer satisfaction. CSR gives retailers a great platform for engagement, creating stories out of your efforts as you raise awareness of a cause whilst indirectly promoting your organisation and consolidating your brand identity. Recent studies back this up by showing that CSR impacts both engagement and customer satisfaction, stimulating a powerful positive response to your brand. According to IBM’s 2020 report, more than 70% of respondents say they are actively looking for brands that support their values, and that these values are the most important aspect in choosing a brand.

Greggs has one of the most comprehensive and consumer-facing CSR programs of any retailer. Since the 1960s, their Greggs Pledge to supply pies and peas to local elderly people in its hometown has evolved into a nationwide free breakfast program supporting 70,000 schoolchildren. They’re also committed to building eco shops, becoming the biggest free drinking water provider, saving energy, and providing choices that support customer health.

Greater employee engagement 

Powerful CSR strategies also help boost your brand image to current employees, driving active engagement. CSR programs give employees a greater sense of purpose as they are motivated by the thought of being a positive driving force, as well as working for a company that supports their values and community. Engaged employees are 17% more productive, 21% more profitable, and have 41% lower absenteeism – and those figures are a powerful argument for CSR as a means for increasing profitability.

These CSR initiatives can be internal too, as Spotify’s 24-week paid parental leave program shows. They’ve credited this initiative with a long-term increase in external job applications that’s ongoing to this day.

Reduced operational costs 

Effective CSR projects are not simple acts of charitable giving – they can carry a high ROI in terms of cost savings. According to Project ROI, CSR can increase a company’s market value by up to 6% and stakeholder value by $1.28 billion over a 15-year period, while also reducing systemic risk by 4%. As a result, they should be seen as an investment, not a straightforward cost. 

A good example of sustainability measures are those taken by tech giants like Google and Meta (Facebook). They have enormous energy costs but are offsetting these by investing in solar and wind power, becoming the largest buyers of green power in the USA. This has had the result of offsetting their energy costs by 10% on average.

The importance of corporate social responsibility can’t be underestimated for the retail industry, especially as industry leaders start to show the huge payoffs that come with this type of forward-thinking. However, it’s not an easy journey and organisations that want to make their CSR matter need partners who can optimise this process for maximum impact and returns.

GoodBox is one of these partners, working closely with corporations to help them access cutting-edge technology for CSR fundraising. With the GBx Core, companies have unparalleled donor engagement. We are an FCA regulated payments company and an ICO registered data controller. This ensures compliance while offering a user-friendly platform that supports all major payment methods, full connectivity and a customisable 5.5-inch display. Want to find out more about our industry-leading donations collection device? If so, please contact us today or request a pricing brochure.