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Six Ways Doing Good Can Help in Company Performance

Submitted by: Gaurav Bhattacharya

Posted: Apr 05, 2017 – 06:00 AM EST

Tags: csr, corporate social responsibility


recent study surveyed more than 1000 CEOs and revealed that 93% of them believe that sustainability is monumental for the success of any business. The views of CEOs are a direct result of the observation made by them on how ‘doing the right thing’ has helped in strengthening the company performance. It goes without saying that ‘doing good’ has lot more implications that go way beyond just monetary benefit.

Here are ways explaining how ‘doing good’ can help a company performance –

1. Risk reduction 
Gone are the days when a company’s irresponsible behavior could easily go unnoticed. Today, word travels faster than ever. Take the Volkswagen scandal for instance. The emission rigging of vehicles caused the stock of the company to plummet to one-third of its value within less than a week. The company had to pay 35 billion USD in the penalty as per the reports.                        

The findings of a study conducted by Vigeo revealed that socially responsible companies enjoy a lot of sanctions for their efforts. Between the years 2012-2013, almost 20% of the socially responsible organizations get sanctions of approx 95 billion Euros.

2. Cost Reduction
The implications of poor social behavior go beyond legal liabilities. Bad business conduct results in opportunity costs and delays. Failure to communicate with stakeholders, and engage with them, often leads to delays in operation and lost opportunities. It can hinder expansion of services, contract renewals, etc.

study by Harvard revealed that community conflicts resulted in around 3 million USD on an average in capital expenditure owed to delayed production. In addition, poor business conduct can also scare off potential investors and hurt your reputation. Divestment campaigns are a great tool for companies to encourage positive behavior and reduce the cost of production.

3. Employee retention
Being socially responsible does a lot more than just cost saving. It also helps in building positive work culture and company image. It reduces employee turnover and improves productivity.

According to a study, companies that are socially responsible enjoy healthier work culture. They generate 2.3-3.8 % higher stock returns every year than their competitors.

4. Competitive advantage
Owing to the Harvard Business School Study, Prof. Serafiem tracked companies with high sustainability performance over the span of 18 years. The report showed that companies with environmental and social systems outperformed companies that were low on sustainability metrics. Socially responsible companies had better stock performance. 

5. Debt reduction and revenue increase
study by Babson College and IO Sustainability found that organizations that stick to socially responsible practices can reduce the cost of debt by 40%. They can also increase revenue by 20%. Additionally, the reports also suggest that companies that make societal contributions show better operational performance.

6. Shared value creation
According to the Harvard Business School article, ‘shared value creation’ is creating economic values while also producing value for the society by battling social challenges. According to Porter & Kramer, there are several benefits of offering products that also take care of societal needs. Nespresso is an excellent example of a company that created shared value. It invested in supplies which resulted in less environmental impact among coffee producers and also generated higher incomes for them. It also increased Nespresso’s supply of quality coffee beans.

All these stats and surveys stand testimony to the fact that being socially responsible and doing the right thing can go a long way for businesses. It does much more than just uplifting the communities and providing monetary benefits.  It reduces cost, helps in employee retention, and gives the organization a competitive advantage.

So, how does your company plan on doing ‘the socially responsible thing’? Let us know!

The opinions, beliefs and viewpoints expressed by CSRwire contributors do not necessarily reflect the opinions, beliefs and viewpoints of CSRwire.

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