Corporate social responsibility is not just ethical, it’s profitable, global research finds
David Woods, June 14, 2011
Organisations that are genuinely committed to corporate social responsibility (CSR) 'substantially outperform' those that are not, research shows.
A study published yesterday by the Kenexa High Performance Institute, a division of HR consultancy Kenexa, found CSR-savvy employers also have a higher level of employee engagement and provide better customer service. Kenexa surveyed 30,000 employees in 21 countries, examining their views on corporate responsibility and its impact on their organisations.
Through an analysis of the financial metrics of 175 companies, the research found organisations that were most committed to CSR reported an average return on assets 19 times higher than the average of those least committed to CSR (a gain of 4.83%, against a mere 0.25%). When analysing the total shareholder returns of these companies over the three years from 2007 to 2009, researchers found that many of the organisations had reported a financial loss.
But low-scoring CSR organisations lost, on average, 11 percentage points more than high-scoring CSR companies.
Brenda Kowske, research manager at the Kenexa High Performance Institute, who co-authored the research white paper with her colleagues Anne Herman and Susan D'Mello, said: "Our study shows a statistically significant relationship between corporate responsibility and organisational success. Employees who work in organisations that have a greater sense of responsibility towards their communities and environment, both ecological and social, have an engagement level four times higher than it is for employees who work in a low CSR culture. We also found that companies that prioritise CSR have a considerably higher rating for providing excellent customer service.
"There is now a need to expand the body of research into CSR to further explore and understand the relationship between CSR and organisational success. For example, do CSR actions actually produce these tangible business benefits or do highly successful companies simply have more resources to devote to CSR, creating a positive cycle?
"Whether they do it to manage their public image or because it's the ethical and right thing to do, one thing is certain: organisations in every industry in all of the major economies around the world are now paying heed to the notion of corporate responsibility."