Turns out being good is making money for successful brands

Out for drinks recently with a friend who’s working at a multinational ad agency, I had been going on a bit about CSR (Corporate Social Responsibility) and startups. When he asked if CSR programs actually had any bottom line impact for companies, I couldn’t come up with a better answer than, “Well yes, it builds brand equity.” 

I went to two leading studies tracking the legacy of CSR to the financial impact on companies globally. Interbrand has been measuring leading brands since 1984 so I looked at their report, Best Global Green Brands 2011 (which actually measures the wider impact of CSR, not just Green initiatives) and KPMG’s 2011 CSR report. 

Companies are not only doing ‘good’, they’re saving money

KPMG found that many leading brands increasingly see CSR as bringing financial value through direct cost savings as well as enhanced reputation. The effects of sustainability can include saved energy and resources benefitting the bottom line. And the effects of enhanced reputation to investors and consumers offers growth on brand value.

The U.S. multinational 3M reported that it successfully tied environmental performance to monetary and non-monetary performance for its employees. By identifying and using renewable materials to replace petroleum-based polymers and monomers in their products, the company showed double bottom line ROI with increased environmental impact and financial growth.

And while they’re making the world a better place, they’re making money too

Both reports uncovered that the companies that are integrating CSR through their structure understand that it builds long-term growth. 

Toyota is a great example of the kind of company where there’s a high level of literacy in sustainability with engagement and responsibility at every level. CSR is part of the workplace culture and everyday business. The company has focused on decreasing its environmental footprint through the supply chain while supporting employees and producing better cars that are more efficient. The effects have been better performance and sales with increased profitability and improved brand presence for the company. Earnings are reinvested to continue the innovation cycle. The company sees it as a ‘virtuous circle,’ feeding sustainable growth.

There's a new type of company where CSR is part of the brand, and they're REALLY doing well

Even more evolved are hyper-focused new companies formed around a purpose, with the social or environmental plan tied together intrinsically to the business model, its people and activities. These companies don’t talk about CSR, they talk about impact... and they’re healthy and growing. There's an overseeing body in the U.S., B Corporations, offering certification based on purpose, accountability and transparency. Their goal is to blend the best of public service and private enterprise to create successful for-profit purpose-based businesses. It’s meant to separate ‘good’ companies from those with good marketing. Patagonia and Method are two of the more recognizable brands that have become certified.

Revolutions Foods is one of the new B Corp companies that’s got social responsibility built into its DNA. Since 2006, they’ve been making healthy, good tasting meals for kids in low-income schools and families in California, Colorado and Washington D.C. 

Founder, Kristin Richmond, talks about what motivated her. “It was education reform, building better schools, creating access for students and primarily underserved communities—and then it was also food.” In Inc. magazine, she tells how the company created a business model that worked for them. Since partnering with a Whole Foods store in the Bay area to launch a pilot program in 2006, the company now employs 750+, feeds more than 120,000 kids each day and is projecting to close this year with $30 million in revenue. 

The future in new business models

Now that big brands have proven that CSR is profitable, it’s easier for early-stage ventures to get funding for new business models that answer questions such as, How can we get good food to kids at school? These new companies are making money by funneling their passion into creating new business models that are built for success, fully integrating CSR with financial sustainability.

Corporate responsibility engagement

KPMG's International Corporate Responsibility Reporting Survey published in late 2011 tracks 3,400 leading companies from 34 countries, looking at trends that are happening worldwide. It found that reporting had increased worldwide, as brands realize that corporate responsibility "drives innovation and promotes learning, which helps companies grow their business and increase their organization’s value." 

What they found was that corporate responsibility (also referred to as CSR and sustainability) reporting uncovers new opportunities for business improvement and brings enhanced financial value to companies, though there's still room for improvement. Data shows that charting countries by level of process maturity and quality of communications, Europe leads in overall engagement, while Asia generally underperforms in both process and communications. Canada and the U.S. showed to over-communicate on their corporate responsiblity to their actual process maturity.

Reading through the report focusing on building business through brand building and engagement, shows that North American companies need to engage with corporate responsiblity as part of how they operate, being clear that it's not about feeling good about something or using it as a marketing message but creating impact that drives business goals.

Social media can help develop engagement for companies who have corporate resonsibility agendas, but have a tough time making them relevant. Social media brings the kind of transparency and engagement that makes brands more responsive and responsible. It can encourage employee engagement, which has been found to be key to making any CR program effective. It can be effective for showcasing thought leadership in companies, allowing employees as well as the public to see what a company's doing.

Corporate responsiblity used to be shown in annual reports and stand alone reports. While that reporting is still relevant to shareholders, regulators and other corporate stakeholders, companies are finding they need to do more to build reputation and enhance their brands. Social media offers a genuine and responsive message that can complement press releases and marketing. Social media can bring the C-suite and thought leaders within companies closer to the public, offering the kind of transparency and presence that builds trust and has a positive impact on a brand.

Because of social media's impact, companies that blend corporate responsibility strategies with brand and social media/communications strategies can result in more effective engagement internally and outside the company.