Purpose and profit: Why CSR and ESG *can be* game-changers
Image credit: Towfiqu barbhuiya via Unsplash
Almost half of respondents to an IBM survey say they paid a premium—on average 59% more—for products branded as sustainable or socially responsible! PWC found this was true even when there are cost of living concerns.
😲 That’s right. Despite what the current political climate would make us think, consumers vote with their wallets—and the message is clear: businesses that stand for something bigger than just profit are winning.
But for some of you, dear readers, I may have just dived into the deep end. So let me start at the beginning.
Maybe you're a business owner, or maybe just a curious bystander watching companies step up their social game. You've heard of CSR (Corporate Social Responsibility) and ESG (Environmental, Social, Governance)— but let's be real, what does it really mean, and why should you care? Well, buckle up, because we’re about to break it down, and trust us, it's not as boring as it sounds. In fact, it might just be the secret sauce to your company's future success. Yes, really.
What are CSR and ESG?
At their core, both are about businesses acting responsibly toward society. Companies are expected to operate ethically, contribute positively to the environment, and treat their employees like, you know, humans.
Let’s start with Corporate Social Responsibility (CSR). CSR isn’t about emptying your coffers for the next nonprofit (though that’s a nice touch). It’s about integrating social good into your daily operations. It’s a recognition of why corporate responsibility is important—not just for the world but for your bottom line, too. CSR involves taking a hard look at how a company’s actions affect the world—and then trying to make it better. Plus, it can make your business look pretty darn good to customers and investors.
Next, ESG stands for Environmental, Social, and Governance—three factors investors use to evaluate how ethically and sustainably a company operates. Think of it as CSR’s more data-driven cousin. ESG examples include reducing carbon emissions, fostering diversity and inclusion, and maintaining transparent leadership practices. Companies with strong ESG performance aren’t just ticking boxes; they’re positioning themselves as forward-thinking leaders. And investors are paying attention..
Why they are important (yes, they really are)
Here’s the thing: Why CSR and ESG matters is simple. People care. Employees care. Customers care. And guess what? Investors care. A lot. And regulators can care too.
Let’s talk about investors for a second. Investors are increasingly looking at how businesses handle things like the environment, employee rights, and community engagement. In addition, they want to know if you’re genuinely trying to do some good—or if you're just posting nice pictures of puppies on Instagram for PR. In 2023 McKinsey reported that 85% of the chief investment officers they surveyed stated that ESG is an important factor in their investment decisions.
But it’s not just about impressing the outside world. Internally, CSR can also improve employee morale. An IBM study in 2022 found that two out of three respondents say they are more willing to apply for (67%) and accept (68%) jobs from organizations they consider to be environmentally sustainable. Employees want to work for companies that align with their values—especially the next generation of workers, who, spoiler alert, really care about doing good. The new workforce craves purpose and profit in their careers, not just a paycheck.
And let’s not forget the customer factor. In that same IBM study, almost half of respondents said they paid a premium—on average 59% more—for products branded as sustainable or socially responsible in the last year. If you're known for doing good in the world, customers will buy from you—and not just once. They’ll stick around for the long haul. And long-term customer loyalty is the golden ticket to business success.
Corporate social responsibility types (it's not just about writing checks)
As CSR is the less technical of the two, let’s focus on that. How does a company actually do CSR? It’s not all about writing big checks or launching charity campaigns. Here are the four main corporate social responsibility types to consider:
Environmental responsibility: Oh yes, the "green" stuff. Companies like Patagonia have raised the bar on environmental responsibility. Reducing your carbon footprint, adopting renewable energy, and using sustainable materials—it's not just for tree-huggers. It’s for businesses that want to thrive. Pro-tip: saving the planet can save you money in the long run. Energy efficiency, anyone?
Philanthropy: This is where you get to do some good with your cash. But before you throw a bunch of money at the nearest NGO, make sure it aligns with your brand’s mission. This will ensure your philanthropy really resonates with your employees and clients. AND it will make it more likely you’re able to support these NGOs with expertise, product donation, and more. If you’re a tech company, for example, you might donate to education programs that teach coding. If you’re a fashion brand, focus on initiatives for fair wages or ethical fashion.
Ethical labor practices: CSR also means treating your employees (and everyone in your supply chain) with respect and dignity. Fair wages, good working conditions, and diversity in the workplace. When people are happy, they’re more productive. It’s a win-win.
Community engagement: This could be anything from sponsoring a local charity event to giving employees paid time off to volunteer. When companies invest in their local communities, it helps build a sense of trust and loyalty with both employees and customers. And honestly, it feels pretty good, too.
Which of these types of corporate social responsibility is your company already implementing? Are there any types your company isn’t implementing but you think it should?
Corporate social responsibility strategies: The secret sauce to success
Okay, so now that we know what CSR is, how do you make it work for your business? Turns out, a solid CSR strategy can actually boost your bottom line (yep, that’s right—CSR can make you money). But like any good strategy, you’ve got to put some thought into it. Here’s how:
Start with a clear vision: No one wants to support a company that seems unsure of itself. If you're going to champion sustainability, make it a key part of your brand DNA. Be authentic. Walk the walk. You can’t be a “green” company and then sell plastic straws on the side. People will notice.
Engage stakeholders: It's not just about throwing money at a cause. To create your environmental, social, governance or corporate social responsibility strategies, I encourage you to ask your employees, customers, and community what they care about. Engage them in the process. Show them you're listening—and that you're willing to make changes based on their feedback. This is how you ensure your strategies resonate. (More tips to truly engage your stakeholders over in another blog post I wrote.)
Think beyond the basics: Sure, it’s nice to donate to charity. But let’s take it up a notch. Give your workers a bonus for every sustainable idea they come up with or start a “Dollars for Doers” program where for every hour an employee volunteers, you give them a dollar to donate to the NGO of their choice. Bonus points for creativity!
Experiment. Harvard Business Review found that experimentation is the secret to an effective CSR program.
Measure your impact: If you don’t measure, did it even happen? Companies like Unilever and Microsoft have clear metrics to track the outcomes of their CSR efforts. Whether it’s reduced emissions, increased employee engagement, or more community involvement, keep track of how you're doing. And then shout about it! Your efforts deserve recognition. This is part of how Microsoft got recognized on the 100 Best Corporate Citizens list in 2023. (Global Reporting Initiative gives you standardized indicators you can report on´in your annual ESG or impact report)
Share your story!: Give yourself the chance to look good. Inspire others. Get credit for what you have done. One way to get this recognition and inspire others is by joining the UN Global Compact.
Purpose and profit: Yes, they can coexist
Here’s the big question: can a company really make money while being socially responsible? Absolutely. I saw this up close and personal during the years I coordinated Danone’s Ecosystem Fund in the Americas. In fact, purpose-driven companies tend to attract more loyal customers, have better employee retention, and even draw investors who are looking for sustainable, ethical businesses to support.
Let’s look at a few cool CSR and ESG examples:
Ben & Jerry’s: I don’t just love them because I am from Vermont. They’re also a textbook case of why corporate responsibility is important. From sourcing fair trade ingredients to supporting progressive causes, they’ve made purpose and profit work together brilliantly. Today, they are a beloved and profitable brand with a loyal following.
Microsoft: Microsoft is top among the ESG examples. Not only are they carbon neutral, but they are on track to become carbon negative by 2030 so that by 2050 they will have removed their historical carbon emissions (talk about leadership!) Plus, they’re big on social equity—supporting everything from local tech education programs to affordable housing.
Walmart: I know, I know, not a great reputation. But seeing it up close and personal, Walmart’s corporate social responsibility strategies encourage growth in underserved communities here in Mexico. Just before the pandemic I was part of a project where Walmart Foundation brought in TechnoServe to strengthen and organize smallholder farmers to sell to large buyers like Walmart.
The bottom line: It’s time to get responsible (and profitable)
CSR and ESG aren’t just a trend—it’s a movement and, in some places, a legal obligation. And businesses that embrace CSR and ESG don’t just make the world a better place; they often see a nice return on investment, too. From building customer loyalty to attracting top talent, the benefits are clear. Plus, we’ve got a lot of CSR and ESG examples these days to inspire you and your boss.
So, what are you waiting for?
If you want to get started or ramp up your CSR and social impact activities, here’s how your in-house team can get started.
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