CSR is a win-win for brands and consumers

Businesses and consumers share the cost burden of companies becoming more socially responsible, but they also share the 'warm glow' of reward when it goes well, according to new research.

Economists at the University of Portsmouth and colleagues in Greece conducted a study to find out why corporate social responsibility (CSR) programs were becoming more prevalent and who was benefiting from these initiatives.

Portsmouth Business School researcher Dr Evangelos Mitrokosta said: “CSR is a way for a business to say they are ‘doing well by doing good’. It has becoming increasingly common for firms to account for the social and environmental consequences of their operation and many make considerable efforts to become, or at least to appear as, socially responsible.

“At the same time, consumers and stakeholders see the social and environmental ‘consciousness’ behind products, services and technologies as improvements in quality and so they are prepared to pay more for them.”

Just for show?

Social responsibility is increasingly receiving attention from business, consumers, academics and policymakers. The research found that businesses dipping a toe into socially responsible activity commonly begin by hiring a manager with a track record in CSR. This signals to consumers that the firm is serious about social responsibility. 

Counterintuitively, as consumers become more socially conscious, businesses are less likely to hire dedicated CSR managers. This doesn’t necessarily lead to a drop-off in socially responsible activity because managers are likely to increase their CSR spending regardless.

Dr Mitrokostas said: “Is this strategy by firms adding value to the economy overall? The answer is yes. We found that competition between firms on CSR activities improves both the firms’ and the consumers’ welfare, provided some consumers are socially responsible.

The study pointed to government education campaigns as a reason for increasing consumer CSR awareness.

A new global index released last week seems to reinforce Dr Mitrokostas’ findings, revealing that carbon-conscious companies are more profitable than their more polluting rivals.

View the University of Portsmouth study paper here.

Brad Allen

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