Why Companies Can No Longer Afford To Ignore Their Social Responsibilities

According to data released this month by Net Impact, the nonprofit that aims to help businesses promote sustainability, 65% of MBAs surveyed say they want to make a social or environmental difference through their jobs.

These days, corporate motivation seems almost beside the point because of the significant business risks to ignoring CSR. Consumers and other companies are likely to shun firms that develop unethical reputations. And arguably, companies that don’t pay attention to their ethical responsibilities are more likely to stumble into legal troubles, such as mass corruption or accounting fraud scandals.

Quite simply, companies care about CSR because their customers do. Consumers, by and large, are a self-motivated and self-interested lot. But numerous studies indicate that a company’s CSR policies increasingly factor into their decisions. For example, a survey by Landor Associates, the branding company, found that 77% of consumers say it is important for companies to be socially responsible. “There’s a heightened awareness of the need to be, and to be seen as, a good corporate citizen,” says Robert Grosshandler, CEO of iGive.com, which helps consumers direct a percentage of their online purchases to support charities.

CSR is also a way to attract and retain talent. According to a Deloitte survey conducted last year, 70% of young Millennials, those ages 18 to 26, say a company’s commitment to the community has an influence on their decision to work there.

Other companies are taking a slightly different approach: viewing CSR as a cost-saver.