The Role of Social Responsibility in Modern Start-Ups

September 11, 2024

Emily Cogburn

The Role of Social Responsibility in Modern Start-Ups

The impact of corporate social responsibility on brand reputations

cartoon 3 people holding plants with CSR in the background

What is corporate social responsibility?

Corporate social responsibility (CSR) can take many different forms, depending on the mission of the company and the type of impact it wishes to have. Some companies focus on sustainable business practices that improve the environmental impact of their products and services. Another way to make a difference is for companies to extend philanthropic initiatives or, relatedly, to engage in and assist with local community projects. Improving the lives of employees through wellness programs and other benefits is also socially responsible. Small or large, any company can have some kind of social impact.

What are the benefits for businesses in considering social responsibility?

Companies are discovering that not only can they easily incorporate social responsibility into their business plans, but by doing so, they are able to improve their businesses as well as the community.

How? First, a company with a good reputation for social responsibility can attract more consumers and investors. A majority of Americans report that their purchase and investment decisions are influenced by corporate social responsibility. According to Harvard Business School, 70 percent of Americans think it is “somewhat” or “very” important for companies to make the world a better place. Seventy-three percent of investors say they consider efforts to improve society in their decisions to invest and 77 percent of consumers report being influenced to buy based on companies’ social responsibility policies.

Corporate social responsibility is especially helpful for attracting younger consumers and investors. Harvard Business School reports that 41 percent of Millennials say they put significant effort into researching companies’ social responsibility policies compared to 27 percent of Gen X and 16 percent of Baby Boomers. On the flip side, 25 percent of investors and 22 percent of consumers report a personal zero tolerance policy for companies that engage in questionable business practices.

According to Forbes, good corporate social responsibility can even help companies attract quality employees. Workers want to apply to businesses that are committed to improving the world because they value social change, and they also perceive that companies concerned about the state of the community will treat their employees better.

Younger employees seem overall more concerned about companies’ CSR than older workers. A study by Cone Communications found that 64 percent of Millennials won’t accept a job in a company without strong social responsibility and 83 percent will be more loyal to a business that helps improve the world. Millennials will even choose to work at companies that pay less if they see the business as environmentally responsible.

Gen Z, which will make up 30 percent of the workforce in just four years, Forbes reports, read companies’ value statements before applying for jobs, prioritizing businesses that care about the same issues they do. These workers will call out companies for ignoring their own value statements and quit if they think a company they work for is engaging in negative behavior.

CSR can improve workers’ positive identification with a company after they are hired as well. Employees are more loyal to a company they perceive as having positive social impacts, according to a study published by the National Library of Medicine in 2023. In that study, job satisfaction was found to be tied to quality corporate social responsibility programs in large and medium sized organizations in Pakistan. CSR can also improve employee retention. Purpose-driven companies have 40 percent high rates of retention, according to Deloitte Insights.

Another profitable avenue for corporate social responsibility is improving internal policies, which can lead to recruiting, retaining, and maximizing the effectiveness of high quality employees. According to Gallup, nearly six in ten employees are quiet quitting, or mentally disengaging from their jobs. When Gallup asked what employers could do to improve their workplaces, 85 percent of responders cited culture, pay, and wellbeing as the most important factors. Employees value opportunities to learn, fair treatment, clearer goals, and better managers.

How can businesses implement social responsibility in the best way?

Hone in on the company’s values: The first step for a successful CSR plan is to create a value statement for the company and make sure any initiatives align with the statement. CSR plans that don’t fit with a company’s overall mission can diminish perceptions of authenticity and negate positive impact on a business’s reputation.
Keep everyone informed: Stakeholders should always know about CSR goals and developments. Communication and transparency are essential for a successful CSR initiative. Along the same lines, the company should be sure that stakeholders know about positive impact of the CSR implementation.
Stay consistent and impactful: When choosing CSR plans to pursue, a company should consider its value statement and the kind of impact that will be most valuable to the community, the company, and stakeholders. Partnerships with government and non-government organizations can aid in credibility for the initiatives as well as maximizing impact. Collaborations can also increase visibility for the project.
Think local: Supporting local communities can be especially beneficial for small businesses since consumers will be able to see a direct impact. Foot traffic might directly result from people in the community observing that the company is helping a cause they are involved in or which benefits them.

Some standout examples of CSR include Raising Canes’ visible presence in local communities through sponsorships of dog parks and sports teams, Coca-Cola’s 5by20 programs to assist women entrepreneurs around the world, and Visa Inc.’s financial inclusion initiative to provide digital cash to impoverished places in the world.

As these examples show, CSR isn’t one size fits all. Different companies can and should have different and flexible CSR missions. While consistency is important, companies should be prepared to adapt as the social and environmental landscape changes. Sticking to an old initiative when it has run its course won’t be a plus for the company.

Finding how to implement CSR in your business will involve understanding your company and your consumers. The right program will have great impact for the company, the employees, and the community.