The Future of Corporate Social Responsibility

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Corporate Social Responsibilty

Profits Meet Social Progress

In 1970, Milton Friedman infamously said that the sole responsibility of businesses was to increase profits for stakeholders – that “the business of business is business” (NPR). Contradictory to Friedman’s claim, in recent times, it has become increasingly clear that social responsibility has an inextricable link to profits and corporations. As such, corporate mentality has shifted to put more resources towards charitable and socially progressive causes. While Friedman would have called this “pure, unadulterated Socialism”, the modern world is primed to embrace this, and Corporate Social Responsibility will undoubtedly continue its rapid rise to prominence in the capitalist landscape, primarily because, as it turns out, embracing CSR increases profits for corporations.

The Basics

Corporate Social Responsibility is a concept used in business where firms hold themselves accountable to all stakeholders, including the environment, and to advance social missions. It has risen to prominence in recent times as calls for social progress have exploded.

A Certified B Corp is a corporation that meets the standards outlined by the non-profit B Lab with a mission to use business as a force for social progress. Essentially, it is a certification that a business has a commitment to promoting CSR activities. B Lab administers a thorough investigation of a company using 200 different metrics, including corporate accountability, environmental impact, job creation, diversity and inclusion, and many more. Companies must meet a score of at least 80 on the B Impact Assessment and meet other legal criteria in order to become fully certified.

Key Drivers of Corporate Social Responsibility

Consumers – In the past, consumers simply bought whatever product was cheapest and best suited their purposes without considering the social or ethical standing of the manufacturers. Currently, we are in the midst of massive social upheaval, with people, namely Millennials, putting their money where their mouth is when it comes to consumer spending. According to Nielsen’s 2015 Global Corporate Sustainability Report, “66% of global consumers say they are willing to pay more for sustainable brands — up 55% from 2014”, and “73% of global Millennials are willing to pay extra for sustainable offerings — up from 50% in 2014”. (Georgetown).

These spending habits have translated to influence societal expectations, with a study by Horizon Media’s Finger on the Pulse revealing that “81 percent of Millennials expect companies to make a public commitment to good corporate citizenship” (Georgetown). Consumers, and Millennials, in particular, are encouraging responsible consumership, thereby signaling to companies that they expect socially responsible corporate practices. The power of youth has shifted corporate incentives towards practicing CSR to accommodate the new responsible consumership mindset.

Employees – Just as consumers take into account the social standing of businesses before making a purchase, employees are considering the social involvement of businesses when weighing work opportunities. According to recent research, “When [a] company advertised they were doing good, they saw the number of applicants increase by 25%”, which is an effect that could be alternatively achieved by “increasing the amount of pay they offered by about a third — from USD11 to almost USD15 an hour — to get an equivalent increase in the number of applicants” (NPR). This effect encourages companies to engage more in CSR since when they demonstrate interest and commitment in making a meaningful impact, they are able to increase profits since workers are willing to work for less.

Additionally, when firms engage in prosocial movements, there is a reported 13% increase in worker productivity and up to a 50% decrease in employee turnover rate. When firms and employees unite in support of CSR, all stakeholders benefit.

Investors – Investors have noticed the unique strength of socially responsible businesses and have adjusted accordingly. From 2012 to 2014, there was a remarkable 61% increase in the amount of money used in socially responsible investing (SRI) assets (ResearchGate). As with other drivers of Corporate Social Responsibility, Millennials are at the heart of this movement, with 52% of Millennials “often or always” investing in SRI funds, in comparison to 40% of Gen X and 31% of Baby Boomers.

Constraints of Corporate Social Responsibility

Skepticism – Good Corporate Social Responsibility is beneficial to corporations from a practical standpoint. It can serve as a tool to increase profits; thus, some companies may engage in CSR for purely selfish reasons and not because they have a genuine interest in advancing charitable missions. While research has shown the positive effects of firms engaging in CSR, studies have also demonstrated that if employees suspect that their companies are “using CSR initiatives instrumentally”, meaning to pursue their self-interest, then the aforementioned positive effects are negated (HBR). Put simply, even if companies are engaging in CSR, their employees nevertheless care about why they are doing so – for selfish reasons or if they genuinely want to support social causes.

Overcoming Challenges to CSR

Research has shown that employees and consumers alike believe in the good intentions of companies only when they “see management making a decision that sacrifices short-term profitability for the sake of adhering to those values” (HBR 2). For example, when CVS stopped the sale and distribution of tobacco products, a source of $2 billion in revenue, it was clear that this was a move aimed at delineating CVS’s corporate values – to promote physical health and not to pursue profit at the expense of defiling that mission.

COVID-19 and CSR

For many trends, the pandemic has been more of an accelerant than a structural transformer. The consumer mindset for Corporate Social Responsibility is no exception to this rule; before COVID, consumer awareness of CSR activities was steadily increasing. That growth has since quickened as consumers and employees eagerly awaited to see how companies responded to the pandemic. Governments could only do so much to deal with the pandemic – people were reliant on corporate responses to help them as well.

The companies that gained the most from the pandemic, which tended to be large corporations like Netflix, Cisco Systems, Facebook, and numerous others, could further bolster their image by creating relief funds (Forbes 1). Other charitable corporate responses include Beyond Meat donating over 1 million burgers to hospitals and food banks. At the same time, Bacardi reallocated its alcohol towards the production of hand sanitizer, and HBO released some of its content for free to incentivize people to stay at home (USA Today). The variety of responses to COVID is encouraging. It is difficult to discern whether some of these companies are sacrificing short-term profitability in favor of long-term brand-building and customer loyalty.

Corporate Social Responsibility : By the Numbers

  • In 2019, the number of B Corps swelled by 25% as businesses including the American shoe brand TOMs and the Guardian Media Group, owner of the British newspaper, became certified
  • 92% of the largest American companies produced a CSR report in 2015 (HBR), up from 64% having such a report in 2005
  • In 2018 alone, Fortune Global 500 firms spent around $20 billion on CSR activities
  • There are currently over 3,500 Certified B Corporations in more than 70 countries
  • The average growth rate of a B Corp is 49%, compared to a 15% rate for similar companies
  • 75% of B Corps scored a 9 or 10 on brand rank, whereas the average brand rank across all consumer companies is a 5
  • During the last financial crisis, B Corps were 63% more likely to survive than similarly sized companies
  • 99% of B Corps recommend other companies also get certified

Key Takeaways

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Corporate Social Responsibility
  • CSR is not just good for society – it is practically beneficial to businesses as well. Consumers are willing to spend more to support companies engaged in CSR. Employees are more likely to take a lower salary when working for a socially progressive company, and investors are more likely to invest in socially responsible businesses.
  • COVID-19 highlighted the importance and rise of CSR. The government was not able to single-handedly tackle this multi-dimensional problem; businesses played a massive part in helping the economy restabilize.
  • The growth of CSR is inevitable. Soon it will not be a way for businesses to distinguish themselves but a requirement for all companies.

Why CSR Matters

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CSR

Despite whatever selfish or ulterior motives businesses may harbor when participating in CSR, one thing remains clear: everyone is better off when companies engage in CSR. Consumer and employee sentiments are driving corporations to practice good CSR, a trend that is in further acceleration by the ongoing pandemic. In the near future, I expect to see B Corps sprouting into existence at an unprecedented pace as the pursuit of profits alongside social good becomes a mainstream objective.

I predict that as the world grows more polarized and politicized, people and corporations alike will have to participate in prosocial movements reflective of their values. Corporate responsibility and social responsibility will soon become one and the same.

To view the Youth Summit- America’s Chapter click here.

Works Cited

  1. Bertrand, Marianna, et al. Tax-Exempt Lobbying. University of Chicago, University of Chicago, 2 Jan. 2018.
  2. Chase, Lisa, et al. The Truth About CSR. Harvard Business Review, 9 Mar. 2015.
  3. Global Perspectives on Sustainable Investing. Schroder’s, Schroder’s, 2017.
  4. Hoepner, A. and Pei-Shan Yu. Corporate Social Responsibility Across Industries: When Can Who Do Well by Doing Good? Capital Markets: Market Efficiency (2010): n. pag.
  5. Kramer, Mark. “Coronavirus Is Putting Corporate Social Responsibility to the Test.” Harvard Business Review, 1 Feb. 2021.
  6. Meier, Stephan, and Lea Cassar. “Stop Talking About How CSR Helps Your Bottom Line.” Harvard Business Review, 31 Jan. 2018.
  7. Neil, Shane. “The Surprising Competitive Advantage of the B Corp.” HuffPost, HuffPost, 7 Dec. 2017.
  8. Rosalsky, Greg. “Does It Pay For Companies To Do Good?” NPR, NPR, 17 Sept. 2019,
  9. Shearman, Sarah. “Purpose over Profit: Are B-Corps the Future of Sustainable Business?” Reuters, Thomson Reuters, 26 Feb. 2020.
  10. Study Reveals Companies Engaged in CSR Can Reduce Staff Turnover Rates by 50%. Satell Institute, 6 Sept. 2018,
  11. van Doorn, Jenny, et al. The Impact of Corporate Social Responsibility on Customer Attitudes and Retention—the Moderating Role of Brand Success Indicators. ResearchGate, Nov. 2017,
  12. What’s the Difference between a Certified B Corp and a Benefit Corporation?
  13. Zhang, Dongyong, et al. Drivers for Corporate Social Responsibility. ResearchGate, Nov. 2017,


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