Stop Talking About How CSR Helps Your Bottom Line

Friday, February 2, 2018

Companies are starting to care more about corporate social responsibility (CSR). Among the largest 250 companies in the world, 92% produced a CSR report in 2015, informing shareholders and the public about the firm’s activities. That’s up from 64% having such a report in 2005. Today, Fortune Global 500 firms spend around $20 billion a year on CSR activities.

Companies are also finding that CSR efforts — such as sustainability initiatives, corporate foundations, employee volunteer programs, and donations to charity — can be important tools for attracting and motivating employees. Research has shown that various forms of prosocial incentives (workers get rewarded not with money, but with the firm engaging in some act to benefit society) indeed increase productivity in simple and complex tasksincrease retention, and even lower employees’ wage demands.

It’s no surprise then that more firms might be investing in CSR. But our research shows that firms should not pursue CSR simply for benefits like greater productivity. We found that if employees think their company is using CSR initiatives instrumentally — trying to engage in prosocial activities only to benefit from it — then they’ll react negatively and put in less effort. In other words, while these initiatives will benefit society, they will backfire for companies if people think they’re being used for the wrong reasons.

Photo courtesy of Ministério do Desenvolvimento Social.

Source: Harvard Business Review (link opens in a new window)

corporate social responsibility