CSR or Corporate Social Responsibility is when companies create programs or initiatives that are designed to help/give back to the community in a meaningful way. A good example is the Ronald McDonald House which works, “ to keep families together & comfortable while battling illness.” Lawyer, Robert Johnson, says Ronald McDonald House, “serves plenty of purposes such as providing child care services, travel and financial resources, and providing homes for families, keeping them together.” McDonalds also works to be environmentally sound, invest in sustainable packaging, and evaluate the health of the animals used in products. This helps McDonalds by giving consumers a more positive image of the company. Some companies engage in CSR expecting to benefit from it through tax write offs/exemptions.
Engaging in CSR can come with a lot of benefits, as well as disadvantages. Lamar Leverett, the midwest franchisee selector for Chick-fil-A, says “A lot of the benefits for us are external, and we see a lot of growth within the communities that we help.” Non-profit social enterprises will have limited liabilities and be eligible for tax exemptions which is many companies' main goal when they create a CSR program. In addition, CSR is beneficial for a company's investor relations and company valuation. A study by the Boston Consulting Group states that companies heavily engaged in social and environmental matters are valued at 11% higher than their competitors. (Walter, Knizek, Koeller, O’Brien, Millman Hardin, Young, Orimo, and Cordes, 2020) Engaging in CSR also fosters collaboration. For example, Chick-fil-A partnered with Arthur Blank to donate millions to the westside of Atlanta for community development. There are some disadvantages, though. For-profit social enterprises may be taxed at a higher rate than non-profits, and they also may miss out on a good portion of profit by investing in these CSR programs. Still CSR activities are growing in popularity. About 90% of companies on the S&P 500 index published a CSR report in 2019, a significant jump from 20% of companies in 2011 (Webinar Care CSR Statistics, 2022). Many companies are gradually getting involved in CSR and according to a Cone Communications Study in 2017, 78% of consumers reported that they want companies to be involved in social issues.
CSR is a great way to build partnerships, and attract customers and employers through their good image. With the above examples and their successes, companies that aren’t engaged in CSR should take note and follow their lead.
Sources:
Fernando, Jason. “Corporate Social Responsibility (CSR) Explained with Examples.” Investopedia, Investopedia, 3 Nov. 2022, https://www.investopedia.com/terms/c/corp-social-responsibility.asp.
“Socially Responsible Companies Pay Lower Taxes.” CFO, 1 Nov. 2021, https://www.cfo.com/accounting-tax/2015/12/socially-responsible-companies-pay-lower-taxes-csr/.
“The Costs and Benefits of CSR: Purpose Drives Profit.” Impactree.com, 19 Oct. 2021, https://www.impactree.com/blog/benefits-of-csr/.
Interviewees:
Robert Johnson
Lamar Leverett