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CSR Practices Can Lead to Increased Profits, Two New Reports Find

Not only are more companies taking CSR practices seriously and implementing them across operations, those companies are more likely to see their value grow, according to two reports released yesterday from IBM and and the Economist Intelligence Unit.

The Economist Intelligence Unit's report, "Doing good: Business and the sustainability challenge" [PDF], surveyed 1,254 senior business executives to find out how, if at all, stock performance correlates to CSR performance.

Although the report's authors are quick to point out that the findings do not show a cause-and-effect relationship between sustainability practices and increased value, the companies surveyed that showed 50 percent or greater growth in stock price over the last three years were also more likely to devote resources to their CSR activities than companies whose stock price dropped by 10 percent or more in the same time frame.

The study found more high-growth companies ranked social and environmental goals as high priorities than did of those companies whose stocks declined in value. Among the practices cited were improving the environmental and human-rights performance of supply chains (40 percent vs. 18 percent), reducing greenhouse gases (38 percent vs. 24 percent), and developing innovative products and services that address social and environmental problems (49 percent to 35 percent).

Another study released yesterday, IBM's "Attaining Sustainable Growth Through Corporate Social Responsibility," surveyed 250 business leaders and found that 68 percent of them are currently engaged in CSR practices, and shows that they can be potentially revenue-enhancing operations. The report contains a "growth curve" that shows the progress a company makes in its CSR implementation, beginning with merely meeting legal requirements, progressing to cost savings from higher efficiency in operations, and resulting in the opening of new markets or product innovations as a result of CSR practices.

Although it is quickly dawning on IBM's respondents that CSR can be a positive force in any company, very few of those respondents are taking them fully to heart: only 16 percent said they fully "engage and collaborate with customers" about CSR activities.

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