Anyone who has turned on the television in recent years will recognize this scene: a company with a questionable track record launches some flashy initiative spotlighting the rescue of polar bears or donating a pair of shoes for every $200 pair sold. Welcome to the world of Corporate Social Responsibility (CSR), in which companies pledge to save the rainforest, fight social injustice, and still manage to make one feel good about downing an extra pint of Ben & Jerry’s. This is how it’s theoretically argued: by behaving ethically, a company can gain consumer love and, as a result, a larger market share. But – leaving aside whether various CSR activities actually help the planet or society – does CSR improve sales, or is it just an expensive way of appeasing the consciences of chief executives?
Corporate social responsibility once meant donating a wing to the local hospital or sponsoring a Little League baseball team. Now, CSR is a fully mature industry, and businesses say they are embedding sustainability, social justice, and community impact directly into strategy.
Vermont-based ice cream manufacturer Ben & Jerry’s, for instance, has long sought to include social activism as an integral part of its brand identity. From pursuing causes like climate change to fighting for racial equality, this company has positioned itself as the moral compass of the dessert world. Similarly, Google promised to use only carbon-free energy by 2030. Bombas, the company turning socks into a social movement, uses a one-for-one model in which for every pair of socks purchased, the company donates another pair to someone in need. Is it marketing genius? You bet. Is it working? Oh, absolutely.
The optimistic case for CSR is simple: in a world where consumers care more about the values of a company than at any time in history, being a good corporate citizen can help a brand rise above the competition.
The numbers don’t lie: 70% of consumers pay more for products from “trusted” brands that commit to sustainability, according to a recent McKinsey report. But what’s behind this trust? It’s the emotional connection, a feeling that the purchase isn’t just about socks or ice cream but about contributing to something bigger. Trust often creates loyalty among consumers who generally show up as repeat buyers, in addition to providing an increase in word-of-mouth advertising. A Nielsen survey found that 66% of consumers globally would pay extra for products or services from sustainable brands. For millennials, that number goes up to 73%. This, of course, is great news for Patagonia. Its “Don’t Buy This Jacket” campaign urged consumers to actually consume less and, perversely, boosted sales by 30%. It would appear that reverse psychology can be an effective sales tactic. Ben & Jerry’s knows this trick as well. The company’s 2015 “Save Our Swirled” campaign was targeted to help combat climate change. Sure, it was just “goodwill,” but the company incidentally had $1.232 billion in global sales that year. After all, what’s better than ice cream to fight global warming?
CSR not only appeals to customers, but it can also improve employee satisfaction. Deloitte estimated that companies with strong CSR programs show a 13% higher morale among employees. Why? Employees apparently are inspired to work at a company that is not perceived as evil. Eighty-six percent of employees that view their company as socially responsible are more engaged at work, leading to better productivity and better customer service. Happy employees produce happy customers and add to brand loyalty, which again translates into more sales.
Still, while some brands are decidedly thriving under the CSR banner, others are finding out the hard way that doing good doesn’t always help a business do well. In fact, when CSR goes awry, it sometimes does more harm than good.
Survey research reveals that 45% of consumers are still skeptical of CSR claims. Even worse, a perception of “greenwashing” (companies exaggerating or fabricating environmental efforts) is an increasingly serious risk. Companies that make big promises, yet fail to deliver measurable results, alienate their consumers. For example, BP Oil Company faced harsh criticism after its 2010 oil spill in the Gulf of Mexico – the largest marine oil spill in U.S. history – on the heels of a decade of promoting its $200 million, environmentally-friendly “Beyond Petroleum” campaign. The result? Calls for boycott and many wasted advertising dollars. Nothing kills CSR faster than perceived inauthenticity. Pepsi framed its 2017 ad featuring Kendall Jenner as support for the Black Lives Matter Movement. In reality, the ad had internet users mocking Pepsi in unison, and it took nine months to recover from the fallout. Consumers appear to have spoken: in addressing serious global issues, one shouldn’t be using a can of soda. TOMS Shoes, once considered a CSR pioneer, became another victim of fake authenticity, or at least CSR fatigue. Its one-for-one model was revolutionary at first, but as competitors began to employ similar strategies, and as consumers started to become more skeptical of its actual impact, the glow began to wear off. Sales leveled off, and the company struggled to keep up.
The evidence shows that CSR can, but does not always, help a business drive growth. Done well, CSR can make a brand distinctive, draw loyal customers, and even help with sales. And even better, a CSR program done well may actually do some good. However, CSR done wrong and perceived as fake-it ends in spectacularly negative fashion.
What differentiates the hits from the misses when it comes to CSR? One word: authenticity. Great CSR campaigns reflect the core of the corporation’s mission and resonate with their target audience. For example, consumers believe Ben & Jerry’s doesn’t add activism, Ben & Jerry’s is activism. They sell ice cream to save the world and maintain a fierce commitment to this mission, and consumers appear to have bought into the company’s message. Similarly, Patagonia’s environmental advocacy rings true because it has hard-wired continuity in its brand character for decades. On the other hand, companies like TOMS Shoes and Pepsi exemplify how shallow or poorly executed CSR campaigns can go awry. The minute a campaign starts to smell like a thinly veiled marketing gimmick, customers don’t hold back from trashing it publicly.
For companies considering CSR, the special sauce has little to do with doing good, but all to do with how it’s done. That means aligning initiatives with core values, being transparent about results, and resisting the temptation to overpromise. Surveys reveal that consumers don’t want just to buy a product, they also want to buy a story. And consumers need to believe that story.
And if your story happens to involve saving polar bears and selling more ice cream? Well, that’s just good business.
