CSR “links sustainability and corporate strategy”1 as it encompasses businesses’ contributions to the community “through various environmental and social measures”.2 These programs are different for every company – some CSR-compliant companies maintain the minimum measures required for company operations by local or national levels of government, while other companies elect CSR initiatives to further their mission.2 Examples of CSR efforts include carbon neutrality, fair labor and trade policies, donations, volunteering, and diversity and inclusion policies.
Unlike Economic Social Governance (ESG),* CSR initiatives are not measured by quantifiable data; CSR serves a different purpose.3 True CSR is concerned with building an internal culture where employees are supported in doing social good.4 This internal structure is implanted through company values that repeat the sustainable and ethical mission of the brand across employee material.5 As employees become accustomed to supporting and implementing various ethics, they associate the programs with the brand’s mission, which becomes more important to them personally.4
When companies lead with their ethical and sustainable policies from a culture that believes in the mission, they create authenticity.6 To maintain this invaluable currency, brands must ensure every channel is communicating the same mission, explaining how the brand relies on sustainable methods to ensure ethical products worthy of consumers loyalty.6 For some brands, earning authenticity has positioned them to make public statements about social issues, including gender and racial equality – a posture consumers have grown to expect from authentically rooted brands.3
Sustainable leadership is particularly desirable to young Millennials and Gen Z who believe that brands are responsible for leading sustainable and ethical initiatives to protect people and the planet.3 Today, consumers look for brands to “do good on their behalf” through “morally better products or services for them to buy or redirecting profits to charitable causes.”6
*Learn more about ESG here
CSR drives brand formation and positioning and the feeling of authenticity due to the ingrained beliefs of each employee, but ESG is also needed to support CSR missions as partners and investors require ESG quantitative data to rationalize their support when evaluating a company.4 It “helps measure or quantify the social efforts”4 partners need to compare with market trends and news to inform their choices.7
CSR shows investors that the business is “accountable for their social commitments in a qualitative manner.”4 It also allows companies to remain realistic with their missions by setting attainable goals instead of initiatives to change the trajectory of the planet.3 For example, striving for carbon neutrality instead of reduction, is a goal that consumers view as more realistic, and consequently, authentic.3 The combined efforts of ESG and CSR have business leaders agreeing that “sustainability should be on the agenda” and that companies should work together to create an impact.3
ESG and CSR tactics also earn consumers’ trust by threading “authenticity and commitment to quality and care” throughout the brand6 proving that they care about “the greater good and not only greater profit.”2 When their trust is earned, consumers are “willing to pay a little extra” for brands and products “whose makers openly and authentically share their concern for consumers as well as the bottom line.”6
In addition to premium pricing, brands can also benefit from CSR efforts through consumer engagement.8 Consumers are not only more likely to engage with sustainable content, but are also more likely to share it with their followers due to their own loyalty and investment in the brand.8 A 2019 Business Wire survey found that consumers are 2.4 times more likely to trust user-generated content (UGC) than brand content.9**
Social media users’ engagement also impacts what topics are highlighted in the news, and when consumers see their interests resurfacing, it affirms their sense of importance around the topic.10 11 For retailers, it is critical to follow consumer trends to meet their demand.12 A 2022 study by the Institute for Business Value found that 44% of consumers are looking for brands that align with their values,12 making sustainability “a business threat” for companies that fall behind.1
**The number has likely increased since 2019.