This article first appeared on GenFKD.org
The age of companies showing a genuine interest in doing good and embracing corporate social responsibility has changed the world of commerce. Traditionally, a business’s only responsibility was the bottom line: turning a profit for their shareholders or investors. Now, many companies are putting their mission of doing social good on full display.
Young people have different consumer tastes, and that’s altering the way companies do business in the 21st century. In sum, millennials want to consume goods and services from companies who care about the world around them. As a result, corporate norms are evolving to satisfy these changing consumer demands.
“What we’re seeing is because millennials want to work for and buy from companies that are doing the right thing, or companies that have purpose,” said Susan McPherson, a corporate social responsibility expert. “While companies have a fiduciary responsibility to their shareholders, treating your employees, customers, investors, and the environment with respect is important as well.”
Corporate social responsibility is about “being the best business you can be,” by taking society-wide issues like environmental conservation into account. In an increasingly interconnected world, if a company is doing things like exploiting labor or harming the environment, it’s hard to keep that a secret from their consumer base.
“Because of transparency and social media, companies are realizing that being better stewards of the environment, being more philanthropic, and being more open and transparent will actually improve their bottom line,” McPherson said.
Susan McPherson and GenFKD’s David Grasso
On it’s face, it might sound counter-intuitive that companies would voluntarily decide to embrace corporate social responsibility. Inevitably, doing the right thing can often increase the cost of doing business. In practice, that means ensuring that you’re paying your employees a living wage and limiting the environmental footprint of your production process. McPherson says there’s clearly a reason that companies have moved toward being good corporate citizens.
“I unfortunately believe that they care because it’s the profitable thing to do and it benefits the bottom line,” McPherson said.
Social responsibility is not necessary profitable as a stand-alone activity. Responsible corporate citizenship helps companies in the big picture. Studies point to improvements in the “long-term health of companies” of companies that practice corporate social responsibility.
Socially responsible activities on their own typically don’t show a return on investment. Nevertheless, they help bolster a company’s image and reputation, which can help it stand out in a competitive marketplace.
The game has changed for big business, as reputation can be easily tarnished in a blink of an eye with non-stop news coverage and share-happy social media. Corporate social responsibility is, if anything, about protecting the image companies want to have as ethical organizations that deliver products to their customers without harming people or the natural environment.
Often, we view making money and doing the right thing as trade-offs. The mass adaptation of business standards that promote corporate social responsibility demonstrate that doing the right thing can be a win-win for everyone.
GenFKD is equipping millennials with the skills and education necessary to create and lead the “new economy.” To learn more, head over to GenFKD.org.
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David is the Editor of Bold. He's especially passionate about millennial economic empowerment. A former local news reporter, David is originally from the Little Havana area in Miami, and later became a pioneer resident of the Disney-inspired town of Celebration, Florida. David holds a Master’s in Public Policy from the Harvard Kennedy School.