Today’s consumer is socially conscious, and this awareness influences their purchasing decision. Find out how to profit and be responsible.
Can you be both socially responsible and make money while doing so? The short answer is yes, and we’ll show you how to amplify both.
But first, let’s explain why social responsibility isn’t straightforward. Corporate social responsibility (CSR) is defined as “assessing and taking responsibility for the company’s effects on the environment and impact on social welfare…[and] can involve incurring short-term costs that do not provide an immediate financial benefit to the company. But instead promote positive social and environmental change.”
In short, CSR is all about compensating for its effect on the environment and community. And it can exist in an array of initiatives- from reducing the company’s carbon footprint with clean energy solutions to being proactive about labor laws and benefits, or donating to local or global charities.
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Ben and Jerry’s, celebrated for their really delicious ice cream, have made corporate responsibility the center of their overall business strategy. They serve nothing but fair trade, GMO-free ingredients and were the first to offer same-sex employees equal benefits. They also developed a dairy farm sustainability program in their home state of Vermont.
This is just one example. Businesses of all shapes, sizes, and locations are adopting socially responsible policies, and for good reason. Today’s consumer is socially conscious, and this awareness directly influences their purchasing decision. And if you’re not doing anything to achieve responsible business practices, your customers won’t buy from you.
In a new study by Nielsen, “55% of global online consumers across 60 countries say they’re willing to pay more for products or services from companies that are committed to positive and social environmental impact.”
Moreover, two-thirds of eco-friendly consumers will choose products from sustainable sources over other products and will be more likely to buy products repeatedly if they know the company is positively impacting the environment. Consumers are passionate about social purpose, and companies are altering their businesses as a result.
But for a small business owner, the aforementioned definition can be discomforting; Mostly the part about “incurring short-term costs” that don’t have “immediate financial benefit to the company.” CSR seems attainable for bigger budgeted businesses. But for those who are cash-strapped, investing a small percentage of profits could be felt company wide. Is it possible for a small business to be socially responsible while maintaining a healthy profit margin?
Absolutely. You can contribute ecologically without suffering economically. In fact, they can even help you save money. For example, after General Mills installed energy monitoring systems to reduce energy usage, they saved $600,000.
For those of you on a smaller financial plan: replace old machinery with energy efficient appliances, use local suppliers, plan fuel-efficient fleet routes with GPS tracking software, and recycling waste. Reducing costs (and your carbon footprint) will boost profit margins.
Secondly, view innovation “through the lens of sustainability.” According to Uniliever’s Global VP of HR, this means create new products or services with sustainability as its core function. The company recently created a new line of hair conditioner that uses less water, allowing consumers go green and conserve water. Small to medium-sized businesses can aim to please the socially conscious consumer by thinking sustainably from the get-go.
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And for those that are already making CSR headway, make sure you’re communicating these efforts with customers. Like we said, consumers shop socially and earth-consciously. And they check the packaging before purchasing.
The same Nielson study also found products with sustainability claims on the packaging showed an average two percent increase in annual sales. Companies who promoted sustainability initiatives through marketing programs saw a five percent boost.
Small businesses need not be overwhelmed by CSR and its deferred financial return. Begin thinking long-term. If consumers invest in companies that care, they’ll shop with you repeatedly. CSR may not boost next quarter’s financials, but it might produce a sustainable ROI.