Interested in how to measure CSR? See this page for a guide to our coverage.
Back in the 90s, when CSR was confined to a few entrepreneurs and some former hippies like me, you could count on one hand the number of companies that actually profited while adhering to standards of social responsibility. Ben & Jerry’s and The Body Shop notwithstanding, few organizations that fully embraced the concept could brag about large profits. Back then, names we now easily recognize—like Tom’s of Maine, Odwalla, and Seventh Generation—struggled to balance their desire for social responsibility with the need for a healthy balance sheet.
Fast forward a decade or so and many of those brands are riding high. Coca-Cola bought Odwalla for $181 million, Seventh Generation was purchased by Unilever for around $700 million, Colgate bought Tom’s of Maine for $100 million, and of course L’Oréal purchased The Body Shop for $1.1 billion. All those millions speak loudly about the financial value of brands that prioritize people over profits.
Over the intervening years, thanks in part to Al Gore and a generation of ex-hippies who turned into consumers, shoppers have come to simply expect the companies they buy from to be socially responsible. According to the latest Cone CSR study, 70% of American consumers believe companies have an obligation to take action to improve issues that may not be relevant to their everyday business operations.
Even more telling is the increasing number of consumers who are more loyal, and more likely to trust companies that support social and environmental issues. Nearly nine out of ten consumers would switch to a brand that is associated with a good cause, given similar price and quality. That’s up from 66% in 1993.
The Cone report concludes, “CSR is now firmly entrenched among price, quality and convenience as a mainstay of consumer purchasing criteria.” Thus we see not just tangible value to doing CSR, but that there is significant risk to not doing it well.
Here are a few examples of companies who have seen significant financial gain from their CSR efforts. So you can see how they measure up to their competition, we’ve included charts comparing to their peers for stock prices, ESG, or B impact scores.
1. Greyston Bakery: Baking brownies to hire people.
Started by Zen Buddhist Bernie Glassman, Greyston Bakery is a $10 million for-profit bakery that decided a long time ago that it was in fact possible to make money by doing good. Its slogan is, “We don’t hire people to bake brownies, we bake brownies to hire people.” Greyston bakes some 6.5 million pounds of brownies annually and employees 176 individuals.
Grayston has an “open-hiring” policy, under which anyone who wants to work for the company is given the chance to work—no questions asked, no background checks, no prior experience or education required. If you show up and want to work, your name goes on the waiting list and when a position becomes available, the next person on the waiting list gets it.
Grayston’s unusual business strategy and hiring policy got the attention of Ben Cohen of Ben & Jerry’s back in 1987. Impressed by both the philosophy and the taste of the brownies, the ice cream maker signed a contract with Greyston and has been using its brownies in many of its most popular flavors ever since.
All Grayston profits go to the Greyston Foundation, which uses them on behalf of the local community. Greyston Foundation helps thousands of people each year through efforts in early childhood learning, workforce development, housing, and community gardens.
2. NEMO: “If it doesn’t provide a meaningfully better experience, we don’t make it.”
NEMO is an outdoor equipment manufacturer based in New Hampshire that probably wouldn’t exist if it weren’t for CSR. Its founder wondered why there were always so many old tents and pieces of camping gear in landfills. So he decided to make a different kind of outdoor product, one that was designed to be repaired, not thrown away. For example, eliminating polyester-based urethanes in its tents extends their usable life substantially. Of course, they offer lifetime guarantees.
All of which sounds lovely and idealistic, but remember who they’re marketing to: adventure-oriented people like themselves that are passionate about the outdoors. As a result of NEMO’s early commitment to social responsibility, the company has thrived, winning accolades and customers for its approach to design and manufacturing. Time and Popular Science both named NEMO’s first product one of the 100 best inventions of the year in 2005. Their products are preferred by Navy SEALs.
In terms of growth, their first sleeping bags sold out before they were even introduced. They’ve had to expand twice and are routinely named the best company to work for in New Hampshire. (And, just in case you were wondering, I’m not saying all this because I’m their VP of Marketing. Her name happens to also be Kate Paine, and she’s in a whole lot better shape than I am.)
3. Pepsi: Performance with purpose.
Upon taking the reins at PepsiCo, CEO Indra Noori decided that the key to sustainable long-term growth was leaving a positive imprint on society and the environment. Launched in 2006, the strategy was called Performance with Purpose and it is incorporated into every aspect of PepsiCo’s business. It drove the company’s acquisitions, including Naked Juice, Kevita beverages, and Stacy’s Pita Chips. PepsiCo invested in programs to shrink its environmental footprint, provide access to safe water, reduce packaging and CO2 emissions, and decrease sugars, sodium, and saturated fats in its products. All of which has resulted in it consistently out-performing its rivals, both in terms of stock price and ESG score. (PepsiCo is the blue line in the chart below, Coca Cola is red.)
4. Clorox: Good growth.
Clorox CEO Benno O. Dorer took a similar approach when he took the helm at Clorox, which is no longer “just the bleach company.” They now produce everything from organic personal care products to Kingsford Charcoal. Dorer’s focus is on “good growth,” i.e., growth that’s profitable, consistent, and achieved in a responsible way. Like PepsiCo, Clorox has invested in environmental sustainability in its operations and its products, adding Burt’s Bees and Brita to its portfolio. As a result, Dorer claims the top CEO spot on Glassdoor’s Highest Rated CEOs list. And like Pepsi, Clorox has consistently outperformed its rivals on stock price and ESG score. (In the chart below the dark blue line is Clorox, P&G is the pink line. )
5. Southwest Airlines
Southwest is a subscriber to the ‘triple bottom line” philosophy, measuring its success in terms of its financial performance, its people, and the planet. Its primary CSR focus has long been on the communities it serves. One of its key definitions of “employee engagement” is the percentage of its employees that volunteer or dedicate discretionary time to helping those in need in those communities. Additionally, it gives away tens of thousands of free tickets—worth nearly $20 million—to charitable organizations.
Southwest’s environmental initiatives are closely tied to reducing its carbon footprint by increasing the efficiency of its aircraft. If you’ve ever wondered why Southwest’s jet wings look different from those of other airlines it’s the “Scimitar Winglets,” a unique design that reduces fuel consumption by up to 5.5%.
Like our other examples, Southwest outperforms its rivals, both in stock price and ESG score. (In the chart below, Southwest is the dark blue line, Delta is in purple and American is in light blue.) It gets high marks for its company culture, consistently receiving a Glassdoor Employees Choice Award. And Southwest is number two on Indeed’s 2017 list of Best Places to Work.
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(Illustration at the top by Bill Paarlberg, thanks to Andrea Reiman and NeONBRAND on Unsplash for the images.)
