The business case for corporate responsibility

It cannot be assumed that companies that adopt a responsible business conduct are automatically going to achieve economic success. However, as a necessary part of good management, corporate responsibility (CR) can contribute greatly to the profitability of a business.

Namely, responsible business conduct may help companies advance their management systems, improve their public image, place companies in a more favourable legal and political environment, and ultimately give them a strategic advantage over competitors in the long-term.

Favourable market forces, the increased demand of customers, and the capacity to anticipate government legislation, also provide additional incentives. If a company is able to take advantage of these new possibilities, it could improve its long-term profitability as well as obtain a greater share of world markets.

To provide some examples, here are some benefits of adopting CR principles according to a survey of several companies that developed and implemented their own business principles:

Legal and political benefits:

  • Sets a positive example by encouraging emulation and the spread of best business practice
  • Helps anticipate new external pressures from regulatory bodies
  • Improves relations with regulatory bodies and is helpful in relation to decisions on operating licences
  • Reduces exposure to litigation or criminal and civil sanctions
  • Contributes to development of economically efficient solutions, sometimes more so than those arrived at through regulation

Benefits relating to relations with customers, suppliers and the public:

  • Helps build customer attraction, satisfaction and loyalty, at a time when customers are increasingly exercising their right to choose
  • Reduces risks of negative publicity, boycotts and tarnished public image
  • Improves product image, brand name and reputation

Organizational benefits:

  • Increases morale, transparency, and trust among company personnel
  • Helps diffuse new technologies and best-management practices
  • Encourages better supervision of supply-chain management

Economic and financial benefits:

  • Reduces operating costs through systematic management of resources
  • Reduces cost of doing business and attracts new companies through rigorous business integrity policies
  • Increases productivity by means of a motivated workforce
  • Attracts a new range of investors
  • Offers opportunity for inclusion in socially-responsible investment indices

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