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.
 

Moreover, favourable market forces, the increased demand of customers, and the capacity to anticipate government legislation, all provide further 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. 
• Induces a 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 through a motivated workforce. 
• Attracts a new range of investors. 
• Offers opportunity for inclusion in socially-responsible investment indices.