Why bother with the correlation between CSR and financial performance…?

August 3, 2012 EcoVadis

…because there is one!

The link between CSR and financial performance has been an issue at the core of its acceptance by the business world. Why do something if it will damage the bottom line? Even if it is responsible, sustainable and ethical? Well, there doesn’t have to be a compromise, you can feel good about doing good, as well as keeping the balance sheet happy.

Many of the relatively straightforward cost benefits from CSR can be seen on the environmental side. These can be initiatives such as energy saving and recycling, which among others activities saved Asda £70million in 2010. It’s only logical that saving energy or re-using a waste product will save money in production.

But CSR does not only mean cost cutting, and it does not only see direct benefits on the bottom line. Treating employees better through improved working conditions, greater health and safety and flexibility for family life is often rewarded by lower turnover, better morale and higher productivity, as DEG KFW Bankengruppe reports on India’s yarn manufacturer Indo-Rama Synthetics (p.16).

CSR or “going green” is also appealing to more and more consumers. Research has gone into finding out how much CSR has an impact on brand value (13 cents out of every USD dollar if you’re interested). Engagement such as by Starbucks on their sustainability “ideas” webpage for customers, and initiatives to make sustainability choices easy for the customer (such as washing machine brands and the “turn to 30°” campaign) really do make a difference to brand value and perception and to generating better relationships with customers.

Harvard Business School have identified brand value and innovation as major benefits of sustainability in their study, The Impact of a Corporate Culture of Sustainability on Corporate Behaviour and Performance. Innovation is one of the greatest leverages to have in this economy (being a leader not a laggard) and it can and should be utilised wherever it can be found. In a recent survey by EcoVadis and HEC, 43% of respondents claim that supplier innovation is the main factor driving Sustainable Procurement. Sustainable procurement is about sustainability, but it is also about opportunity; opportunity which can ultimately contribute to your bottom line through knowing your supply chain better, and identifying and nurturing innovation within it.

The possibilities of CSR and sustainable procurement can facilitate us to create better business, helping all stakeholders along the way.


Article written by EcoVadis CSR Analyst Maria Mursell. You can follow her on twitter @MariaGMursell
Photo from Wikimedia Commons under public domain

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