SOCIAL RESPONSIBILITY BLOG
Positive Return on Investment (ROI), with Social Responsibility paving the way
Marie Vander-Heiden (CBS) MA MBA BEd
Social responsibility (SR) and Corporate social responsibility (CSR) are now mainstream with regards to corporate initiatives, as they are proving their position within the fundamental strategies of business to be positive with Return on Investment (ROI). Small, medium and large organizations are catching on to SR/CSR sustainable business and its valued within all business practices. There is this sudden understanding in organizations, that SR initiatives will help our environment, global, national and those close to home, as well as, the bottom line (ROI). I am jumping for joy inside, as this has been a very long time coming.
This new understanding is a little more complex, but as we know, corporate governance will not fair on its own any longer. Factors such as sustainable development, environmental impacts, management of supply chain, social and financial contributions within the local communities, ethical business practices of marketing and sales, and possible global implications regarding human rights where ones businesses may be operating. This may all seem somewhat of an encumbrance, but it is absolutely manageable and the end results are much more gratifying, in every sense of the word.
Carbon offsets, verified emission reductions (VER), and renewable energy credits (REC) are all part of our fantastic new trading market. Organizations now have the ability to develop and gauge their ROI by their direct SR/CSR efforts. These efforts can go much further in their design and integration with both internal and external associations of the business practices, such as; improved employee health (less days off, improved performance and greater personal happiness at work), large reduction in waste and energy (utilities incl.), liability exposure decreased, hiring methods improved, community relations boosted and cultivated, superior and renewed brand recognition, explicit disparity from all competitors, financial gains and benefits dramatically increased over multiple departments and divisions alike, together, the whole of any business would experience a much higher efficiency with sustainable SR/CSR initiatives integrated, than previously thought possible.
World-views of business roles and responsibilities have changed and therefore business leaders are setting sustainability SR/CSR initiatives and policies in direct relation to their corporate ROIs. Our environmental impact falls first and our social impact second. With environment, it is just a fact that whether you are a large or small business, you affect the environment either minimally or to a colossal degree. On the social end, your business can positively impact; your community, social causes, employee social programs, NFPs, foundations, impoverished and underprivileged, minority groups, and the deprived people of underdeveloped countries, to name just a few. Genesis, a renewable energy services firm, has gone about conducting and investigating the ROI impacts for many businesses that have incorporated SR/CSR initiatives and policies into their day-to-day, planning, and structures.
So how does SR/CSR initiatives positively affect an organization in direct relation to financial and competitive based performance?
The measures used by Genesis, based on the social and environmental SR/CSR fronts, were conventional and related towards a companies success, such as, market share, brand image and value, market valuation and profitability. A 38% increase was shown to have been achieved in some larger companies who had already integrated sustainability practices and SR/CSR initiatives and polices. They did it by the creation of a new corporate culture, of which employees began to commit to acting more as stewards towards the environment on a personal level, both within and outside of their business environments. Employees were educated about environmental sustainability and those surrounding issues, their personal contributions and changes they can make to not only benefit themselves but to benefit the whole of society and our planet. With CSR, EHS or HR departments/offices taking on the task of both corporate and employee education and training, many large businesses are seeing their ROI go up considerably. By looking at company’s current SR/CSR and sustainability initiatives and ensuring that all employees have a strong understanding of the new vision, including environmental sustainability and SR/CSR education, any business can assume they will increase their ROI, not to mention their popularity and interest from stakeholders.
It can be formidable to separate a business’s value from their own sustainability program such as quantifiable measures (e.g. energy reduction, utilities reduction, money saved, etc.), and those less tangible, such as, a companies enhanced standing. In another study, one from Goldman Sachs, had found that those who lead in Environmental, Social & Governance (ESG) policies were also leaders in performing stocks, by approximately 25% on average. Another study by the Environmental Leader report showed that those who adopted Renewable Energy were in the plus by 15% or more on ROI, and in some cases, that return had a great possibility of growing even more. Additionally in a another report, 40% of those businesses that responded, claimed that prior to their 15-20% ROI, their implementation of on-site renewable energy additions, had spent more than $1 million and 20% at least $500,000. Within these numbers, I also noted that some businesses made great use of those federal and state incentives which often made it affordable to add on-site energy generation. As well, about 12% of those businesses claimed that they were able to put renewable energy sources on-site without any aid, simply by taking those capital costs and shifting them over to their own provider through Power Purchase Agreements.
One thing is for sure, companies are now rushing forward with the integration of SR/CSR within their strategic performance, as they know, corporate performance and sustainable (‘best business’) practices are progressively measured together with SR/CSR policies and initiatives as fundamental components. The bonus, that corporations are beginning to see the possibilities of higher ROI after SR/CSR integration and implementation. Each day I contemplate these numbers, findings and statistics only to realize that a great new reality in business and for our planet is finally reaching fruition. How wonderful is that!
ABOUT THE AUTHOR
Marie Vander-Heiden (CBS) MA MBA BEd is an approved Certified Business Specialist (CBS) with the Academy of Business Strategy and her specialist subject is social responsibility. She has achieved an MA in Environment Education and Communications, an MBA featuring Accounting, Corporate Finance and Marketing and an BEd from the Royal Roads University BC Canada. She has been employed as a Naval Communicator, Investment Manager, Consultant and Teacher and has experience within the defense, coast guard, oil and gas, clean energy, financial services and education industries. Her clients or employers have included the Federal Government – Department of National Defense, Department of Fisheries and Oceans (Canada), the Canadian Coast Guard, Carwithen Investments and Iwaki City Fukushima Prefecture. She has geographical working experience in the United States of America, Canada and Japan. She speaks English, Japanese and French. Her service skills include social responsibility and environmental sustainability (SRES), corporate social responsibility CSR, communications, renewable energy and utilities and cost reduction.