What is the ROI of CSR?

November 30, 2017 Kim Lynes

As corporate social responsibility (CSR) programs become more prevalent in the world’s leading companies, investors are becoming more interested in the potential ROI of a successful CSR program. In fact, according to Leo Rotchild (Executive Director, Canadian Business for Social Responsibility), the existence of a CSR program and a company’s investment in social good has quickly become an essential factor for investors when choosing where to invest. 75% of all professional investors are really considering a company’s ESG, or Environment, Social, and Governance performance before deciding to invest in that stock.

So why do they care? Well, it turns out investors do see the potential for measurable, positive ROI from CSR programs. As Leo mentions in the episode “ROI of CSR” on the Champions for Social Good podcast, investors look for business certainty, and have flagged social issues as an area that will have an impact on business risk moving forward. He cites climate change as an obvious example of a business risk. So we know investors are looking for details on CSR as it relates to strengthening the case for sustainability for your organizations. But how can you communicate metrics to potential investors?

The measurement of ROI from CSR programs can go beyond profit. Leo highlights other metrics like reputation, relationships, and actual improvement to social and environmental issues that the company is being told (by the public, internal stakeholders, or even environmental experts) require improvement. Going back to the climate change example, a company could demonstrate a positive ROI on their efforts by scoring highly on the Dow Jones Sustainability Index.

Depending on the current culture within your organization today, you may be having trouble getting the internal buy-in and cross team coordination necessary to effectively measure the ROI on your CSR efforts and impact. The key to changing the culture according to Rotchild? Relationship building. The nature of CSR is one that appeals to most on a human-level; you’re working to achieve positive impact and your organization can provide resources to help. Have face-to-face conversations about the great reasons you’re working to build a stronger CSR program, and establish trust amongst the different teams. Once you do see tangible success because of your work (let’s say a good score on that Dow Jones Sustainability Index), you’ll have total buy-in as the group feels like they were a part of the team that got there. Tangible success can mean an impact on share price, positive acknowledgement from investment firms, and more. The result? Executive buy-in. Then you’re ready for the new role CSR can play within your organization: an area of the business that can be used to mitigate risk while simultaneously identifying new business opportunities.

 

Listen to the entire podcast here, and learn more about why Leo feels it is essential an organization aligns itself with the global goals, or risk becoming irrelevant in the future.

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