Why scaling down CSR initiatives during an economic downturn is a mistake

During times of recession, some may look at CSR as an unaffordable luxury. It’s absolutely not. Studies show that CSR activities can actually increase brand value and improve performance, even during an economic downturn. 

In today’s climate, backing down from yesterday’s promises could have serious implications. Both the global pandemic and the rise of political movements like Black Lives Matter have shone a light on socioeconomic disparities. That light is not dimming.  

In 2020, any corporate misdeed that feeds inequality is being called out. Conversely, companies that are actively implementing policies to rectify inequality and stop damaging the planet are benefitting from powerful, brand-boosting recognition. 

Ultimately, the actions that businesses take today will impact how investors, customers and employees view them in the future. In other words, the industry leaders of tomorrow are ensuring that they’re on the right side of history, today. 

Let’s deep dive into three reasons why scaling down CSR initiatives in 2020 is a mistake: 

1. Investors won’t invest

When Larry Fink told stakeholders that purpose and profit are inextricably linked, it demonstrated just how seriously CSR is being taken at board level.

In a recent survey, HBR interviewed 70 senior executives at 43 global investment firms, including the world’s three biggest asset managers (BlackRock, Vanguard, and State Street). “We found that ESG was almost universally top of mind for these executives.” HBR

Slacking on CSR initiatives is no longer an option for organisations that rely on shareholder support. For one, climate change is a systematic risk which investment houses are unable to diversify their portfolios away from; it’s become too big to mitigate against. Furthermore, there’s now $21.4 trillion invested sustainably in global assets, with $13 trillion of this in Europe alone (HSBC). As these numbers rise, so does the importance of having—and sticking to—environmental targets.

But the importance of CSR isn’t only relevant businesses reliant on investment. Last month Tesco demonstrated this by announcing its new ￡2.5bn revolving credit facility which links interest rates with environmental targets; if the company delivers on them, they benefit from a lower interest rate loan margin. Aligning corporate financial strategy to sustainability commitments is an approach we’re only going to see more of as the green revolution takes off. 

The way I see it, businesses that drop CSR over the coming months will effectively be swimming upstream. 

2. Customers won’t buy

This year there’s been countless demonstrations of what happens when a company gets caught being unfaithful to its brand promise or values. 

In fact, according to a report from GlobalWebIndex, 68% of online consumers in the UK and the US might not use a brand if they have poor or misleading CSR. Close to 85% said they would or might stop buying from a brand with a poor environmental track record. 

On the other hand, a 2020 study by the European Journal of Marketing revealed that “...CSR initiatives during recessions are actually associated with increased perceptions of brand value.”

A good and recent example of this is Brewdog’s ￡30 million investment plan to remove carbon from the atmosphere. They’re double offsetting their carbon footprint (part of which Pawprint helped to calculate) by planting trees and restoring peatland. This campaign has already been splashed across headlines, and I’ve little doubt that their ‘drink beer, save the planet’ approach is going to do wonders for the brand’s top-line growth. 

In a world where consumers have plenty of choice, and they’re more driven than ever to vote for change with their purchases, does pausing CSR initiatives really sound like the right choice?

3. Talent won’t stay

I don’t know about you, but when I read that one in four workers were willing to take a pay cut to work for an environmentally-friendly company I was both inspired and (I must admit) a little shocked. 

If a business ever needed more proof of the value of CSR, surely this is it. According to the survey by Totaljobs, employees are (on average) willing to be paid ￡8000 less to work for a company that aligns with their environmental values. This trend, known as a ‘Green Cut’, demonstrates just how serious talent is about protecting the planet. 

Scaling down or pausing CSR initiatives might save money in the short-term, but is that really worth losing, or losing out on, top talent and the benefits they bring to your firm’s long-term growth? 

What to focus on

2020 required a bit of a reshuffle on the CSR front, causing climate change and sustainability to temporarily take a back seat whilst businesses ensured their employees were supported through new ways of working, and hands were lent to vulnerable or front-line communities. 

Now that we’ve more or less bedded down into this new way of working, I’d encourage businesses to relook at their environmental objectives. Proactively re-engaging with these initiatives sends a strong message to employees, customers and investors that you’re dedicated to achieving your goals. On the other hand, waiting until share\stakeholders prompt you could damage those relationships.

For businesses looking to implement or build on environmental objectives, consider where you’re able to best make a difference. IKEA, for example, has dedicated a large portion of its efforts to making cotton farming more sustainable, since cotton is one of its most used materials. Creating change within your remit is powerful because it’s where you hold the biggest potential for change. 

If you’re looking to expand or create new initiatives, one area you can definitely make a difference is through employee education and engagement. Building a company culture that encourages green behaviour—both at work and at home—won’t only reduce your business’s carbon footprint, it will also ripple out to the wider world (and make you an attractive employer in the process). 

Over the past year, an all-star team and I have been working hard to design a solution for businesses looking to engage employees on climate change. Pawprint for Business is an online tool that: 

• Inspires your employees to fight climate change
• Nurtures green thinking so that sustainability becomes an inherent part of your company’s culture
• Equips businesses with data concerning their environmental impact and employee sentiment around green initiatives

Learn more about how Pawprint for Business works here. We’re looking for businesses (that want to engage their people on sustainability) to become early adopters of the product. If you’re interested in speaking to me about getting involved—to start, or continue, swimming with the tide—get in touch. 

?This post was originally published at www.pawprint.eco on October 27, 2020.