Companies operating in today’s climate are coming under ever-closer scrutiny over corporate social responsibility (CSR). Consumers are one of the most influential stakeholder groups demanding greater social, economic and environmental accountability – and increasingly voting with their wallets when corporates fail to measure up.
Nowadays, consumers expect the firms that they do business with to prove that they are working in the best interests of communities and the wider planet. They are also weaving CSR into the basket of expectations that shapes their customer experiences. Companies that want to stay competitive have no choice but to embed CSR into their corporate strategies.
In a six-part study, market research and information firm Kantar TNS considers the role of CSR in driving successful and purposeful business and leadership, and how different stakeholders perceive and act on the concept. The initial discussion centers on typical consumer attitudes to social, economic and environmental responsibility practiced by corporations.
Let’s start with a definition. Corporate social responsibility refers to the ability of companies to combine the creation of social, environmental and economic value with their core strategy and operations. This improves the management of business risks and opportunities while enhancing long-term social and environmental sustainability.
Traditionally, the corporate approach to CSR has focused on risk management. However, as it becomes an increasingly important part of companies’ reputation management toolkits, CSR is becoming a channel for adding value and identifying business opportunities.
CSR evolving from theory to reality
Kantar TNS conducts regular CSR surveys that target up to 70 companies in sectors as diverse as finance, retail, services, and healthcare. It has amassed a database of research that it has used to analyze the attitudes, buying habits and preferences of roughly 40,000 Finnish consumers.
In 2014, the company conducted a series of consumer surveys looking at companies’ mission or purpose statements. These are market-facing declarations of the ideals that drive the organizations and act as a qualitative indicator of their commitment to corporate social responsibility.
The results of a set of blind surveys showed that when companies did articulate their purpose, the statements generally did not resonate with consumers. Additional surveys offered little consolation for corporations – when researchers tied mission statements to brands, consumers felt they did not reflect the companies’ businesses.
Another finding revealed that consumers are increasingly interested in a company’s overarching goals. In 2014, 32% of respondents said they had received or asked for information about a company’s mission. In 2017, that percentage had risen to 47%. In 2014, 22% said that they had not received such information but were interested in getting their hands on it, compared to 21% in 2017.
But researchers observed the most dramatic change among consumers who said they had no interest in finding out more about a company’s mission. In 2014, 46% of respondents said they had not received any information concerning a corporation’s guiding principles, and were not interested in getting any. By 2017, however, that number dropped to 24%.
“This demonstrates clearly that an organization’s purpose is becoming more important for consumers,” said Sirkka Paronen, Head of Customer Strategies at Kantar TNS. “It means that CSR has moved from theory to reality for consumers,” she added.
CSR influencing buying behavior
Another finding that is perhaps more revealing is the impact of CRS strategies on consumer behavior. This should serve as a wake-up call for companies not approaching CRS as a strategy for adding value and tagging new business opportunities.
In 2014, 42% of consumers said that purpose and CSR had a high impact on their shopping behavior, a proportion that grew to reach 53% in 2017. Conversely, while 44% of consumers said these factors had a low impact their buying habits in 2014, by 2017 that amount had decreased to 32%.
At the individual level, researchers discovered that consumers tended to have an ego-centric approach to CSR issues. Essentially, they showed a preference for doing business with companies that shouldered the burden of acting responsibly in economic, social and environmental matters.
Experts culled statistics from TNS Mind, an extensive database that includes information about trends, attitudes, preferences and buying behavior affecting consumers and decision makers. In response to the statement, “I favor companies that bear the responsibility for ethical and ecological behavior so that I do not have to,” 63% agreed either completely or in part.
“This has become increasingly important as a consumption factor,” concluded Niina Frosterus, Senior Insight Manager, Consumer & Digital.
Consumers also tend to focus on the local impact of CSR initiatives. This means that they are more likely to support campaigns that highlight local products and supply chains because they address concerns about environmental (shorter supply chains), social (supporting the local community) and economic (local job creation) responsibility.
“Local impact is also small and easy to understand and it offers an immediate opportunity to influence companies and gives consumers power – the choice to buy or not to buy,” Frosterus added.
TNS researchers noted that while Finnish consumers have traditionally been sensitive to price, they are increasingly willing to spend to support environmental and social issues. The upshot is that in addition to price, technology, and service, CSR and reputation factors have a growing influence on customer expectations – and by extension, customer experience.
That’s an important insight for companies looking to engage customer sentiment to build on their current business, attract new consumers and boost loyalty and new spending among the existing customer base.