How Today’s CEOs Can Hedge Against The Downside Risk of CSR

October 23, 2017 Comments Off on How Today’s CEOs Can Hedge Against The Downside Risk of CSRComments Off on How Today’s CEOs Can Hedge Against The Downside Risk of CSR

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In response to consumer demand for companies to do good, corporate social responsibility (CSR) is being increasingly adopted by global corporate giants and bootstrapping startups alike. While there are numerous examples of how CSR efforts have improved corporate profitability, the two don’t always go hand in hand.

In fact, a recent study found that CSR efforts often fail to produce profitable returns; however, they consistently lead to profitability when coupled with strong communications strategies.

The downside risk of CSR poses a threat to CEOs who are accountable for revenue growth and quarterly profits.

An article published in the Strategic Management Journal reported that CEOs leading companies with a higher investment in CSR have an 84 percent greater risk of being fired in times of financial hardship, compared with CEOs at firms without as much commitment to CSR.

These findings suggest that CEOs should couple CSR initiatives with marketing strategies to effectively share company social good stories which will, not only improve return on CSR, but also increase job security.

Here are three ways that CEOs can hedge against the downside risk of CSR:

1. Weave CSR storytelling into core marketing: Today’s conscious consumers want to support companies that build a better world. If shoppers don’t know what your brand is doing to mobilize an impact, they can’t actively choose to buy from you because of your good deeds. Therefore, it’s essential to build marketing campaigns around CSR.


D&AD impact awards highlight numerous examples of successful CSR campaigns that made a measurable social impact and generated substantial earned media.

One example of a campaign built around social impact is Verizon’s #WeNeedMore initiative. The campaign featured pop culture icons like Lebron James promoting the need for STEM (science, technology, engineering and math) professionals instead of more famous athletes or entertainers. Verizon coupled the ads with a youth education project that introduced students to in-demand careers they might not be aware of and donated technology to get them started.

Essentially, by incorporating your CSR initiatives into your core marketing and advertising strategies you can better inform your target audience about the social impact you’re creating, which is essential to generating positive ROI from CSR.

2. Lead social change: Corporate Social Responsibility efforts that don’t align with brand purpose can seem disingenuous.  Similarly, initiatives built on one off events or the 24-hour news cycle come across as “me too” cause marketing.


To truly build authentic, meaningful and memorable CSR advertising campaigns, you must own an impact space and build your CSR around it.

Tesla does an excellent job of leading social change with its CSR initiatives. The brand is literally built around the mission to “accelerate the world’s transition to sustainable energy.” All of Tesla’s products and services progress society towards the brands goal, which essentially combines its CSR efforts with core business.

Ultimately, to lead social change you must be a mission with a company, not a company with a mission.

3. Invite consumers to get involved: Showcasing your CSR efforts to consumers in a way that represents your brand is crucial to using purpose to drive profits.To take your impact-driven initiatives to the next level, empower your customers and fans to participate in your social good campaigns and build your brand with you.


Social media opens up the potential to invite consumers to participate in an easy and tangible way. What’s more, user generated content is an excellent way to scale the organic reach of your marketing campaigns and generate earned media.

It’s especially important to engage younger generations via social media advocacy. The recent How To Speak Z study found that more than half of Gen Z-ers say they think posting about a cause on social media has a bigger impact than getting involved offline. What’s more, this group is most likely to engage with content that helps them support a cause they believe in and are motivated to share cause related content that they think can inspire others as well.

User generated content is not only an excellent way to awaken engagement in your CSR initiatives, it’s also a powerfully persuasive marketing strategy. In fact, 90 percent of consumers say that user generated content influences their purchasing decisions, which is more impactful than other forms of marketing.

A great example of a corporate social responsibility campaign that incorporated user generated content is #RaiseItForward, an Absolut Elyx initiative. The vodka maker encouraged fans and followers to post a picture of themselves raising a glass with the brand’s hashtag. For each photo posted between World Water Day (March 22nd) and Earth Day (April 22nd) the brand donated 1 week’s worth of water to people who need it via the nonprofit ‘Water For People’. Absolut Elyx also donates one week of water for every bottle sold.

Ultimately, it’s essential to offer shoppers a way to participate in contributory consumption. This not only makes people associate your brand with a good cause and builds consumer goodwill, but also weaves your marketing strategy into CSR.

The key takeaway is that corporate social responsibility doesn’t always lead to profitable returns and can actually pose a risk to CEOs that champion impact while profit margins aren’t up to snuff. At the same time, intertwining CSR with marketing, storytelling, and user generated content has a track record of producing profitable returns. Therefore, it’s essential to embed CSR efforts into core marketing rather than throw in one off social good campaigns that consumers don’t automatically associate with your brand.


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Title image via iStock user cyano66


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