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Performance with Purpose: Focus on Long-Term Business Development in the New Time Economy

May 29, 2017, 18:57 UTC+3
1 pages in this article

The concept of corporate social responsibility has become an inherent part of today's business ecosystem, and the number of companies implementing charitable and environmental initiatives has been growing throughout the world. This paradigm reflects the needs of communities, governments and investors. So, it helps corporate players to make a valuable contribution to the societal well-being, while improving their bottom line.

The number of companies committed to sustainable development and corporate social responsibility has been growing.

  • This trend is most visible when it comes to major corporations. In 2011, only 20% of S&P 500 companies published reports on their social responsibility programmes. By early 2016, such reports have become common for 81%.
  • Russian corporations follow the trend and bring social responsibility to their forefront. Between 2007 and 2016, the number of companies issuing annual reports that go beyond their financials jumped from 55 to 164. 
  • Over the last three years, the Sustainable Development Vector Index that was introduced by the Russian Union of Industrialists and Entrepreneurs to measure outcomes of such programmes has been growing at a steady pace.

As businesses face more stringent sustainability-related requirements, international non-profit organisations work on shared global social responsibility standards.

  • In September 2015, UN member-states adopted the 2030 Agenda for Sustainable Development. This backbone document lays a foundation for sustainability initiatives worldwide. The Agenda defines 17 sustainable development goals, 169 targets, and 230 global indicators.
  • In April 2016, a total of 175 countries signed the Paris Climate Agreement that provides a roadmap for reducing emission, combating climate change and ensuring sustainable development. 

In fact, the funds spent by businesses on socially relevant programmes are investments in their own long-term growth and success.

  • Corporate social responsibility initiatives signal that companies do care about communities, enhance their perception as good corporate citizens, and strengthen brand loyalty.
  • Such initiatives attract new customers, help build constructive relationships with stakeholders and, eventually, improve the bottom line. Socially responsible companies have better financial track records across the globe.
  • Moreover, environmental projects help cut costs, and, accordingly, boost margins. For example, between 2008 and 2018 environmental protection programmes will have saved Uniliver EUR 600 million.
  • Engaging communities also helps expand product lines and identify new market niches. Reebok is a prime example as it benefits from sportswear and accessory sales leveraging the hot crossfit concept and relevant community.

Social responsibility programmes also bring in new investors, and many stock exchanges require non-financial reports from their listed issuers.

  • To the investment community, a social responsibility strategy is a valuable indicator of the long-term growth potential that enhances the investment case.
  • By early 2017, there were 58 stock exchanges that declared their commitment to sustainable development and started prompting their listed companies to make non-financial disclosures.
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