Proponents of CSR claim that it benefits the bottom line. Can that be true? Let’s see. We’ll look at just five CSR themes: consumers, community, employees, environment and supply chain. Can each show a bottom line return?

What consumers expect

Are consumers interested in CSR? In the technicalities, no; in the substance, yes. Consumers expect businesses to keep their promises about price, quality and service. Though often ignored in the CSR debate, this is key. It is about integrity.

Beyond this is an area where firms can gain competitive edge. Good CSR performance generates market advantage. Bad CSR performance dents sales and the brand. Firms build reputation by connecting the consumer to the producer, showing the eco-efficiency of the product, and through cause-related marketing. Cadbury’s Dairy Milk going Fairtrade and Lipton gaining Rainforest Alliance certification for its tea are good examples.

Good reputation boosts the bottom line.

Community: mutual benefit

Are businesses just out to help themselves or do they benefit the community too? The answer varies from business to business but those seen to be helping in the community strengthen their reputation.

The form of help varies. Tesco carved a niche through Tesco Computers for Schools, an appropriately comprehensive initiative for the UK’s number one retailer. Firms with a strong local presence pursue a more local approach. So Northern Rock directs community support to its home turf in North-East England through the Northern Rock Foundation.

Businesses get a two-for-one benefit when they mobilise the skills of their employees for community advantage. The pro bono work of city law firms and accountancy practices are notable here.

Effectively managed community engagement is not a deadening overhead. It is an investment that yields the dividend of improved reputation, a secure licence to operate and raised employee morale.

Employees: critical resource, key audience

People want to work for responsible organisations, especially the most skilled and most sought-after individuals.

Fair and humane employment practices correlate strongly with high employee alignment with employers and strong motivation. Policies such as flexible working hours and career breaks are seen as responsible practices that can give an edge in the labour market.

As noted above, employee volunteering programmes aid job satisfaction and align employees with the aims of their employer’s corporate responsibility programmes.

The employee aspect of corporate responsibility strengthens a company’s position in the labour market. It generates measurable effects in reduced absenteeism, reduced turnover and increased motivation.

Environment: operational savings, market advantage

Good environmental practice means using less resource. This means money in the bank for the business. Responsible environmental practice has moved from being a questionable add-on to becoming a mainstream activity that generates financial savings and creates a societal benefit.

Good environmental practice can also be used as a marketing tool, when a strong link can be made with the corporate brand or an individual product.

Wal-Mart is majoring on eco-efficiency, evidence, if any were needed, that corporate environmental responsibility sits firmly on the benefits side of the ledger.

Supply chain: risk and opportunity

Take a product, say a Nestlé chocolate bar. It is not just the product of Nestlé. Behind the bar and outside Nestlé’s direct control are thousands of dairy farmers, cocoa farmers, sugar plantations and so on. The consumer expects the company to guarantee not only responsible behaviour in its direct operations but in the supply chain too. Get it wrong and the deluge of negative publicity dents corporate reputation. Get it right and brand value increases considerably.

Even ten years ago this was an optional part of the agenda. Now it is inescapable.

Good supply chain practice does not necessarily yield an immediate return. Nonetheless, supply chain CSR is not a matter of detached altruism. It creates a benefit to the company even if the level of return varies more than in the other four areas we have looked at.

And the bottom line is?

Yes, corporate responsibility yields noticeable advantage to companies. In each area covered we have found a positive return for corporate responsibility. Experience teaches us that the returns are only fully realised by companies that set out to do the right thing.

Bear in mind the conclusion of the Johnson & Johnson credo. Having listed all the groups that Johnson & Johnson owes a responsibility it concludes: “When we operate according to these principles the stockholders should realise a fair return”.