Why Marketers Should Care About Consumer Perception of Corporate Social Responsibility

This is no secret to companies in various industries. The Sustainable Investment Institute (Si2) recently reviewed the current state of companies’ sustainability reporting and reported that websites of 92% of S&P 500 companies included disclosure on sustainability, with 395 companies (78%) issuing full reports on the subject. The rising role of chief sustainability officers (CSO) is itself an indication for sustainability’s coming of age. In 2000, no one has heard of such a job title in the corporate world, but the role of CSO has become more and more important as consumers expect companies to address their impact on the environment and share responsibility in solving some of the world’s biggest problems.

Further along the road, investor interest in environmental, social and governance (ESG) factors of corporations has also soared. Sustainable investing constitutes a major force across global financial markets. Socially responsible investing has grown by 34% to $30.7 trillion over the past two years, according to the latest report from the Global Sustainable Investment Alliance (GSIA). Responsible investment now commands a sizable share of professionally managed assets in each region, ranging from 18% in Japan to 63% in Australia and New Zealand. The largest three regions based on the value of their sustainable investing assets are Europe, the United States and Japan.

Multiple facets of the subject of sustainability have been examined by academic researchers. At Kent State University, marketing professor Christopher Groening has been studying different micro- and macro-level conditions through which customer satisfaction and corporate social responsibility affect firm value. Professor Groening launched Corporate Social Responsibility Public Perception Quotient, CSRPPQ. The goal of this project is to collect and analyze consumer perceptions of corporate social responsible and irresponsible activities. More than 36,000 consumers have taken the survey. CSRPPQ can show firms where consumer perception of firm CSR activities differs from firm CSR endeavors. Thus, a firm can understand when it should devote more resources to create greater awareness of their CSR activities. Consumer perception is important to monitor because perceptions drive actions. A firm’s CSR actions affect the consumers’ perception of the firm and their choice of relationship with the firm.

What does this all mean for businesses? In today’s socially conscious environment, customers are willing to spend more of their money with businesses that prioritize corporate social responsibility. Improving CSR business practice and CSRPPQ not only help build a positive brand image, but also have a positive impact on improving customer loyalty and contributing directly to the bottom line, as shown in the examples below.

In spring 2019, IBM’s Chicago office opened its door to the members of the American Marketing Association collegiate chapter. Undergraduate and MBA students learned about ways that IBM differentiates their strategies by focusing on people, process, technology and research in the ever-changing world. IBM especially shared the value they have placed on sustainability and how they are addressing sustainability areas with their technology. IBM has been developing the ways to provide Africa with enhanced solutions to their infrastructure, such as water quality management and healthcare, by leveraging IBM Watson’s capability under the name of “Lucy Project.” With this project, not only is IBM consistently putting efforts into creating further sustainable innovation and new business opportunities, which align with their mission statement, and they are also contributing to sustainable growth of the whole world.

In a different industry but in a similar vein, Patagonia’s recent announcement regarding limiting sales of certain products in an effort to minimize ecological damage bolstered their brand personality: passion toward the environment. The Patagonia Nano Puff Vest, also known as the iconic Power Vest and considered the gold standard of the industry, will no longer be sold to some firms. The company is getting more selective in terms of which corporate sales clients they take because it wants to focus on selling to do-gooder companies, companies with a charity element or those committed to supporting social causes and protecting the environment. With this bold move, Patagonia will be able to convey its core messages to consumers more effectively and develop consumer trust simultaneously by saving the planet audaciously.

The fact that this announcement triggered a market shock shows it already has a strong brand power and identity. Patagonia is also communicating its core brand values, which highlight the beauty of integrity and durability, by releasing a documentary film “Artifishal” depicting the loss of wild fish habitat, which is attributable to human arrogance to nature. Similarly, Tesla’s consistent endeavor to developing the future of zero emissions, such as generating clean energy and expanding global Supercharger networks, has boosted the overall public engagement with the concept of sustainability.

Today’s consumers want companies to be honest and transparent with what they do. In addition to demanding products or services that are accountable for social and environmental impact, they are becoming more aware of the importance of CSR and are eager to be part of it. In light of the shift in consumer preferences toward being more socially and environmentally conscious, concentrating on the theme of sustainable future will offer values to companies and to the society at large. As the business competition is getting fierce and essential natural resources are depleting more rapidly than we expected, corporate sustainability is indispensable for marketers to draw long-term growth and be more competitive.

CSR and corporate sustainability go well beyond specific concerns about exploiting resources ethically and economically. These are effective approaches for businesses to build long-lasting and genuine relationships with consumers. Many companies have kept abreast of social problems and environmental challenges and turned them into new economic opportunities. They are likely to have a high CSRPPQ, a healthy relationship with their customers. Those with less than ideal CSRPPQ need to spend more effort doing good or make their CSR positions and endeavors are known. In marketing communications such as advertisements or promotional messages, companies need to be aware of and sensitive about environmental topics. Otherwise, they may have a big price to pay from consumer backlash. Overall, communicating your core CSR values and your related actions will help build a more loyal customer base.