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Corporate Citizenship: are “Nicer” Companies More Profitable?

Author: Daniel T. McKillop

Date: May 12, 2016

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Are “Nicer” Companies More Profitable? Taking a Look at Corporate Citizenship

Consumers, particularly millennials, are increasingly considering whether a company is a good citizen when purchasing goods and services. More importantly, they will often pay more for brands that make corporate ethics a priority, whether that means transgender friendly employee policies or environmentally-conscious packaging.

corporate citizenship

As a result, business executives and compliance professionals are placing greater emphasis on corporate citizenship, transparency, and diversity. At Ethisphere Institute’s Global Ethics Summit, Ethisphere polled 120 executives regarding the impact of corporate ethics and behavior on profits and growth.

What did the survey say?

The survey revealed that more than 84 percent of respondents think consumers would be willing to pay more for goods or services from a business that is recognized as a good corporate citizen. More than half of those surveyed (53 percent) also indicated that good corporate citizenship is very important for consumers when selecting a financial services company. Below are a few other key findings:

  • Over half (53 percent) of those surveyed indicated that C-level executives primarily drive ethics-related change within their companies; followed by the board of directors (22 percent) and middle management (16 percent).
  • The majority of respondents (43 percent) said training programs and workshops have been the most effective way of promoting ethical behavior at their company. Only 8 percent of individuals explained that ‘incentive/reward’ based programs for ethical behavior were most effective.
  • When asked where their company has the most room to improve, the highest number of respondents (37 percent) selected employee recruitment, retention and reward. This was followed by sustainability initiatives (22 percent), financial transparency (18 percent) and counterparty product sourcing and supply chain management (13 percent).

Social media & corporate citizenship

As the survey highlights, Facebook, Twitter, and Instagram provide additional platforms for companies to tout their good deeds.

Social media has also made corporate ethics more important. In total, 94 percent of respondents believed that the real-time nature of social media impacts companies’ accountability, especially for their behaviors; in addition, 49 percent indicated that they consider this impact to be extreme.

As the survey highlights, Facebook, Twitter, and Instagram provide additional platforms for companies to tout their good deeds. Target’s recent announcement that it encourages transgender team members and customers to use the restroom or fitting room facility that corresponds with their gender identity spread virally and was welcome news to many shoppers.

At the same time, social media can also be used to shine a light on questionable corporate policies. For instance, when Sea World launched an #AskSeaworld Twitter chat in 2015, many of the questions revolved around Sea World’s alleged mistreatment of animals.

“Smart executives are truly recognizing that millennials, and consumers in general, are paying close attention to whether the companies they support are promoting best practices,” said Ethisphere CEO, Timothy Erblich. “The advent of social media has given companies an unprecedented platform to engage with customers and stakeholders. The C-suite can either choose to lead and be recognized for best practices or face scrutiny in real-time.”

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

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