CORPORATE SOCIAL PROFITABILITY: HOW COPORATIONS

ARE PROFITING OFF THEIR ACTIONS

Issue #1

Corporate
Social
Profitability:
How corporations are
profiting off their
actions
November 1, 2015
Image courtesy of Starbucks.com

By Zara
Its not hard to see the corporate
social responsibility trend many
of our favorite companies are
catching on to. From recycling
and waste reduction to charities,
corporations are increasingly
seeking new avenues to display
their corporate social
responsibility. However, these
beloved brands are profiting off
their corporate consciences at
the same time and in more than
one way:

sizable discount on drinks

refilled using their reusable
thermoses or cups.

Brand Loyalty
From coffee to clothes, these
companies have used their CSR
to gain loyalty from consumers
throughout the globe.
Companies like Starbucks and
H&M have offered incentives to
customers to aid them in their
recycling efforts and have
garnered much support. At most
Starbucks, customers can
receive a 10 cent discount on
drinks refilled using the same
disposable cup and a more

locations. The transparency of

these companies creates a
credibility to the image of these
corporate giants which makes
consumers coming back for
more. Consumers trust these
companies over others and are
more inclined to shop with these
companies in comparison to
companies with little to no CSR.
This loyalty places these ethical
companies with a competitive
advantage over other
companies along with a stronger
market share and higher sales
volumes which can all lead to
higher profits.

Image courtesy of Alligator.org

They arent the only ones on the

reduce, reuse, and recycle train.
H&M now offers a discount to
shoppers who bring their old
clothes, regardless of their
brand or condition, to be
recycled at any of their
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CORPORATE SOCIAL PROFITABILITY: HOW COPORATIONS

ARE PROFITING OFF THEIR ACTIONS
are not given proper rights or
fair pay which easily contradicts
the bottom line of CSR.
Companies can bolster their
image with CSR and can also
potentially receive tax breaks by
the municipal governments. The
more companies save on costs,
the more money they have for
more investments and higher
dividends, net operating income
or retained earnings.

Stock Prices
The recycling bin found in H&M stores in
part of their clothes recycling initiatives.

Companies with an image of

good CSR have the potential to
Image courtesy of recyclenation.com
have their stock prices increase.
This effect is simple to
understand: good press can
Minimized Costs
translate into higher stock prices
because a companys ethical
Socially responsible companies
efforts can mean more
are maximizing profits by
popularity and profitability for
minimizing costs thanks to their
that company. This is arguably
moral-minded efforts.
the only monetary benefit
Companies are doing so in ways
shareholders receive from CSR.
never imagined. Take Equal
While shareholders may
Employment Opportunity rules
sometimes resent their invested
and guidelines for instance.
companies costly CSR initiatives,
Companies with CSR are
the odds can be in their favor
minimizing the costs (and
and stock prices can potentially
improving their reps) by creating
rise because of a companys
welcoming environments to
moral efforts. Pepsi, a pioneer in
diversity while lowering
CSR, is at an all-time high of
employee turnover and its
$102.21 per share*. Named a
associated costs (like getting
Top Socially Responsible
sued). Environmentally friendly
Dividend Stock by Dividend
and energy-conserving ways can
Channel, the company had a
also result in lower operating
2.9% dividend yield in 2014
costs and higher profit margins.
paying each shareholder $2.62
Consider Under Armours
in dividends per share. Pepsi is
Catalyst line. It is arguably one
not the only socially responsible
of the most innovative and
corporation thats seeing sunny
environmentally considerate
days for their stock. Starbucks is
clothing lines out there being
currently at $62.57 per share*,
made from recycled plastic
just four cents below their allbottles. Plastic bottles are
time high. Under Armour is also
ubiquitous whereas materials
faring well at $95.11 per share*,
such as cotton can fluctuate in
nearly $30 more than their stock
price due to changes in weather
price at this time last year. Aside
patterns. Cotton is also largely
from a stock price increase CSR
collected and processed in third
companies can see, morally and
world countries where workers
environmentally-conscience
*Price subject to change from market activity

Issue #1

investors are also more likely to

invest in these companies. This
gives companies with CSR a
huge leg-up against those
companies that have
detrimental impacts on the
environment and society. Top
liberal arts colleges such as
Swarthmore and Davidson
College along with public
schools like California State
University at Chico are feeling a
growing pressure from a large
group of vocal students to divest
from fossil fuel companies. With
that being said, a little CSR can
go a long way.

Harvard students protesting the

universitys investment in fossil fuel
companies.
Image courtesy of Slate.com

The Big Picture

Though it may seem like
companies are translating their
corporate social responsibility
into profitability, we have to
remember that there are still
costs that are to be incurred
with taking on CSR and it is
ultimately the choice of a
corporation if they want to or
not. However, it sets those who
do apart from those who dont
and shows who actually cares
and who doesnt. With CSR
pioneers like Pepsi and
Starbucks leading the way,
corporate social responsibility
could soon go from choice to
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CORPORATE SOCIAL PROFITABILITY: HOW COPORATIONS

ARE PROFITING OFF THEIR ACTIONS

Issue #1

standard within a matter of few

years. Hopefully, this trend goes
beyond national companies and
extends to companies
worldwide.

*Price subject to change from market activity