What Is a Corporate Social Purpose and Social Responsibility?

All managers, for both big and small companies, know that the business world has evolved significantly over the last few years. The pandemic shifted perspectives in many ways, from mental health to remote working practices.

Beyond the employee experience, another area that has seen a shift is corporate social purpose, and social responsibility. Employees today want their companies to act responsibly, ethically, and sustainably.

For companies looking to stay competitive, having a strong social purpose could be your magic ingredient for standing out and differentiating yourself. Deloitte found that “purpose-oriented companies have higher productivity and growth rates, along with a more satisfied workforce who stay longer with them.”

For companies looking to stay competitive, having a strong social purpose could be your magic ingredient for standing out and differentiating yourself.

If your company doesn’t already have a thoughtful social purpose, now is the time to make a meaningful change. Below we look at the difference between social purpose and social responsibility, why it’s important, and how your small company can get started.

What is a corporate social purpose and social responsibility?

While you’ve likely heard the term “corporate social responsibility,” a social purpose is a bit different. Although they are similar, according to Deloitte, a corporate social purpose is broader than a company’s social responsibility: “It is how a business makes a positive economic, social, and environmental impact in the world.”

In contrast, social responsibility can mean a few things:

1. It can mean a “form of self-regulation that reflects a business’s accountability and commitment to contributing to the well-being of communities and society through various environmental and social measures.” (similar to a social purpose)
2. It can mean a series of decisions made by businesses to be more appealing to various stakeholders, including investors, employees, and customers (more rooted in appealing to different groups to attract more financial funding).

So the key difference is while a social purpose emphasizes the importance of doing good in the environments a company operates in, social responsibility can also include decisions made by businesses to appeal to investors.

More companies are paying attention now than ever to their impact

Many companies have started taking their impact on the economy and societies in which they operate more seriously than ever before. One Harvard Business School report found that 90% of companies on the S&P 500 index published a corporate social responsibility (CSR) report in 2019, up from a mere 20% in 2011.

A CSR report “is an internal- and external-facing document companies use to communicate CSR efforts and their impact on the environment and community. An organization’s CSR efforts can fall into four categories: environmental, ethical, philanthropic, and economic.”

Some examples of companies with strong corporate purpose and social responsibility programs include:

• Patagonia: Not only do they pledge a percentage of sales to the “preservation and restoration of the natural environment,” but their founder also recently donated the company to fight climate change. They also truly care about the well-being of the employees making their clothes.
• Ben & Jerry’s: While Ben & Jerry’s has always been known for being socially conscious, in recent years they have become even more vocal about social justice issues. They’ve come out as BLM allies, and against extreme right-wing politics.
• Levi’s: The famous denim company has remained committed to “reducing its greenhouse gas emissions by 40% by 2025”. They also have a history of supporting anti-segregation practices, and educating the public on LGBTQIA+ issues.

The importance of being socially responsible as a company

Having a clear social purpose is not only good for your workforce, but also for the broader societies your company operates in. Below we outline why having a thoughtful social purpose, and committing to social responsibility, are important.

The communities you operate in will benefit

This is perhaps the most important reason to find a strong social purpose. Performative words without action won’t cut it here.

Your company, and its people, should truly stand by and believe in your social purpose. Deloitte’s report outlines the key areas people look at when making purchasing decisions:

• How the company treats their employees (28%)
• Also, how the company treats the environment (20%)
• How the company supports the community it operates in (19%)

We’ll delve into this more in the final section!

Your employees expect you to be socially responsible

Over the last few years, it’s become clear that people see their employers as more than just a paycheck. People expect more from their companies, and that includes working for a business with a transparent purpose: 93% of employees in one study say they believe companies “must lead with purpose.”

Perhaps even more notable is that another 88% of employees said that “it is no longer acceptable for companies just to make money; companies must positively impact society as well.”

Job seekers want to work for socially conscious businesses

Staff retention and hiring have presented challenges for HR this year. One way to remain attractive to top candidates is by having a social purpose.

Being socially responsible could make the difference in keeping or losing your people.

In fact, not having one might be the reason people opt not to apply at all. In was found that 69% of employees said they wouldn’t work for a business that doesn’t have a strong social purpose, and another 60% said they’d even take a pay cut in favor of working for a company with one!

Moreover, being socially responsible could make the difference in keeping or losing your people: A Deloitte report found that retention is 40% higher in companies with a purpose, compared to competitors without one.

You’ll attract more customers

A 2019 report found that 79% of consumers were motivated to buy from companies that demonstrate a commitment to making the world a better place. Another 68% would recommend that company to someone else!

This is especially true for Millennials, as 41% of Millennials make an active effort to research companies and their global impact before making a buying decision (compared with only 16% of Baby Boomer consumers!)

Customers expect companies to be vocal about their social purpose

Once again, young people are leading this force, likely because Gen Z is trying to navigate a significant societal transformation. This generation has had a front row seat to rising inequality and prominent systemic racism.

Because of this, they expect brands to be vocal, and take a concrete stand on social issues. In fact, 47% of Gen Z respondents in one report say that companies need to be vocal because it’s the right thing to do.

How can your company find its social purpose?

Determining your company’s social purpose, and being socially responsible, is no easy feat. It also isn’t an overnight process, but one that requires thoughtful consideration, and an action plan.

Remember, words and actions must align here! It cannot simply be used as a marketing tactic.

BDC has outlined the key steps to determining your company’s social purpose, and how to measure social responsibility:

1. Assess your company’s current efforts: This is where you take stock of your current social purpose initiatives, because you may informally have a social purpose without being aware!
2. Define your company’s social responsibility objectives: Your company’s social responsibility objectives need to be defined, and included in your mission, values and planning.

The key areas initiatives can focus on include:

1. The environment: This is where Patagonia has a heavy focus.
2. Philanthropy: This includes donating money, products, or services to social causes. This might be an easier target for smaller companies. You can pick a community-based charity to focus on and partner with.
3. Ethical labor practices: Companies of all sizes can (and should) have this as a focus.
4. Volunteering: This means volunteering time without expecting anything in return. Some companies offer days (outside of vacation or personal days) for employees to volunteer their time.
5. Prioritize: The goal here is to choose a manageable amount of initiatives with help from your employees, management, and stakeholders.
6. Create an action plan and follow up: This is where the heavy lifting comes in. Your action plan should include a timeline, and a list of who is responsible for what tasks. Regular meetings will also need to be scheduled to measure progress, and make adjustments.

According to BDC, these are some ways your company can measure progress:

• Amount of donations
• Score on the Greenhouse Gas Equivalency Calculator
• B impact assessment (a free confidential tool developed by BDC and B Lab, the nonprofit that certifies B corps)
• Emissions volume
• Energy and water use
• Diversity in employees and suppliers

A social purpose has become an expectation of companies

Overall, customers and employees alike expect companies to be thoughtful about their impact. This includes how they affect the environment, their workforce, and the communities they affect. Small companies may be wondering if they can have an impact, and the answer is, yes!

While you may not be able to have the same environmental impact as a big player like Patagonia, a solid social purpose is not only possible, but will positively impact your business. Turnover might decrease, you’ll attract more customers, and you’ll have a positive impact on your community.