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CSR, Profits ‘Closely Linked’

While a company’s reputation is the primary reason for adopting a corporate social responsibility program, there is still a close link between profits and CSR, according to research by corporate and investor relations firm Adam Friedman Associates.

In the AFA survey, 88 percent of respondents cited company reputation as a factor in CSR decision-making. This was followed by the company’s competitive positioning and social consciousness, which 71 percent of respondents mentioned. Profitability (38 percent) and pending or existing legislation (32 percent) were determined to be motivating factors, according to Corporate Social Responsibility: Who’s Responsible?

The results indicate that companies now look at CSR as “a way to differentiate themselves in the marketplace,” according to AFA. Many businesses evaluate the relationship between profit and CSR when developing strategy, the report says.

Some 86 percent of respondents say CSR is either very or extremely important to the mission of their companies. Results suggest that internally the opinions of C-suite executives are most important when measuring the company’s CSR efforts, cited by 86 percent of respondents. Employees followed at 76 percent. Internal measures of CSR success include financial and manpower units devoted to CSR as well as the company’s own assessment of the social benefits of these initiatives, the report says.

The survey was sent to senior executives at Fortune 1000 companies over a 10-week period, and generated 77 responses on behalf of the companies, with 26 percent of those responses representing Fortune 100 companies. For a copy of the report readers should contact AFA.

A report out in February found that companies that voluntarily issue press releases disclosing their carbon emission information see their stock prices rise significantly in the following days. Going Green: Market Reaction to CSR Newswire Releases, by Paul Griffin of UC Davis and Yuan Sun of UC Berkeley, used archives of the Corporate Social Responsibility Newswire to identify climate change-related press releases issued between 2000 and 2010.

For the 172 companies identified as making voluntary disclosures, average stock prices increased just under a half percent in the five-day span around the disclosures, according to the study.

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