Studies show that business ethics have improved over time, both in the actions of individual employees and companies altogether. After the rebirth of environmentalism in the 1990s and the rise of online business (and the new moral dilemmas that coincide with the latter), businesses have grown increasingly value-based while still maintaining one central goal—earn enough net profit to remain operable. This increasing importance of ethics in business has led to the development of a business model known as corporate social responsibility (CSR).

What is Corporate Social Responsibility?

Investopedia defines CSR as “a self-regulating business model that helps a company be socially accountable — to itself, its stakeholders, and the public.” It’s a multi-faceted concept, so let’s break it down further.

Consider Ben & Jerry’s, a company that produces ice cream and other frozen treats. Its founding in 1985 coincided with the establishment of the Ben & Jerry’s Foundation, which uses a percentage of the company’s pretax profits to fund social change and sustainability initiatives. Ben & Jerry’s uses its profits to not only grow its business, but to also grow the surrounding community.

Another example would be McDonald’s. While this fast food joint overlooked by infamous Golden Arches is a for-profit business that sells quick and affordable foods, its nonprofit offshoot, the Ronald McDonald House Charities, focuses on helping children in need of healthcare as well as their families. 

The Ben & Jerry’s Foundation and Ronald McDonald House Charities are just two examples of CSR initiatives, as they demonstrate dedication to philanthropy and business ethics.

Why Does Corporate Social Responsibility Matter?

At the end of the day, CSR is not a requirement for standard business practices. Plenty of businesses forgo giving opportunities without a second thought, and still find success. In that regard, why does CSR matter; or, perhaps the better question is, what makes CSR so important?

The key finding of numerous studies is that putting profit towards CSR initiatives can actually lead to returns. Here’s how: companies publicize their efforts to enact social change, which reaches the eyes and ears of stakeholders, customers, and even a wider audience. That audience thinks of the business in a positive light, which can lead to higher customer demand and, in the end, higher profit margins. It’s a multi-step process that strengthens public image for the company and, more importantly, benefits everyone. By forging strong relationships between customer and company, client and corporation, businesses can find great success beyond simply making money—they can make a change.