The Business consultancy Boston Consulting Group (BCG) has examined in a study how social commitment of companies affects ir profits. For study “total Societal impact – a new lens for strategy”, companies from sectors “general consumer goods”, “pharmaceutical products”, “oil and Gas”, “business banking” and “technology” were surveyed. In total, more than 300 companies were asked about ir social and environmental commitment, as well as 200 representative persons from 20 companies. The results of study show that re is a clear link between social commitment and financial performance of a company: The more a company is socially engaged, respecting environmental issues or having non-governmental organisations Work toger, better it cuts its economic performance.
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The authors of study write that companies that are socially committed have reduced risk of becoming victims of adverse events – such as product accidents, character campaigns or sales scandals. In addition, social commitment would open up new matic areas and new sales opportunities for companies. Companies with social awareness would be more flexible and forward-looking. In addition, customers would reward social commitment with confidence and stable customer loyalty, for example when product manufacturers used biodegradable resources. Companies with social awareness are also particularly attractive for talented new employees. The positive image had a positive impact on economic performance, because it succeeded companies in struggle for new employees to better enforce mselves.
A general trend
In “General goods” division, companies with highest social commitment achieved 4.8 percent more profits than average respondents. In pharmaceuticals sector, it was 8.2 percent more profit, in area of “oil and gas” 3.4 percent and in segment “business banking” 0.5 percent.
The authors of study point out that social commitment of a company must go hand in hand with a sophisticated, reflected corporate governance, so that higher profits could be achieved. The Social policy field in which a company engages must be in line with company’s market objectives and be deliberately selected. The company must articulate its social goals clearly and communicate to customer what it wants to achieve with its social measures. Experts who are familiar with chosen social policy field should be consulted. The measurability of social measures must be given. Investors should be informed about objectives. In addition, good management must exist, capable of efficiently coordinating social commitment with company’s economic expectations.
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The topic of social commitment at company is currently booming. It is to be a topic in January at World Economic Forum 2018 in Davos. In September, a study by World Economic Forum has already confirmed that social measures in workplace would increase productivity of companies. The study examined protection of workers ‘ rights. It is important for competitiveness, wrote authors of WEF: “Competitiveness improves (…) When necessary Flexibilitätmit is combined with adequate protection of workers ‘ rights”, says paper.
