Consider this: if two companies offer similar products but one is well known for supporting social and environmental issues that align with your beliefs – whose products would you buy?
More and more customers are prioritizing a company’s corporate social responsibility (CSR) and holding them accountable for affecting positive social and environmental change. One recent study found that 87 percent of U.S. consumers would purchase a product because a company advocates for issues they believe in and support in their daily lives. Further, 76 percent of consumers said they would refuse to buy from a company if they learned it supported an issue contrary to their own beliefs (Cone).
Enacting and supporting a robust CSR initiative helps validate a company’s legitimacy both in the eyes of their customers and shareholders. A report from McKinsey & Company found that companies can directly link CSR programs to increased financial value, even in the short-term. For example, some companies are measuring the impact of environmental or sustainability programs with traditional business metrics such as cost efficiency (McKinsey). Investment entities like Just Capital are even using company CSR ratings to help inform who to finance and back from an investment perspective.
For the financial services market, implementing CSR requires the overall industry to self-reflect and consider the kind of impact they have on society and the communities they serve.
Financial Services’ Opportunity to Make an Impact
Our economy depends on the financial sector and each publicly traded company has to answer to its board and shareholders. Therefore, financial services companies must have a realistic view of their influence. Implementing a CSR strategy is an opportunity to look beyond just traditional financial priorities and use that influence to make positive changes in society – and the world.
For financial services entities, gaining and retaining the trust of customers is paramount to success. By integrating CSR into their overall identity, companies can achieve better self-awareness, create greater brand value and work toward goals that have a positive impact on their business and their customers. A strong CSR program will also help to attract and retain individuals that positively impact company culture—an important factor for the financial services industry which is constantly looking to recruit and retain top talent. In fact, according to another study conducted by Cone, 64 percent of millennials consider a company’s social and environmental commitments when choosing a job and 88 percent say their job is more fulfilling when they have opportunities to make a positive impact on issues relevant to them (Cone).
Mastercard is striving to make a positive social impact. With the creation of the Mastercard Center for Inclusive Growth, the company is connecting people to the networks and resources that enable them to thrive and prosper. Mastercard is investing its assets — expertise, data, technology and philanthropic investments — to advance upward economic mobility for the growing population of over 100 million Americans who live at or well below the poverty line.
Bank of America has also invested time and resources into their social impact and responsibility initiatives. The company is widely-known throughout the financial services industry for focusing on environmental sustainability, driving economic and social progress and enabling financial health. Bank of America reports that since 2007, it has deployed $87 billion for low-carbon and sustainable business activities (Bank of America). Additionally, they have committed $125 billion to help accelerate the transition to a low-carbon economy by 2025 (Bank of America).
Bank of America also considers the unique needs of the people and small businesses it serves in low and moderate income communities and connects them with resources to help achieve economic mobility. The company launched a financial education platform to honor their commitment to helping everyone understand their finances and take steps to improve their financial lives (Bank of America).
These are just a couple examples of how the financial services industry can leverage its impact for good. While there is no cookie-cutter CSR plan for companies to follow, they can start by learning about and understanding the needs of their customers and the communities they serve.
The Changing Role of Financial Services
Customers aren’t the only ones putting pressure on businesses. Government entities, competitors and employees are also demanding companies play a more significant role in addressing a broad scope of environmental, social and governance issues – from sustainability to education.
As the importance of CSR continues to grow, companies will feel increased pressure to recognize, take a position and advocate social, environmental and governance issues that they believe are most relevant for them. Companies should be prepared to make CSR a crucial part of their overall mission and commit to consistently track progress and make appropriate changes along the way. CSR is a living initiative and not simply a box companies can check off. More importantly, CSR programs must remain authentic and true to the company’s culture with buy-in coming from the top-down.
It is critical for those in financial services to understand and appreciate the role they play in society. Customers trust them with their livelihoods, and the more transparent companies can be about their daily practices and intentions, the better. When considering CSR, transparency and honesty are paramount to earning consumers’ (and the broader public’s) trust. There is real value for companies that have well-designed and successful CSR policies, practices and tangible initiatives. From encouraging sustainable behavior to increasing community presence and creating a positive brand recognition – it will only become more important for companies to embrace CSR initiatives that match their values and deliver on their overall business priorities.