To appeal to consumers, enterprises such as Amazon and Zoom have been emphasizing their corporate social responsibility (CSR) initiatives through comprehensive reports.
These reports allow businesses to showcase their initiatives benefiting employees, customers, communities, and the environment—highlighting objectives beyond profit generation. Research indicates that CSR disclosures are linked to increased sales.
As a marketing professor, this correlation prompted a compelling question: Are the additional sales driven by CSR disclosures coming from new customers, or are they simply boosting purchases from the existing customer base?
In a recent investigation involving the examination of numerous Chinese companies, a collaborator and I aimed to address this inquiry. Our results indicated that CSR disclosures lessen a company’s dependence on its current clientele by 2.1%.
This outcome is encouraging for companies—it shows that the extra sales are being fueled by new clients who are favorably impacted by the firm’s CSR initiatives.
However, the results also revealed challenges.
In order to boost sales, businesses frequently find it necessary to broaden their supply acquisition. This leads to the following inquiry: Do CSR disclosures aid companies in gaining new suppliers?
To our surprise, we discovered the contrary. Businesses releasing CSR reports seemed to discourage potential suppliers. This may stem from the fact that suppliers frequently bear extra expenses when a business focuses on social responsibility.
Depending significantly on suppliers may become expensive for companies. When suppliers notice that a business relies on them, they might prefer cash payments over offering credit. This decrease in credit options can put pressure on a company’s cash flow, resulting in fewer resources available for investment.
Therefore, although revealing CSR activities might draw in clients, it could also drive away suppliers, presenting a possible drawback.
Although earlier studies have shown that CSR disclosures have the potential to increase sales, it was not evident if these sales came from new or current customers. Our research offers insights that can assist in business decision-making.
This understanding is equally pertinent to legislators, authorities, and supporters of corporate accountability, as they discuss the potential requirement for CSR reporting to be obligatory.
While the U.S. does not require companies to issue CSR reports, other nations, such as China, do. Since 2009, all public companies in China have been mandated to submit annual CSR reports—a requirement that provided the foundation for our study.
Interestingly, the U.S. Securities and Exchange Commission has thought about the possibility of mandating CSR disclosure. Until such regulations are established, numerous American firms will probably keep issuing these reports on their own initiative.
Considering these advancements, the demand for empirical data regarding the advantages and expenses of CSR reporting is more crucial than ever.
Future Directions
Growing concerns about extreme weather events and their associated human impacts have piqued my interest in environmental responsibility. I am currently working on two research projects in this area.
First, I am examining corporations’ public statements to evaluate their environmental risks and the steps they’ve implemented to address these issues. Second, I am exploring how CEO motivations impact corporate environmental statements, initiatives, and expenditures—or the absence of such measures.
