2020 was one of the most significant transformative years in recent history, especially within business sectors. A once-in-a-century pandemic, the resulting economic downfall, and a historical reckoning with racial injustice have radically altered the business landscape. This trifecta of life-changing events has led many businesses to reevaluate their Corporate Social Responsibility (CSR) initiatives, with many companies redefining their values and strengthening their commitments to customers, stakeholders, and their communities.
CSR can encompass several actions and decisions made by businesses that speak to ethical behavior, improving the lives of their employees or customers and enacting positive change in society as a whole. These actions and decisions encompass environmental, social, and procedural considerations that affect how a business is viewed overall and influence stock prices.
“Many times, the road to success is sprinkled with obstacles of all shapes and sizes,” says Jorge Olson, co-founder and CMO of two publicly traded companies, Hempacco and Green Globe International. He is part of a generation of entrepreneurs and marketing experts that have had their careers wildly influenced by the pandemic, economic upheaval, and social justice matters. “The drive to continue when things get hard is not natural. You need to cultivate it and change your perspective on problems, business, and life,” Olson explains.
When radical change hits, businesses that positively pivot and take their values seriously will likely find success within their customer base and see that success reflected in their stock prices.
The Shift of CSR
The CSR shift in business has been evident post-2020. Companies across most, if not all, industries recognize the need to adapt or die to this changing view of the importance of CSR.
For one, customer expectations have risen concerning where they will spend their hard-earned money. The expectations of stakeholders and employees have increased, as well. Many companies have decided to adopt rather than risk closing (or being “cancellation”), and the rate of change in the post-2020 business landscape has been swift in many cases. Companies reconsidered hiring practices, formed new marketing strategies, and reaffirmed their commitments to a better world — environmentally and socially.
Much of what could be considered CSR shifts followed major societal mindset shifts. In the wake of the pandemic and the social uprisings in 2020, people began to reframe their ideas of what they considered important.
“Mindset is how you perceive reality, so you can change your reality by changing your mind. But, how do you do this?” asks Olson. “You start by understanding that your mind is elastic and can change, your brain is filled with webs of connections between brain cells, and they can change and mold your thinking and emotions. So, you can ‘hack’ your brain by giving it new information.”
Many business leaders proved that they could be elastic — they could change — and that those changes could positively affect society and their bottom lines.
The “stock market effect”
Businesses want to be seen as relevant, functional, and socially conscious. In today’s social media-driven society, a CSR misstep by a company could permanently destroy its brand. However, avoiding cancellation can’t be the only reason a business focuses on the importance of CSR. The stock market effect has been a much-studied and documented result of enhanced CSR attention, piquing the interest of companies likely already dedicated to improving their CSR in the wake of the last few years.
When companies embrace CSR, customers, and employees take notice. Many customers report that they are likely to pay higher prices for goods or services if they know a portion of the profits is going towards good causes. Companies that invest in local communities will likely receive higher foot traffic and popularity overall. When it comes to long-term financial growth and business scaling, a commitment to CSR can help a business attract investment offers and top talent to their teams, allowing them to scale faster and increase profit as a result.
All of this points towards gains in the stock market for businesses that do not neglect CSR. An overall market decline has radically affected most market sectors. This widespread decline has caused some with an eye on big players like Disney or Nike to repeat the recently popularized “go woke, go broke” sentiment, ascribing downturns in the market to big companies increasing focus on social or environmental matters.
However, overall, consumers care about CSR. According to recent studies, 70% of consumers want information on how the brands they know and love address social and environmental issues. There seems to be no statistical link between a strong CSR stance and a dip in stock prices. Rather, any dips in stock performance in the wake of 2020’s triple-threat of issues are due to other factors — such as investors fearing the worst from the pandemic, policy shifts by the Federal Reserve, and aggressive interest rate hikes.
Through it all, the signs still point to a strong CSR stance that benefits businesses long-term. Jorge Olson continues to take a socially responsible approach in his ventures and urges others to follow suit.
“I believe entrepreneurs have an obligation to leave the world better than how we found it,” he explains. “We’re a green company and want to pressure the entire industry to think before they contaminate.” Olson is also concerned about providing a workplace that considers the needs of employees. “I feel an enormous responsibility for my employees, and I want to make a difference in their life and the life of their families. I try to mentor and offer a great place to work.”
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Olson joins many other business leaders around the globe who know the importance of a strong stance on CSR. As the world emerges from the ravages of the pandemic and the reckoning that came with climate change and social justice revelations, businesses will be shifting to platforms and missions that heal and help rather than harm.