To appeal to consumers, enterprises such as Amazon and Zoom have been emphasizing their corporate social responsibility (CSR) initiatives through comprehensive reports.
These documents enable companies to present their efforts that positively impact employees, clients, neighborhoods, and the environment—emphasizing goals that extend beyond mere profit-making. Studies suggest that reporting on CSR is associated with a rise in 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 result is promising for businesses—it indicates that these additional sales are being driven by new customers who are positively influenced by the company’s CSR activities.
Nonetheless, the outcomes additionally highlighted difficulties.
To increase sales, companies often need to expand their procurement of supplies. This raises another question: Do CSR disclosures help businesses attract new suppliers?
Surprisingly, we found the opposite. Companies that issued CSR reports appeared to deter new suppliers. This could be because suppliers often shoulder additional costs when a company prioritizes 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.
Thus, while CSR disclosures can attract customers, they may alienate suppliers—posing a potential downside.
While previous research has established that CSR disclosures can boost sales, it has been unclear whether these sales are sourced from new or existing customers. Our study provides clarity that can guide 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 considered introducing mandatory CSR reporting. Until such requirements are in place, many American companies will likely continue to publish these reports voluntarily.
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.
