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 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.
However, the results also revealed challenges.
To increase sales, companies often need to expand their procurement of supplies. This raises another question: Do CSR disclosures help businesses attract 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.
Thus, while CSR disclosures can attract customers, they may alienate suppliers—posing a potential downside.
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.
Although the U.S. does not obligate businesses to publish CSR reports, other countries, including China, do. Starting in 2009, every publicly traded company in China has been required to file yearly CSR reports, which laid the groundwork for our research.
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 analyzing companies’ public disclosures to assess their environmental risks and the measures they’ve taken to mitigate them. Second, I am investigating how CEO incentives influence corporate environmental disclosures, actions, and spending—or the lack thereof.
