by Leslie Berliant

Wall Street evaluates companies by dollar figures. LOHAS consumers judge by a different bottom line; whether corporate practices align with consumer values. Is it possible the socially responsible practices LOHAS consumers expect and brand building, revenue enhancement practices investors expect can be one and the same? Some analysts think so.

While companies have always engaged in philanthropy, when American Express began raising money for the Statue of Liberty restoration 25 years ago, engaging consumers directly in the fundraising process through a transactional connection was unique. Since then, cause branding has become increasingly prevalent though the benefits of corporate social responsibility (CSR) are sometimes difficult to quantify. One way companies derive Calculated Intangible Value (CIV) is by comparing their three year profits to that of competitors with similar tangible assets.

For Paul Herman of HIP (Human Impact + Profit) Investor, there are more precise measures, and many examples of companies that solve problems and serve human needs experiencing better revenue and tax positions, and lower costs of operation, raising capital and issuing stock. Examples include Toyota’s assent to number one automaker by capitalizing on a new market with the highly profitable Prius, Liberty Property Trust spending 2% more on LEED conpliance reaping 30 – 40% operating cost decreases, Walgreens tax breaks and lower operating costs from installing solar panels on 100 stores, and Burt’s Bees acquisition by Clorox for almost $1 billion. Finally, Herman points to Interface Flor’s re-branding around sustainability resulting in a billion dollar market cap and higher PE ratio than competitors.

Concurrently, companies like Mattel, once profitable based on what Herman calls “the China price”, are seeing their sales and stock plummet while “HIP price” products are increasingly popular and profitable. The furniture company Herman Miller, for example, charges premium prices while investing in sourcing sustainable materials, leading to enviable profit margins.

Nike views corporate responsibility as a catalyst for growth and innovation, concentrating efforts on improving conditions in factories, designing for a better world, achieving climate neutrality and unleashing potential through sports. They call the return on these integrated CSR programs “ROI2”. Youth focused community efforts using sports to inspire social change have obvious benefits for Nike by creating future loyal consumers. Nike has also reduced manufacturing waste by 45% since 1998, in part through closed-loop systems, with vendors receiving back waste materials from the shoe-making process to recycle into new materials for Nike.

PR Week and the marketing firm Barkley released a survey quantifying the positive effects of corporate philanthropic activities. According to their results, 72% of consumers have purchased a brand because it supports a cause they believe in. Corporations report positive PR (65.3%), an increase in sales (26.7%) and an enhanced relationship with target demographics (52%) as a result of cause marketing. 56% of companies also report heightened staff morale and retention and 14.7% cite improved recruitment of quality candidates.

According to Barkley CEO, Mike Swenson, program effectiveness is measurable through cause marketing sales (events with product sales involved), cause event visibility (runs, walks, etc.), and cause branding traction (programs that define the company). In 1995, Barkley’s own client Lee jeans, looking to take advantage of trends toward casual Fridays and more casual workplace dress codes, and improve perception of the Lee brand among 24- 49 year-old women, started Lee National Denim Day benefiting breast cancer research. Brand tracking studies report 60% of women have a more favorable impression of Lee and 33% are more likely to purchase the brand based on its sponsorship of Lee National Denim Day. Further, women aware of the sponsorship are more likely to view Lee as a fashionable brand. Swenson also points to the Dove Self Esteem campaign repositioning a commodity product into a brand with a clear point of differentiation.

Other companies, World of Good for example, successfully established entire brands around CSR practices. The 3 ½ year-old company sells international, fair-trade style sourced hand crafts online and through strong partnerships with retailers like Whole Foods. With 300% annual growth, World of Good appeals to traditional venture capitalists and serves as an example of marrying positive impact with bottom line profitability.

According to another Barkely survey, growing evidence shows that cause branding also positively effects Generation X and Y stock purchases. For companies courting consumers and investors in their 20’s and 30’s, CSR is now an important decision point. At the same time, employees looking to find more meaning in their work are demanding that companies get more involved in problem solving and have a positive social, environmental or health impact.

No longer just something a company has to do for PR purposes, corporate social responsibility has become a significant differentiator for consumers, employees, investors and shareholders. CSR companies are simultaneously investing in the greater good and their own good, resulting in an increase in multiple bottom lines.