Feb. 13, 2008 -  Companies are now seeing corporate social responsibility (CSR) as a growth opportunity rather than just a regulatory compliance or philanthropic effort, according to a new IBM survey of top business executives. Two-thirds of those surveyed report that their companies are focusing on CSR activities to create new revenue streams, and more than half believe CSR has already given them an advantage over their competitors.

Driving these beliefs, according to the study, is the rising influence of well-informed consumers who have used the internet to familiarize themselves with a broad range of environmental and social issues, from climate change to labor practices to product safety. "The more information these stakeholders get, the more they want to know," says George Pohle, leader of IBM's business strategy consulting practice. "This increased visibility of corporate behavior is driving consumers' decisions on what to buy and who to buy from, who to work for, who to partner with, where to invest."

Despite this clear connection between transparency and competitive advantage, the report exposes a gap between what executives understand about their companies' CSR practices and what consumers would like to know. Seventy-six percent of businesses surveyed admit they don't truly understand their customers' CSR concerns. In fact, even businesses that feel they are knowledgeable and prepared to deal with CSR issues may not be: Nearly two-thirds of companies surveyed believe they have sufficient information about the sources behind their products and services to satisfy customer concerns, but half of those admit they don't understand their customers CSR expectations well.

The move toward greater transparency may be as driven by necessity as by meeting stakeholder demand. Three-quarters of businesses report that the number of advocacy groups collecting and reporting information on them has increased in the last three years, as has the amount of information businesses are providing about the sourcing, composition and impact of their products, services, and operations.

"It's not only critical for businesses to keep up with the emerging demands of their stakeholders, but to build CSR into the core of their business strategy," says Pohle. "That way CSR is not viewed as a discretionary cost but an investment that will bring financial returns. And since customers are changing buying behavior as a result of CSR, the financial impact can be dramatic."

Download the report here (PDF).