The Fundamental Link Between Social Responsibility and Financial Success

With respect to the relative financial health of companies and their willingness to address social or environmental issues brought forth by socially responsible investors, it’s important to appreciate the fundamental link between these issues and the financial success of the company.

Certainly companies provide people with the opportunity to work. In Laudato si’, Pope Francis notes “Work is a necessity, part of the meaning of life on this earth, a path to growth, human development and personal fulfillment.” (128) However, when companies fail to address and manage issues such as labor relations or human trafficking in the supply chain, the impact on people can be devastating and the companies themselves may suffer longer term performance issues, including reduced stock prices. Instead, if companies can successfully manage these issues, it may help them improve employee relations and better withstand other crises that come up including those outside of the company’s control (e.g. a significant drop in commodity prices, natural disasters, etc.).

Companies can be distracted by crises, mergers, and more which can make it more difficult for them to achieve progress on an engagement with CBIS. But these situations might also create new opportunities to influence a company. One of the ways we try to be effective through corporate engagement is to take the time to understand companies’ perspectives, priorities, or challenges and help them understand how moving forward on these issues may help them down the road.