Corporate Social Responsibility and Sustainability
According to Gaio & Henriques (2020), a positive relationship exists between financial performance and corporate social responsibility (CSR). Firms with positive financial results have more money to invest in social activities. Also, positive outcomes follow when a firm directs more excellent resources into financial investment. Such a business will get a good reputation, socially conscious clients, and a competitive edge over its rivals.
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Potential Key Financial Performance Indicators (KPIs)
Sales Growth Rate
Sales growth rates are key financial performance indicators that measure a company’s economic performance. Measuring sales rates helps the business identify the sales strategy that works for the business and does not. If a business has positive KPIs, it is in a good position. However, the company should change its strategic approach if the sales growth rate is negative. For instance, Patagonia ensures fair trade practices are observed along the supply chain (Patagonia, 2020). Essentially, this is because of the awareness that some consumers may run away from a company that does not observe fair practices along the supply chain. Consumers tend to avoid companies that tolerate unfair practices such as child labour along the supply chain.
The net profit margin is another critical financial performance indicator aligned with Patagonia’s CSR initiatives. Profitability is what remains from a company’s revenue once operating and non-operational expenses are deducted. In this case, Patagonia ought to ensure it maintains profitability to fund social activities. The company has a self-imposed 1% earth tax to finance nonprofits undertaking environmental conservation (Patagonia, n.d.). Without profits, it may be unsustainable for Patagonia to pursue that course.
Benefits of CSR
According to Murphy (2022), CSR helps a business attract and retain customers, which is vital to a business’s long-term performance. Besides, when people know that part of a company’s profits is channelled to social courses near them, they can pay premium prices. In addition, companies dedicated to supporting the local community experience an uptick in customer traffic. For instance, a bank that loans low-income earners will see more clients. These factors go a long way to boosting a business’s overall bottom line.
Moreover, a CSR business will benefit from community support and customer loyalty. Accordingly, this is so because companies and consumers use social responsibility to support the community. Therefore, customer loyalty and retention will increase if consumers realize the company upholds social responsibility values. Research indicates that 87% of American consumers will support a company that pursues an issue they care about (Murphy, 2022). Also, 76% of customers are likely to abandon businesses that support what they do not believe in (Murphy, 2022). Therefore, pursuing social responsibility will help the company create a good reputation and attract and retain customers.
Using CSR to Achieve KPIs
The pursuit of achieving CSR can be incorporated into the company’s operations to achieve desirable performance. For instance, in 2020, Coca-Cola launched the 5by20 initiative to empower women financially (Murphy, 2022). The company provided training, financial access, and networking opportunities for women across its supply chain. By delivering its retailers access to finances, Coca-Cola believes it will inspire them to become even more productive and valuable to the company. Likewise, health and beauty companies can adopt a similar strategy and empower their people. For instance, helping farmers who provide the company with some raw materials and access to finances will positively contribute to the company’s bottom line.
References
Gaio, C., & Henriques, R. (2020). Social Responsibility and Financial Performance: The Case of STOXX Europe Index. Corporate Social Responsibility [Working Title]. https://doi.org/10.5772/intechopen.93573
Murphy, C. (2022, March 24). Why Is Social Responsibility Important to Some Businesses? Investopedia. https://www.investopedia.com/ask/answers/041015/why-social-responsibility-important-business.asp#:~:text=Embracing%20CSR%20increases%20customer%20retention
Patagonia. (n.d.). Patagonia Outdoor Clothing & Gear. Www.patagonia.com. https://www.patagonia.com/activism/
Patagonia. (2020). Patagonia Outdoor Clothing & Gear. Www.patagonia.com. https://www.patagonia.com/our-footprint/
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Question 
As you get ready to review and analyze the financial performance of the company you work for in Project Two, it would be helpful to explore another company and learn from its business model, primarily related to corporate social responsibility (CSR), sustainability, and activism.
Corporate Social Responsibility and Sustainability
Therefore, you will review Patagonia’s activism and corporate social responsibility initiatives and identify potential critical financial performance indicators (KPIs).
Because Patagonia is a privately held company, its financial records are not available in the public domain. So, you must analyze the mission, vision, values, CSR initiatives, and financial records of the health and beauty company you work for and the company you chose in Module One. You will then deduce which economic key performance indicators likely align with a company’s mission, vision, values, and CSR initiatives.
Prompt
To complete this assignment:
Review the resources you will use in Project Two: Assessing Financial Performance.
Marketing and sales executive summary
Vision, mission, and values of your company
Consolidated balance sheet of your company
Consolidated cash flow statement of your company
Consolidated income statement of your company
The balance sheet of your chosen company
Cash flow statement of your chosen company
Income statement of your chosen company
Please review information on Patagonia’s corporate social responsibility, activism, mission, vision, and values. Use the following resources to help guide your research:
WileyPlus: Patagonia Case Analysis
Patagonia’s Corporate Social Responsibility and Activism
Patagonia—Our Footprint
Patagonia—Mission, Vision, Values
Based on your review of the health and beauty company’s financial records and the company you chose in Module One, identify common financial KPIs and explain how they would align with Patagonia’s CSR initiatives and its ion, vision, and values.
Based on your review of Patagonia’s information, describe how CSR activism can lead to a better brand image and financial results.
Please explain what the health and beauty company could do to incorporate CSR activism strategies to meet its KPIs.