In the UAE and Saudi Arabia, CSR is no longer philanthropy; it’s a growth strategy that fuels innovation, builds trust, and strengthens business resilience, a recent KPMG report revealed.
Mounting evidence shows that robust Corporate Social Responsibility (CSR) practices are linked to strong business performance. Far from being a charitable cost center, strategically implemented CSR can drive financial returns, enhance brand value, mitigate risks, and fuel innovation. This section outlines the key reasons why investing in CSR creates business value, supported by data and real examples from both global companies and Saudi firms in Saudi Arabia.
CSR – From Charity to Strategy — A Brief History
The idea behind CSR is straightforward: a business has responsibilities not only to its shareholders and financial bottom line, but also to the communities, society, and environment around it. The modern concept of CSR began taking shape in the 1950s, when Howard Bowen first coined the term, reflecting a growing recognition that companies should contribute to societal well-being beyond just making profits. Early on, CSR largely meant corporate philanthropy and community volunteering. Over the subsequent decades, however, CSR’s scope broadened in response to social and political changes. In the 1960s and 1970s, businesses started to address labor rights, workplace safety, and environmental protection as part of their operations, moving CSR closer to the core of business management.
The rise of globalization in the 1990s then expanded CSR to a global stage, with companies increasingly held accountable for their impacts on far-flung communities and ecosystems. By the mid-2000s, thought leaders like Michael Porter and Mark Kramer introduced the concept of “creating shared value,” pushing companies to design business strategies that create economic value for the firm and social value for society simultaneously.
In recent years, CSR has further matured into the broader paradigm of ESG, emphasizing measurable criteria for environmental, social, and governance performance. Especially over the last decade, investors and regulators have focused intensely on issues like carbon emissions, diversity, and anti-corruption—to the point that sustainability metrics are now a mainstream business concern. Reporting on sustainability has become standard practice among large companies; indeed, as of 2024, 96 percent of the world’s largest 250 companies produce sustainability reports, and 95 percent have set specific carbon reduction targets. In some regions (for example, the European Union), regulators are moving toward mandatory disclosure of ESG performance, further cementing these practices into the core of corporate accountability.
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Global Frameworks Guiding CSR Evolution
As CSR evolved, international frameworks emerged to guide and encourage companies’ contributions to sustainable development. Notably, the United Nations Sustainable Development Goals (SDGs), established in 2015, provide a universal blueprint for tackling issues like poverty, inequality, education, health, and climate change. Businesses worldwide have increasingly aligned their CSR initiatives with these SDGs, recognizing that corporate resources and innovation can help achieve these global goals.
For example, the UN Global Compact—the world’s largest corporate sustainability initiative—now has over 25,000 participants across 167 countries, including more than 18,000 companies that have committed to aligning their strategies and operations with ten universal principles covering human rights, labor standards, environmental protection, and anti-corruption.
96% of the world’s 250 largest companies publish sustainability reports.
By signing onto initiatives like the Global Compact, companies voluntarily pledge to support broader societal goals (the SDGs) through responsible business practices and collaborative projects. This alignment not only benefits society but also provides firms with a clear framework to shape their CSR programs and report progress in a globally recognized way. For instance, Principle 10 of the UN Global Compact calls for businesses to actively combat corruption—directly supporting SDG targets on peace, justice, and strong institutions.
Such frameworks have helped standardize what effective CSR looks like and encouraged companies to move beyond ad-hoc charity toward integrated sustainability strategies.
95% have set carbon reduction targets in 2024.
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Financial Performance and Investor Confidence
A growing body of research indicates that companies with strong sustainability credentials often outperform their peers. The positive correlation between CSR and financial results is evident in numerous studies—as noted earlier, 92 percent of academic studies have found that Corporate Social Responsibility (CSR) contributes a net benefit to financial performance.
Investors have taken notice. Global capital is flowing into ESG investments at record levels, signaling that sustainability is now seen as integral to long-term profitability. In fact, ESG-focused assets are on track to exceed US$50 trillion by 2025, which would represent about one-third of all global assets under management. This stunning figure reflects an investor consensus that companies managing environmental and social factors well are likely to be better long-term bets.
In parallel, surveys show that roughly 73 percent of investors factor a firm’s environmental and social initiatives into their decision-making. Among younger investors, the sentiment is even stronger—about 41 percent of millennial investors say they actively prioritize companies with solid CSR performance when building their portfolios.
The market rewards responsible business: companies that lead in CSR can attract a broader base of investors and often enjoy a lower cost of capital, as they are perceived as less risky and more future-ready. Conversely, poor CSR can repel investors; approximately 22 percent of investors now voice a “zero tolerance” stance on unethical corporate behavior, avoiding companies with questionable social or environmental records. In short, in today’s capital markets, doing good is increasingly a prerequisite for doing well.
- 41% of millennial investors prioritize strong CSR when investing
- 73% of investors factor in ESG/CSR in decision-making.
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Consumer Trust and Brand Loyalty
What a company stands for socially and ethically has become a major driver of brand equity. Consumers—especially in the age of social media—are quick to reward or punish companies based on their social impact.
A majority of consumers are willing to vote with their wallet: surveys find that 77 percent of consumers would pay more for a product from a company committed to making the world a better place. This indicates that Corporate Social Responsibility (CSR) initiatives can translate into premium pricing, higher sales, and greater customer loyalty.
On the flip side, consumers are increasingly unforgiving of unethical practices; about one in four consumers adopts a zero-tolerance approach to companies involved in scandals or irresponsible behavior. By proactively acting as good corporate citizens, businesses can differentiate themselves, strengthen their reputations, and build a reservoir of goodwill that helps sustain customer loyalty even during tough times.
We have local examples of this dynamic: stc reports that its community and sustainability programs have strengthened customer loyalty and enhanced public perception of the brand, solidifying stc’s image as a responsible corporate citizen.
In essence, Corporate Social Responsibility (CSR) can be a powerful brand-building strategy. Companies like Coca-Cola illustrate this well—facing global concerns over water scarcity and plastic waste, Coca-Cola integrated environmental sustainability into its core business strategy. The company’s ambitious Water Stewardship initiative (to replenish 100 percent of the water it uses by 2020) and its “World Without Waste” commitment (to make all packaging recyclable by 2025) were not only socially responsible moves, but also shrewd business bets.
These programs helped Coca-Cola reduce operational risks (ensuring water availability in its supply chain and staying ahead of regulatory pressures on plastics) and boosted its brand reputation and consumer trust as a sustainability leader. Coca-Cola’s experience shows how aligning CSR with core products and stakeholder concerns can reinforce a company’s market position and customer loyalty over the long term.
- 77% of consumers are willing to pay more for products from socially responsible companies.
- 1 in 4 consumers use a zero-tolerance policy toward unethical companies.
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Operational Efficiency and Risk Management
Many Corporate Social Responsibility (CSR) initiatives lead directly to operational improvements and risk reduction, which save costs or prevent losses for the business. Environmental efficiency measures—reducing energy use, waste, or water consumption—often lower operating expenses. Social initiatives like improving labor conditions or community relations can preempt conflicts and disruptions that might otherwise impact production or sales.
A clear example comes from TotalEnergies, one of the world’s largest energy companies, which faced a complex challenge managing human rights risks across its vast supply chain. In response, TotalEnergies redesigned its procurement processes through a CSR lens: it conducted workshops to educate its procurement teams on human rights issues and deployed a sustainable procurement tool to assess supplier risk, aligning with France’s strict “Duty of Vigilance” law on corporate human rights and environmental due diligence.
The benefits of this strategy were tangible. TotalEnergies’ procurement teams became far more attuned to human rights considerations—these criteria became embedded in everyday procurement decisions—and the company significantly reduced its legal and reputational risks related to suppliers.
In essence, by proactively addressing a social risk (human rights in the supply chain), the company not only did the right thing ethically but also shielded itself from potential lawsuits, boycotts, or supply disruptions. Many firms have similar stories: integrating CSR often means integrating risk management into the business.
It’s no surprise that 95 percent of business leaders in one recent international survey agreed that their company is willing to invest more to use ESG as a competitive advantage (up sharply from 60 percent a year earlier), recognizing that sustainable practices can fortify a business against a wide range of risks.
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Innovation and Growth Opportunities
Embracing CSR can spur innovation by pushing companies to rethink products, services, and business models in ways that create new value. When a company sets bold CSR goals (for example, around sustainability or social impact), it often has to innovate to achieve them—and these innovations can yield competitive advantages.
Consider DuPont, the science and materials company. Traditionally, DuPont’s sustainability efforts were siloed and compliance-driven, focused on minimizing harm. But in recent years, DuPont made a strategic shift: it combined its Chief Innovation Officer role with its Chief Sustainability Officer role, effectively uniting sustainability and R&D under one leadership umbrella.
The company also integrated climate-related risk assessment into its enterprise risk management, aligning with frameworks like the Task Force on Climate-related Financial Disclosures (TCFD). This governance overhaul meant that sustainability was no longer an afterthought—it became a core criterion in product development and innovation processes.
The results were striking. DuPont’s integration of “sustainability thinking” into its innovation pipeline led to new products and solutions that reduced environmental impact while driving profitability. By pursuing an “innovate for good” strategy, DuPont not only bolstered its environmental credentials but also opened up new market opportunities, enhanced stakeholder trust, and demonstrated measurable operational improvements (for instance, more efficient use of resources).
In a similar vein, Nike responded to past criticisms over labor and environmental issues by reshaping its entire approach to innovation. Nike established a dedicated Corporate Responsibility, Sustainability and Governance Board Committee and gave its sustainability chief a direct reporting line to the CEO as well as the head of innovation.
This top-level commitment enabled major initiatives like Nike’s Move to Zero campaign (aimed at zero waste and carbon neutrality), which in turn led to the development of new sustainable materials and product lines. The payoff has been multifaceted: Nike has achieved significant progress on its five-year sustainability targets, attracted environmentally conscious consumers, and strengthened brand loyalty—all while aligning its growth trajectory with a more sustainable future.
These cases show that CSR can be a powerful engine for innovation, pushing companies to create better processes and products that meet emerging societal needs (like green technologies or inclusive services) and giving those companies a first-mover advantage in new markets.
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CSR as a Strategic Lever
Dr. Mubarak Albogami, Director General for Corporate Social Responsibility (CSR) at MHRSD – with previous roles as Head of CSR at the Saudi Central Bank (SAMA) and stc – finds that a CSR function is not meant to sit on the sidelines.
“When done right, it becomes a strategic lever that ties directly to an organization’s mission and vision, while also sparking growth, innovation, and competitive advantage.”
CSR has the ability to mobilize people; it can create a movement making others—whether customers, employees, or investors—join in and get on board with the organization.
Dr. Albogami adds, “CSR is no longer a marginal activity; it became an integral part of the strategies. It is a mechanism for translating a company’s mission and vision into tangible impact.”
From a national perspective, MHRSD empowers the private sector to incorporate CSR into their commitments to support the Kingdom’s broader development goals.
“When an organization positions sustainability, innovation, and community well-being at the heart of its vision, CSR becomes the practical tool to orchestrate the business objectives with development needs.”
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Employee Engagement and Talent Attraction
Companies often cite their people as their greatest asset—and Corporate Social Responsibility (CSR) can dramatically affect how those people feel about their employer. Today’s employees, especially younger generations, want to work for companies that stand for something beyond profit.
According to the Porter Novelli 2020 Purpose Tracker, a striking 95 percent of employees surveyed in the US say they believe businesses should benefit all stakeholders—including employees, customers, and communities—not just shareholders. When employees see their company living up to positive values, it boosts morale, pride, and loyalty.
Engaged employees are more productive and less likely to leave, directly impacting a company’s performance. CSR programs can also provide meaningful opportunities for staff development and team building (for example, volunteering initiatives or cross-departmental projects on sustainability).
In Saudi Arabia, we have seen how CSR efforts can galvanize the workforce. Zamil Group, a large family-owned conglomerate, reports that since it formalized a more structured CSR framework, its employees have actively participated in community development projects, fostering a strong sense of purpose and engagement among the staff.
Employees often take pride in these initiatives, which in turn improves their satisfaction and commitment to the company. Additionally, a strong CSR reputation helps attract talent in the first place. In competitive job markets, candidates (especially skilled Saudi youth) may favor employers known for their positive impact and ethical practices.
A company deeply involved in, say, educational programs or environmental projects is likely to be viewed as more attractive and forward-thinking by prospective hires. In short, CSR is increasingly part of the employee value proposition. By aligning business with a social purpose, companies not only do good externally but also create a more motivated, loyal, and high-performing team internally.
- 95% of employees believe businesses should benefit all stakeholders, not just shareholders (US survey).
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Local and Global Examples of Value Creation
The business benefits of CSR outlined above aren’t just theoretical—they are backed by the real experiences of companies both worldwide and in Saudi Arabia.
For instance, RSG, a Saudi developer of sustainable tourism destinations, explicitly views its extensive CSR programs as long-term investments in the company’s success. RSG’s initiatives in community development and environmental conservation are designed not for short-term publicity, but to yield sustained returns such as stronger community relationships, enhanced brand differentiation in the eco-tourism market, and even financial payback through efficiency gains and new business opportunities (e.g., eco-innovation).
At stc, executives have noted that their CSR and sustainability efforts (which range from education grants to environmental projects and volunteerism) translate into concrete business gains: CSR has strengthened stc’s customer loyalty and public image, contributing to its competitive edge in the telecom sector.
On the global stage, we have seen how proactive CSR helps avoid costly pitfalls—for example, companies that took early action to ensure fair labor practices in their supply chains (often prompted by CSR concerns) avoided the reputational and legal crises that befell less responsible competitors. And when unexpected crises do hit, companies with a track record of good corporate citizenship often fare better at maintaining stakeholder support.
In sum, companies are finding that purpose and profit go hand in hand. The data and cases make a compelling argument: treating CSR as a core business strategy leads to multiple avenues of value creation—from higher revenues and lower costs, to stronger brands, loyal customers, engaged employees, and more resilient operations.
Having established why Corporate Social Responsibility (CSR) makes good business sense, the next question is how companies are putting this into practice. The following section examines the strategic shifts underway as businesses integrate CSR into their core governance and leadership structures, ensuring that the pursuit of social value is embedded in how they operate.
“When done right, CSR becomes a strategic lever that ties directly to an organization’s mission and vision, while also sparking growth, innovation, and competitive advantage.”
— Dr. Mubarak Albogami, Director General for Corporate Social Responsibility, Ministry for Human Resources and Social Development
“We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients. That requires understanding how companies are adjusting their businesses for the massive changes the economy is undergoing.”
— Larry Fink, Chairman and CEO, BlackRock, in his 2022 “Letter to CEOs”
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Disclaimer
This article is based on insights from the KPMG Middle East report titled “CSR at the Heart of Corporate Leadership” (October 2025), authored by Hanan Alowain, Partner – Government and Public Sector, KPMG Saudi Arabia. The report highlights how corporate social responsibility (CSR) has evolved from a philanthropic activity to a strategic business imperative driving innovation, competitiveness, and sustainable growth. Drawing from real-world examples of global and Saudi companies such as stc, Red Sea Global (RSG), Zamil Group, DuPont, Nike, and TotalEnergies, the study demonstrates how CSR, when aligned with Saudi Vision 2030, enhances financial performance, investor confidence, brand reputation, and employee engagement. The article integrates these findings to explore why doing good is now central to doing well in business.
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