It's time to understand why should companies care about social responsibility?

Corporate social responsibility initiatives and the idea of the triple bottom line have grown in popularity among business circles. But the confusion is where do the boundaries of a company’s social responsibilities lie, and who determines it. Over time, the relationship between businesses and society has evolved. Businesses have had a significant impact on the way we travel, homes we inhabit, foods we eat, and conveniences we enjoy. Every product and service we enjoy is a testament to the positive differences businesses have made in our everyday lives. But has this improved quality of life come at a price? Who is responsible when a consumer uses some of the products or services resulting in harm to others and/or the environment?

The relationship to the society and environment for the business is a critical factor to operate effectively and is also increasingly being used as a measure of their overall performance.

Social responsibility means that individuals and companies have a duty to act in the best interests of their environment and society as a whole. In the past few years, businesses have incorporated this idea into the concept of corporate social responsibility (CSR) and have developed sustainability strategies where social responsibility is an integral part of their business model.

A recent study suggested that there is a challenge for society in making choices on what is good and who determines if it is good or bad?

Social responsibility is one of the most important issues that a business is facing today. Those who follow the way in which companies engage in social problems wold have noted that social responsibility has a strategic importance for two reasons:

1) A healthy business can only succeed in a healthy society. Thus, it is in the best interest of a company to produce only goods and services which strengthen the health of society.

2) If the company wants to succeed in the long term it needs to have the acceptance—or licence to operate—from social actors affected by the company’s’ operations.

But the response of businesses to society’s social demands has not always been well received. On one hand, many corporations have used their CSR initiatives to “look good and feel good”. And on the other hand, there is lack of clarity as to what exactly is social responsibility and how far does it go.

Therefore, how a company handles its social responsibility has become a key success factor for global companies because they are more visible to the public than small and medium sized companies, and because public exposure affects their competitiveness.

Consequently, large companies invest significant economic and human resources to develop strong and sustainable relationships with customers, employees, suppliers, government authorities, academics and other stakeholders.

In Addition to that, It is important for companies to understand that Social responsibility is not only about reducing harm, but also maximising positive outcomes.

All too often, the sustainability strategies of companies are entrenched in activities focused on diminishing the negative externalities of the firm such as reducing harm or minimising negative externalities on stakeholder groups. A socially responsible company, however, is one that not only minimises harm but makes sure to maximise positive outcomes. While the triple bottom line and other frameworks suggest that firms can make up for negative performance through positive outcomes, this is simply not accurate

If a company pollutes the environment, does it actually reverse it's impact by paying for CO2 offsets?

Similarly, if a company pays its producers below minimum wage, will donating a portion of its profits towards a non-profit will improve the situation?

In short, social responsibility should not be an afterthought or public relations manoeuvre; instead, it should be integrated from the outset into the core strategy and business model of a company.

Source: Szekely, 2018



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