Enlightened business stakeholders realize that profit is only one positive effect of business operations. In addition to safeguarding the environment, other ethical contributions that stakeholders could lobby corporate management to make include establishing schools and health clinics in impoverished neighborhoods and endowing worthwhile philanthropies in the communities where companies have a presence.
Other stakeholders, such as state governments, NGOs, citizen groups, and political action committees in the United States apply social and legal pressure on businesses to improve their environmental practices.
For example, the state of California in enacted a set of laws, referred to as the California Transparency in Supply Chains Act, which requires firms to report on the working conditions of the employees of their suppliers. The law requires only disclosures, but the added transparency is a step toward holding U. As instances of this type of pressure on corporations increase around the world, stakeholder groups become simultaneously less isolated and more powerful.
Firms need customers. Customers need employment, and the state needs taxes just as firms need resources. All stakeholders exist in an interdependent network of relationships, and what is most needed is a sustainable system that enables all types of key stakeholders to establish and apply influence. How can corporations and their stakeholders measure some of the effects of CSR programs? The triple bottom line TBL offers a way. Are they making a profit, staying solvent, or falling into debt?
That is the customary bottom line, but Elkington suggests that businesses need to consider not just one but rather three measures of their true bottom line: the economic and also the social and environmental results of their actions. The social and environmental impacts of doing business, called people and planet in the TBL, are the externalities of their operations that companies must take into account.
If increasing wealth damages the environment or makes people sick, society demands that the corporation revise its methods or leave the community. Society, businesses, and governments have realized that all stakeholders have to work for the common good. When they are successful at acting in a socially responsible way, corporations will and should claim credit. In acting according to the TBL model and promoting such acts, many corporations have reinvested their efforts and their profits in ways that can ultimately lead to the development of a sustainable economic system.
On the other hand, for some, CSR is nothing more than an opportunity for publicity as a firm tries to look good through various environmentally or socially friendly initiatives without making systemic changes that will have long-term positive effects. Carrying out superficial CSR efforts that merely cover up systemic ethics problems in this inauthentic way especially as it applies to the environment , and acting simply for the sake of public relations is called greenwashing.
While the forms that ethics and social responsibility take will vary significantly from one company to another, each of them has a place within every organization. Ethics comes from the Greek word, ethos, which means moral character. Ethics means knowing the difference between right and wrong and continuing to do the right thing. Ethical business decisions can be based on your conscience or based on principle.
In either case, individuals make their own decisions according to the laws of the land or according to their core beliefs. In a business sense, corporate leaders must follow the right behavior to benefit the good of everyone including the shareholders, stakeholders, employees, customers, and the community.
Consultants Doug Wallace and John Pekel from the Twin Cities in Minnesota say that business ethics are critical in times of fundamental change such as we are in now. The general response to that is to question and scrutinize behavior to ensure that good ethics are being played out in the workplace.
Social responsibility refers to businesses doing what they can to benefit their communities. Societies set their own acceptable norms. To be successful, businesses have to adhere to social norms and expectations. If a business is being built on being honest and ethical as well as well keeping social responsibilities in mind, it tends to be more successful and loved by people around more.
Society always expects successful businesses to give back to their community and environment, and people tend to buy more from the companies that prove that they are following social responsibilities and giving back to the community and not harming them in any way. To build a successful business, good business ethics and social responsibility, both, are important to follow.
A company should always make sure it is genuine, and all expectations of society, customers, and employees are being met. Attention to business ethics and social responsibility always creates a good environment and business. Business ethics and social responsibility always go hand in hand to ensure the growth and success of a company and its employees. Business ethics include what a business needs to follow to profit its employees and stakeholders harmlessly.
Social responsibility ensures all norms of a society are being followed in the right manner while building a business. Would love to hear your views. Image credit: Oliver Wendel. Skip to content These two terms can seem interchangeable, but there are some subtle, and not so subtle, differences between them.
Vision Corporate Social Responsibility CSR looks backwards, reporting on what a business has done, typically in the last 12 months, to make a contribution to society. Targets CSR tends to target opinion formers — politicians, pressure groups, media.
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