What is social responsibility in business?
Social responsibility in business means that businesses not only work to maximize shareholder value but that they also act in a manner that is beneficial to society.
Socially responsible companies will promote policies that enrich society as a whole, while simultaneously reducing the negative impacts that a company may be producing.
Types of social responsibility
Corporate social responsibility can be defined in four categories:
- Environmental responsibility refers to actions such as reducing pollution, greenhouse gasses, general waste and responsible water consumption.
- Philanthropic responsibility is the practice of giving back, whether it is to charitable organizations that directly deal with relevant business practices, or nonprofit organizations which may be unrelated, yet still promote positive change in the world.
- Economic responsibility is the practice of a business using all of its financial decisions and resources to positively impact society as a whole.
- Ethical responsibility is the practice of operating a business in a fair and ethical manner in regard to employees, stakeholders, suppliers, customers and investors.
Socially responsible companies can be motivated by morals, ethics, or simply the drive to improve society as a whole. Social responsibility will look different depending on the organization but the main driving force is ultimately to make the world a better place.
Social responsibility practices
Depending on the organization, social responsibility can take on different forms. More and more companies are becoming increasingly concerned with their actions other than the ones that affect profitability.
Some examples of social responsibility practices include:
- Charitable donations
- Reducing carbon footprint
- Practicing sustainable procurement
- Advocating for sustainable legislature
- Diverse and inclusive hiring practices
- Volunteering and giving back to the community
- Investing in other socially responsible companies
Why is social responsibility important for companies?
Investors, stakeholders and customers are becoming more concerned with the social responsibility of corporate organizations.
Not only does practicing social responsibility help companies to be more favorable amongst shareholders, but, more importantly, social responsibility is helping to guide organizations toward a more sustainable future.
- Social responsibility is the commitment of businesses to act in a way that benefits society
- The four categories of social responsibility are environmental, philanthropic, economical, and thical
- Social responsibility is becoming increasingly important to investors and shareholders looking toward a more sustainable future
CLICK HERE to learn more about how corporate social responsibility is assessed under the EcoVadis Rating Methodology