The multi-national companies operate in many territories and gather profits from the people. The companies are responsible to all the stakeholders (investors, employees, and customers) because their policies and actions could either be beneficial or harmful. For example, a chemical production company established in a developing country is responsible to the countryâ€™s people. The production of chemicals generates gases and waste that could cause harm to the local environment and the people. Thus, the company should uphold its social responsibility to ensure the well-being of the people.
Social responsibility is not a burden or liability for private enterprises. All private conglomerates begin, thrive, and attain their goals by operating their businesses in society. They must share a percentage of their success with the people they earned profits from a few corporates may perceive social responsibility as a burden on their exchequer. They should consider a major point that a companyâ€™s brand equity depends on customersâ€™ loyalty, and customers prefer to purchase products from socially responsible companies. Social responsibility via sharing a percentage of profit or revenue may dent a company in the short term. Still, in the long-term, it would be beneficial for the growth and progress of the company.
How can Companies be socially responsible?
A business cannot be called socially responsible just because it follows the rules and laws. Social responsibility demands much more than law-abidance. Being socially responsible is a moral obligation, and companies can become socially responsible by abiding by morality and business ethics principles.
Transparency â€“ Businesses can provide accurate information on the packaged products. The labels should clearly show the correct information to help consumers to make informed decisions. For example, nutrition and calorie ingredients/figures.
Fair employment policies – Through fair and just work-related policies and practices, a business can fulfil its social responsibility. For example, policies reflecting minimum wage, fair remuneration, compensation and performance appraisal, and other information could prevent discrimination at the workplace.
Pro-environment actions â€“ In todayâ€™s globalized and progressive world, pollution (air, water, and land) is a major concern for everyone. Companies can follow go-green initiatives to reduce their carbon emissions. Companies can donate funds to non-governmental organizations that work for the conservation of natural resources and the prevention of pollution or global warming.
Pro-people activities â€“ Companies operate in a society and cannot alienate themselves from the people. The public is the ultimate consumer of the companyâ€™s goods and services and no business can remain profitable at the cost of the public. Therefore, businesses should be proactive for the social and financial upliftment of the people. For example, people donate money to set up new health facilities at the crucial time of deadly pandemics.
The company policies can serve society either via philanthropic activities or via pro-environment operations. They should remember that a business that serves the people via philanthropic activities but harms the environment by polluting the natural resources (land, air, and water) is not socially responsible. A business should honestly practice go green initiatives without deceiving the government or society.
Factors influencing the Social Responsibility of Companies
A business does not operate in isolation. Multiple multi-dimensional factors are responsible for the progress and growth of the business. Todayâ€™s technological revolution has changed the ways of operation of companies. Technology offers both opportunities and challenges for companies to be socially responsible business.
Type of industry – Businesses belong to different genres or niches, and not all of them are equally responsible for causing pollution. For example, companies that operate in coal-based power production are more polluting than renewable energy companies. In addition, some industries produce more pollutants as by-products while others do not.
Location â€“ A multi-national company that operates in two or more countries abides by the laws of all countries. However, the company may choose not to be socially responsible; if a country does not have the guidelines that promote businesses to involve in charity or other social causes.
Media exposure â€“ Todayâ€™s social media is more active than print media. Any comment, tweet, or social media post can trigger either a positive or negative response for the companies. In recent incidences, several protests were observed that highlighted the need for pro-environmental initiatives and criticized the companies for creating digital waste. Such awareness initiatives focus on the steps of Reduce-Recycle-Reuse to protect and conserve the environment.
Besides, multiple factors such as compliance costs, company management, societal expectations, and legal obligations influence the companies to either follow or evade social responsibility.
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