Social Responsibility

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DEFINITION of 'Social Responsibility'

The idea that companies should embrace its social responsibilities and not be solely focused on maximizing profits. Social responsibility entails developing businesses with a positive relationship to the society which they operate in. According to the International Organization for Standardization (ISO), this relationship to the society and environment in which they operate is "a critical factor in their ability to continue to operate effectively. It is also increasingly being used as a measure of their overall performance."

BREAKING DOWN 'Social Responsibility'

Many companies, particularly "green" companies have made social responsibility an integral part of their business models. What's more, some investors use a company's social responsibility - or lack thereof - as an investment criterion. For example, one who has a moral (or other) objection to smoking, may not want to invest in a tobacco company.

That said, not everybody believes that business should have a social conscience. Noted economist Milton Friedman noted that the "social responsibili­ties of business are notable for their analytical looseness and lack of rigor." Friedman believed that only people could have social responsibilities. Businesses, by their very nature, cannot.

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RELATED FAQS
  1. How do you conduct effective social responsibility training?

    One way to provide employees with effective social responsibility training is to base training sessions on resources offered ... Read Full Answer >>
  2. Is there a difference between socially responsible investing (SRI) and green investing?

    There isn't a huge difference between socially responsible investing (SRI) and green investing; green investing is actually ... Read Full Answer >>
  3. What is socially responsible investing?

    In the financial world, where profit and return are often the priorities of the average investor, the vehicles we use to ... Read Full Answer >>
  4. Which socially responsible retailers appeal most to ethical investors?

    Ethical investors have many reasons to consider companies in the retail sector. The sector is broad and features an abundance ... Read Full Answer >>
  5. What are restricted shares?

    Restricted shares refer to shares of stock whose sale or acquisition is subject to specific restrictions laid out by the ... Read Full Answer >>
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    Generally speaking, ethical investors shy away from chemical manufacturers and companies that have perceived negative chemical ... Read Full Answer >>

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