What is Social Responsibility
Social responsibility is the idea that businesses should balance profit-making activities with activities that benefit society. It involves developing businesses with a positive relationship to the society in which they operate. The International Organization for Standardization (ISO) emphasizes that a business's relationship to its society and environment is a critical factor in operating efficiently and effectively.
What is Corporate Social Responsibility?
BREAKING DOWN Social Responsibility
Social responsibility means that individuals and companies have a duty to act in the best interests of their environments and society as a whole. Social responsibility, as it applies to business, is known as corporate social responsibility (CSR). Many companies, such as those with "green" policies, have made social responsibility an integral part of their business models.
Additionally, some investors use a company's social responsibility, or lack thereof, as investment criteria. As such, a dedication to social responsibility can actually turn into profits, as the idea inspires investors to invest, and consumers to purchase goods and services from the company. Put simply, social responsibility helps companies develop good reputations.
In general, social responsibility is more effective when a company takes it on voluntarily, as opposed to being required by the government to do so through regulation. Social responsibility can boost company morale, and this is especially true when a company can engage employees with its social cause.
Social Responsibility in Practice
Social responsibility takes on different meanings within industries and companies. For example, Starbucks Corp. and Ben & Jerry's Homemade Holdings Inc. have blended social responsibility into the core of their operations. Both companies purchase Fair Trade Certified ingredients to manufacture their products and actively support sustainable farming in the regions where they source ingredients. Big-box retailer Target Corp., also well known for its social responsibility programs, has donated money to communities in which the stores operate, including education grants.
The key ways a company embraces social responsibility includes philanthropy, promoting volunteering and environmental changes. Companies managing their environmental impact might look to reduce their carbon footprint and limit waste. There's also the social responsibility of ethical practices for employees, which can mean offering a fair wage, which arises when there are limited employee protection laws.
Social Responsibility Concerns
Not everyone believes that businesses should have a social conscience. Economist Milton Friedman stated that "social responsibilities of business are notable for their analytical looseness and lack of rigor." Friedman believed only individuals can have a sense of social responsibility. Businesses, by their very nature, cannot. Some experts believe that social responsibility defies the very point of being in business: profit above all else.