Social Responsibility of Business: Meaning & Examples

Can the best way to serve society be a business’s focus to achieve sustainable economic growth? It can be a never-ending debate whether businesses should focus exclusively on profits or engage in broader company social responsibilities. Milton Friedman’s followers argue that a company’s profits drive attributes like innovation, efficiency, and economic growth eventually benefiting society. But this trajectory can bring about considerable social and environmental damage. So companies need to have a more holistic approach for the interest of all their stakeholders and integrate social responsibility of business and business ethics into their core strengths demonstrating ethical and sustainable practices.

This blog will try to cover several aspects of the social responsibility of business, its area of focus, examples, benefits, criticisms, and arguments.

What is the Social Responsibility of business?

Social responsibility of business is an ethical focus for individuals and companies that want to act and be accountable for practices that benefit society. It's become increasingly important to investors and consumers who want to invest in companies that contribute to the welfare of society and the environment. Social responsibility is also referred to as “corporate social responsibility (CSR)” when associated with businesses and is popular due to this evolving norm. Companies have made CSR a core part of their business model without compromising on profitability.

Areas to focus for the Social Responsibility of a business

The areas of focus for Social Responsibility are the following:

1. Environmental Sustainability – reducing carbon emissions, conservation of water and energy, and lessening waste.
2. Community Engagement and Development: support local communities through initiatives like philanthropy, volunteering, and projects that improve infrastructure, healthcare, education, and social welfare.
3. Ethical Business Practices: fair, transparent, and ethically abiding laws, regulations, and industry standards. Practising anti-corruption actions and responsible marketing.
4. Labor Practices and Human Rights: fair labour practices, protecting workers' rights, providing safe working conditions, and promoting diversity, equity, and inclusion within the workplace.
5. Consumer Protection:  prioritisation of product safety, quality, and transparency. Safeguarding consumer data, ensuring responsible advertising, and providing seamless customer service.
6. Corporate Governance: implement strong governance to augment accountability, transparency, and ethical decision-making at all levels.
7. Economic Responsibility: through job creation, fair wages, and investments in innovation and local businesses.

These areas discussed above show a holistic approach to social responsibility, addressing the needs and expectations of various stakeholders of a company.

Examples of Socially Responsible Corporations

CSR for certain industries and companies:

1. Reliance Industries - Environmental Sustainability Reliance Industries’ environmental sustainability through its "Project Green Gold" initiative is well known. Afforestation and the creation of green belts around its industrial areas are the company’s focus. Millions of trees have been planted thereby enhancing biodiversity, carbon footprint reduction, and environment conservation.
2. Infosys - Community Engagement and Development - The Infosys Foundation, invests in various community development programs like infrastructure for schools, hospitals, and libraries in rural areas. Providing scholarships and support for underprivileged students. Disaster relief efforts and healthcare initiatives are the focus of Infosys.
3. Tata Group - Ethical Business Practices - renowned for its promise to ethical business practices. Stringent ethical guidelines established by the Tata Code of Conduct, ensure transparency, fairness, and integrity in all its business dealings. The emphasis on ethical behaviour has set a high standard for corporate governance in India.

These examples showcase how Indian companies are integrating social responsibility into their business strategies for several societal and environmental challenges.

What Are the Main Benefits of Social Responsibility of business?

The main benefits of CSR are reducing the negative impacts on the environment and helping society. Consumers are becoming more conscious and prefer to buy goods and services from socially responsible enterprises thus positively impacting the bottom lines.

What are the criticisms of the Social Responsibility of business?

According to critical arguments, Corporate Social Responsibility (CSR) demoralises the main goal of businesses and that is growing profit. Milton Friedman famously proclaimed that individuals can have responsibilities and that enterprises lack a sense of responsibility. The recent repercussion against diversity, equity, and inclusion (DEI) efforts demonstrated by the legislative activities in Florida under Governor Ron DeSantis showcases adverse reactions to CSR policies. The collective criticisms have impacted the focus on profitability and some people like Utah CU Congressman Phil Lyman attributed organisation failures to DEI. The good thing is that despite such criticism, CSR is still fundamental to many companies, motivated by the business ethics and expectations of younger generations such as millennials and Gen Z.

Businesses engage in CSR and benefit the common good in several ways by making changes in the environment, enforcing ethical labour practices and pro, and promoting volunteering and philanthropy. CSR in business benefits the bottom lines of companies as more and more consumers prefer to engage with businesses with socially responsible companies.

FAQs

Ans. Companies increase profits by making CSR an integral part because customers want to know how organisations react to social and political issues; companies with negative value are often boycotted. Companies with a positive CSR value, ultimately increase customer traffic and company profit.

Ans. Milton Friedman. Five decades ago he wrote in the New York Times Magazine that the only social responsibility of a business is to increase its profits.

Ans. The social responsibility of business usually begins with management. A CEO or owner of a business prioritises CSR, and the company leadership guarantees that social responsibility seeps into the organisation.

Ans. Social responsibility is beyond the legal responsibility of business. Legal responsibility is fulfilled by mere compliance with the law, but social responsibility includes voluntary engagement towards society not covered by the law.