…transitioning for social good
In recent times, the attention to advance the concept and principle of a universal adoption by businesses worldwide for a purpose-led, responsible and holistic strategy focused on achieving long-term and sustainable value for all stakeholders, employees, shareholders, the supply chain, society and of course, the environment in addressing climate change challenges present no option to the business sector.
Businesses which are the engine of the economy contribute to economic and social development through job creation, development of skills and technology, and the provision of goods and services. Nonetheless, business activities can have adverse impacts on people, the environment and society. This leads to the question of what a responsible company is.
Should a responsible business only be interested in its profit to shareholders? I believe no. Its ability to provide for the well-being of its employees, make excellent products, be a good force in the community and protect nature is the new norm for sustainable businesses. Besides, a responsible company owes a return not only to its shareholders but to something that has come to be called stakeholder. Hence, a responsible company bears this obligation as well.
The quest for promoting and enabling responsible business conduct is of central interest to countries wishing to attract and keep quality investment and ensure that business activities in their economies contributes to broader value creation and sustainable development.
By this, ensuring a business has sound and good practices with regard to all of its stakeholders as well as reducing or eliminating negative impact or externalities are the foundations for a responsible business. That said, a responsible business is essentially one that benefits society and addresses negative impacts it might have on society, people and planet. As shareholders and business leaders, are you operating a responsible business?
What is a Responsible Business?
Responsible Business as core concept explains the key characteristics of a workplace where its people accept that people and planet issues and making an ethical profit are a responsibility not a choice. It signifies a place where everyone, regardless of position, plays their part in helping to make the world a better place to live and work.
Sustainable business where the long-term future of its people, of society, and of the planet combined with sustained and ethical profit is part of the over-riding strategy of that business. Workplace where people are fairly paid, happy and engaged in their work, where well-being is prioritized, where their work is purposeful and their actions respectful.
Simply put, responsible business is the practice of creating customer value through the active concern for people, ethics, equity, and environmental impacts while running a profitable business. Responsible business enables us to view business practices and challenges through the lens of Profit, People, Planet, Ethics, and Equity.
By focusing on Profit, a business ensures it is financially sustainable. Without generating a profit, a business cannot survive or thrive, so the primary role of a responsible business is to ensure that the business returns a profit and provides income to survive and grow. Unless it makes a profit, the business cannot fulfill the other four aspects of its being.
By paying attention to People, a business focuses on its employees, suppliers, and customers. Here, we notice that, employees are the key group that make the business function and enable it to create value-added. Satisfied, happy, and productive employees are the lifeblood of a successful business. They deserve good wages, meaningful employment, and the means to sustain their families and live meaningful lives.
Much more importantly, Suppliers too are key because they enable the business to obtain inputs that are goal-effective and cost-effective in order to generate value. Customers create the demand for its products and deserve safe, high quality, and high value products and services.
With Planet consideration, the responsibility of the business ought to operate in ways that minimize the harm to the environment and the planet, through its actions. It must ensure it treats the natural environment as a finite resource, which must be sustained and respected. Attempts to degrade the environment and destroy it leads to a situation in which business itself is no longer sustainable.
Besides, subscribing to strict ethical standards makes the business abides with legal, moral, and values-based considerations that guide its behavior. Ethics, which includes operating with integrity and in a transparent manner, doing things right with nothing to hide are some guiding principle of responsible business.
Is CSR the same as responsible business?
Most organizations of all sizes consider their environmental impacts and steps that need to be taken to reduce negative impacts and increase positive impacts on society.
Genuine responsible business practice embeds core values into every facet of the business operations, rather than treating it as a mere exercise. The movement from CSR to ESG reframes responsible business practices from a reputation building exercise to creating opportunities for business success. Responsible business means moving away from the predominant focus on shareholder value and philanthropic moves.
Unless the business sector accepts it has a responsibility towards people and climate issues, particularly with climate change, the world as we know it today will not exist. This evolution is geared towards a transformed philanthropy to a management discipline where responsible business is prioritized across the entire company.
Obviously, positive social impact requires consideration for all stakeholders including employees, customers, suppliers and the local community. These instruments establish that all companies have the responsibility to avoid and address adverse impacts with which they are involved, including in their supply chains, while making a positive contribution to the economic, environmental and social progress of the nation.
Essentially, the triple responsibility of people, planet and profit is the essence of responsible business. I prefer “responsible business” as it more clearly and aptly defines what is required of the business sector taking responsibility towards people and planet issues as well as the responsibility to make a profit.
Why Social Responsibility Matters to Businesses
Embracing socially responsible policies goes a long way toward attracting brand recognition, which is essential to a company’s long-term success.
According to Harvard Business School, nearly 70% of employees say they would not work for a company without a strong purpose. Ninety percent of employees who work at companies with a strong sense of purpose say they’re more inspired, motivated, and loyal, and 92% of employees who work at a socially responsible company say they would be more likely to recommend their employer to those in their network who are looking for a job.
Businesses that implement social responsibility initiatives can increase customer retention and loyalty. Socially responsible companies have the opportunity to stand out from the competition because they cultivate superior and positive brand recognition. Besides, the need for embracing social responsibility is to increase employee motivation, consolidate sustainable strategies and to enhance sustainable supply chains.
Increases Employee Motivation
Social responsibility acts as an effective tool to increasing employee engagement with the business. With social responsibility, companies tend to attract employees who are eager to make a difference in the world in addition to simply collecting salaries. Also with large companies, there is strength in numbers, and the collective employee efforts can achieve substantial results, which increases workplace morale and boosts productivity.
Consolidate Sustainable Strategies
Exploring the most pressing challenges facing companies today and offering practical solutions to help organizations implement effective sustainability strategies that create value for both business and society comes as an act of responsible business.
Companies that focus on the importance of creating and implementing a sustainability strategy in organizations integrate environmental, social, and economic aspects into an organization’s operations and decision-making helping to manage resources, mitigate risks, enhance reputation, and contribute to a better world.
Enhance Sustainable Supply Chains
Examining the difficulties and opportunities faced by businesses when attempting to promote sustainability throughout their supply chains provides workable solutions and instances of initiatives when it turns to inculcating social irresponsibleness into its operations.
Setting specific goals and objectives, evaluating the environmental and social impacts of operations, adopting sustainable procurement practices, incorporating sustainability criteria into supplier selection, and routinely monitoring and evaluating performance are all necessary steps in the implementation of a sustainable supply chain and therefore an act of responsible business.
The road to Responsible Business and Impacts of ESG Compliance
It is obvious responsible business will survive in the long-term, many irresponsible businesses will not. The question is, if a business does not change today, what makes it think it will change tomorrow?
The actions that reflect the responsibility of contributing to the improvement of the quality of life in the communities for operating and for acting in a manner that ensures the equity of the process to everyone touches on the introduction of ESG sustainability framework.
ESG takes a holistic approach to doing business as it embeds responsible practices into a company’s strategy, operations, products and culture. It focuses not only on minimizing risk but also maximizing opportunities.
While some may find all this rather bureaucratic, especially with increasing regulation and compliance coming into force across most geographies, it is seen as an opportunity to build a responsible business where the focus is primarily on community engagement, environmental impact, social recognition and responsible governance practices.
Become a responsible business Organization
All business, regardless of their location, size, sector, operational context, ownership and structure, should act responsibly, identify and manage risks of impacts linked to their operations, products or services, including in their supply chains and other business relationships. Governments should encourage responsible business behavior through a smart mix of mandatory and voluntary measures, and support the creation of an enabling environment conducive to responsible business practices.
In order to promote the positive contribution that businesses can make to sustainable development and help prevent and address negative impacts, companies ought to increasingly focus on social responsibility, whether they are championing women’s rights, protecting the environment, or attempting to obliterate poverty, on local, national, or global levels.
This is because, responsible business derives its roots from the concept of the stakeholder approach. The responsible business concept goes beyond the shared value concept by explicitly bringing in values and the concern for process equity in order to serve the stakeholders of the business. A responsible business, thus, alludes to or expresses its values in its purpose for being in business.
Becoming a responsible business would empower employees to leverage the corporate resources at their disposal to do good, boost employee morale in the workplace and lead to greater productivity which eventually impacts on how profitable the company can be.
In summary, a strong commitment to responsible business can protect and enhance a company’s brand, create a more positive working environment, boost profits, and attract top-tier talent.
Discovery….Thinking solutions, shaping visions.
Written By:
Frank is the CEO and Strategic Partner of AQUABEV Investment and Discovery Consulting Group. He is an Executive Director and the Lead Coach in Leadership Development and best Business Management practices for Discovery Leadership Masterclass..
Email: [email protected] or [email protected]
