Business studies: 2. Businesses social responsibilities and business ethics

2. Businesses social responsibilities and business ethics

Social responsibility is to perform business activities in an unbiased way to all the stakeholders.Different definitions for the concept of business social responsibilities have been presented.

“Business social responsibility is the continuous commitment by the business to act ethically and contribute to the economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”

- World business council for sustainable development -

“ Business social responsibility is about how companies manage the business processes to produce an overall positive impact on society.”

- Mallen Baker -

“Business social responsibility is to create maximum value for shareholders while performing justly to all interested parties such as consumers,employees,society,government and environment”

- Narayan Moorthy -

“Business social responsibility is about accepting personal responsibility for the actions and its impact on society”

- USA -

“Business social responsibility is about business giving back to the society.”

- The philippines-

A great awareness has to be developed at present about the necessity of fulfilling business social responsibilities. There are some developing forces , that will have an impact on the stakeholders and the society in general.

• Business competition

• Globalization

• Electronic business

• Environmental pollution

There are some main parties to whom the business has to fufill its social responsibility.

• Customer

• Employees

• Owners

• Society

Business should take steps to meet the expectations of all the stakeholders when fulfilling the social responsibility.

Various benefits that can be obtained by fulfilling social responsibilities

1. Ensure the existence of business.

2. Develop business goodwill / image.

3. Ensure business trust

4. Satisfy customers

5. Achieve the business objectives.

“Sustainable development is development which meets, the needs of the present, without compromising the ability of future generations to meet their own needs.”

- World commission on environment and development -

Sustainable development is built up of three pillars that are equally important.

• Economic sustainable development

• Environment sustainable protection

• Social sustainable development

Economic sustainable development

Traditionally economic development was considered as the progress in GDP. It is expected here to improve human welfare by enhancing the quality of life, and reducing the consumption of resources. It is important here to empower people to have a better standard of living while earning wealth in engaging in economic activities and providing the present and future generations with prosperity and protection by confirming a high standard of life style and eradication of poverty of the people worldwide. A competitive market is important for this and it is expected to reach an economic sustainable development by producing eco friendly products that are affordable.

Environment sustainable protection

There are limited resources in the world for us. Every human being who lives on earth needs clean air, water, suitable habitat to live in as well as fertile land to produce adequate food. It is expected to satisfy the basic human needs such as air, water, food and shelter through environment sustainable protection by the quality presence, maintenance and protection of the basic human needs. In sustainable environment protection, human activities for the protection of global environment and for the future generations are expected while considering on how to do effective changes without destroying the natural environment. Adverse effects that have risen such as global warming, destruction of forestry, excessive fishing in oceans should be focused here. To satisfy human needs, natural resources should be extracted from environment. Environment sustainability can be protected through consuming resources, which cannot be replaced, at a lower speed rather than the speed they take to replace themselves naturally.

Social sustainable development

To ensure a sustainable future, needs and wants of people could be satisfied equally/ fairly. In other words, while human needs and wants can be fulfilled at a high standard, there shouldn’t be corruption or violation of others’ rights to do so. To ensure this position in social sustainable development, it emphasizes on giving equality, social capital, social integrity, commitment of community and development of human rights, social responsibility, social justice to everyone.It is expected in social sustainable development to have human development by satisfying human needs while not violating the needs of future generations. The way that businesses can contribute to sustainable development

While selecting strategies and activities by a business to fulfill needs and wants of a business itself and its stakeholders, it should develop and protect natural and human resources for future needs. Then that becomes a sustainable use of a business.

To make sustainable development a reality, cannot be done only by one business working for it alone, rather consumers including total world - economic community should actively contribute for that.

Contribution of businesses for economic sustainability

There are some facts that a business should concentrate on working towards economic sustainability.

• Economic development and stability

• Efficiency (Use of resources)

• Competition

• Production and consumption

• Employment

• International trade.

There are some steps that can be taken by a business to ensure economic sustainability

1. Job designing

2. Empowering skills

3. Efficient use of resources

4. Efficient usage of capital

5. Risk management

6. Empower economic development

7. Growth in benefits of stakeholders

8. Investment for national economic growth.

9. Introducing innovation

10. Developing technology

11. Contributing to the development of business infrastructure.

12. Employee welfare

13. Improving exchange and transaction process.

14. Encouraging production process.

Contribution of businesses for environment sustainability

There are some facts that should specially be focused on by businesses when achieving environment sustainability.

• Consumption of resources.

• Raw materials and waste management.

• Risk management

• Protection of natural and cultural heritages.

• There are some activities that can be done by a business to ensure environment sustainability

1. Buying eco friendly products.

2. Engage in activities by retaining resources such as raw material, energy, water in the

3. production process.

4. Putting into practice concepts such as 3R, 4R, 5R in waste management.

5. Use of eco friendly transport modes.

6. Use of dangerous substances in a safe manner.

7. Minimizing the pollution of water, air and soil

8. Taking action to protect bio diversity.

9. Acting in accordance with environment rules and regulations.

10. Working together with government and non government firms for environment

11. protection/ eco friendly activities.

12. Usage of eco friendly powers such as solar power.

Contribution of businesses for social and cultural sustainability

There are some facts that a business should focus on to ensure social and cultural sustainability.

• Enhance the standard of living of people

• Provide equal opportunities to people.

• Create social integrity

• Encourage international participation.

• Maintain human capital

• Protect local traditions and customs

• Protect cultural environment.

• Take action to minimize poverty ( people in need)

• Employee relationships.

There are some steps that can be taken by a business to ensure social and cultural sustainability

1. Respect for human diversity

2. Contribute to the protection of human rights.

3. Act with equity and provide equal opportunities.

4. Contribute to the essential facilities such as education, health and transportation

5. Contribute to the social assurance activities,

6. Contribute to respect and protect cultural diversity

7. Contribute to protect law and peace.

Concepts that businesses use for sustainable development at present

4R concept for sustainability

Accumulating an unbearable amount of waste for a day in production and consumption activities has become a global problem. Therefore, concentration is focused on to it globally to achieves sustainable development through 4R concept in : production consumption waste management. 4R is,

1. Recycle

2. Reuse

3. Reduce

4. Replace

Recycle

Waste is separated here to form a material to produce another product. Here the physical state of substance is changed. Recycling can be done in two ways to have two outcomes.

1. Materials with lower value are transformed into products, with higher value (upcycle) eg : Producing paper from hay.

2. Products with higher value is transformed into materials with lower value (low cycle) eg : Making irons by crushing vehicles that are discarded (in Japan).

Reuse

Using products that can be used over and over in production and consumption activities is known as re use. eg : Using lunch boxes (Can be used over and over) instead of lunch sheets.

Reduce

This means the reduction of waste that is released to the environment. This can be done easily by reducing the discarding amount used at consumption or production. The contribution to sustainable development can also be done by eliminating the use, by avoiding the use, or by not using the harmful products at all.

eg : Not using non degradable polythene for packing Not bottling drinking water in plastic bottles,

Replace

Among the natural resources that are used in production, the replacement of resources that are replaceable is known as replace.

eg : Start a reforestation project by a firm that uses timber as its a raw material Farming fishery resources by a business that engages in fishing industry

Adverse effects of business activities

1. Import low quality products expecting more profits.

2. Mislead customers at high competition

3. Unbiased employee welfare.

4. Conducts business activities by wasting natural resources.

5. Release waste and pollute environment.

6. Create advertisements that don’t suit our society and culture.

7. Designing cloth which will not suit our society and culture

Business ethics

Business ethics means to act favorably to all the interested parties acknowledging the good and bad.

It is important for businesses to follow business ethics.

eg :

• By supplying quality goods and services, fairness can be fulfilled, thereby increasing their trust on business.

• By following ethics related to accounting, financial irregularities and misconduct can be avoided by ensuring trust.

• By following ethics related to the rights and responsibilities of both employers and employees, unfairness by caste, social status, religion or gender can be avoided, thereby leading to a better human resource management.

Factors to be considered when forming a code of ethics

• Business

• Customers

• Employees

• Competition

• Socio culture

• Organizational culture

• Practicalness

Factor	Details
Business	What is the nature of business ? Does it produce goods or services? Is it a small scale or a large scale business?
Customers	Their demand patterns, communication, religious and social cultural factors
Employee	Which level employee, their environment, their needs and wants etc should be considered.
Competitors	Are there competitors? what are the ethics they follow
Socio - culture	Rooted cultural values Norms of ethical groups and their sub cultures.
Organizational culture :	Customs and practices, values, habits, attitudes of the business
Practicalness :	It should be considered, if ethical code of system can practically be Implemented when formulating it.