Business’ responsibility to society

The moral principles both of an organization as a whole and of the people in it, from the employees to the top-level executives to the owners/shareholders, play a significant role in the firm’s overall performance. After all, the company’s objectives, strategies, policies and actions are significantly influenced by what the organization represents, what it stands for, what it believes in and supports, as well as by the personal values of its strategists and decision-makers.

The most important ethic that a modern business organization should possess is a sense of social responsibility. With the recent rise to power of the business sector, it is inevitable that its influence should also increase, and with this, its responsibility to society, to the people and entities that it affects with its decisions and actions.

But what exactly is meant by corporate social responsibility (CSR)? Does it negate the business organization’s primary purpose of acquiring profit? Is there a way to reconcile these two seemingly disparate goals? And most importantly, what is the best way for a company to practice social responsibility?

There is no question that the concept of the social responsibility of businesses has become, more and more, a debated topic. Nevertheless, here in the Philippines, the concept is being practiced only by a limited number of firms, and these few firms do not practice real social responsibility but simply philanthropy. They believe that CSR consists of merely sharing a portion of their profits with the less fortunate. The reason for this misconception is a failure to understand what CSR really means.

Although CSR has become a much-used phrase, it is true that there does not seem to be any consensus on its meaning. The idea has in fact taken many different forms and driven by many different motives.

In most companies, CSR has been defined in terms of a philanthropic model.  Companies donate a certain share of their profits to charitable or social causes.  The model assumes that social responsibility is limited to profitable companies and that its main purpose is charity.

Another model defines CSR in terms of obligations to the so-called stakeholders of a corporation, namely the owners, employees, suppliers and the community in which it operates. This model assumes that a corporation must balance its social goals with the equally important goal of increasing shareholders’ value. There is also the social commitment to the general public or society at large.

In all these models, the general theme is that CSR will ultimately benefit the corporation. For example, sustainable development is good because business must preserve the resources that it exploits. In the long run, sustainable development will translate into a sustainable business.

CSR is therefore viewed as a means rather than an obligation. This view is again based on the fundamental belief that business must be driven by “selfish” interests and not the common good.

Among the more common definitions of CSR with their sources are the following:

• Continuing commitment by business to behave ethically and contribute to 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)

• Voluntary positive initiatives by business that look to go beyond legal compliance in a diverse range of social, economic and environmental areas. (International Organization of Employers)

• Treatment of stakeholders of the firm ethically or in a socially responsible manner.  Stakeholders exist both within and outside.  Consequently, behaving socially responsibly will increase the human development of stakeholders both within and outside the corporation. (Michael Hopkins: “A Planetary Bargain: CSR Comes of Age”)

• Corporate management of business processes to produce an overall positive impact on society. (Mallen Baker)

In the Philippine environment, CSR must be defined as the obligations and responsibilities of business to society, that in the pursuit of the profit motive, the basis for its corporate acts and strategies should include its commitment to protecting the environment, upholding the rights of its workers and contributing to the improvement of the quality of life of its community and society at large.

Today businessmen must accept that they have an obligation to society on the same levels as politicians.  This demand is based on the fact that businesses are now institutions as powerful as governments in the world.

It is business that determines the price of drugs and, therefore, assumes responsibility for the lack of proper health care for the poor. It is business that hires child labor and causes floods resulting from indiscriminate logging. However, when government intervenes, business calls it socialism.

It is business that is the cause of pollution in our environment, determines the definition of a living wage and decides whether land should be used for housing or a golf course. It is business that decides what news we will read or see, what courses universities should emphasize and the type of cultural shows the public can attend.

The list can go on and on.

The business world has become the biggest exploiter of the environment. It is also the biggest employer globally. The domains of business and government are overlapping and this now leads to the acceptance of the business world that they have obligations beyond profit that may have been the sole obligation of government at one time.

*      *      *

Young Writers’ Hangout via Zoom on Saturday, Oct. 22, 2-3 pm with Kimi Tuvera, whose recent novel is “The Collaborators”.

Contact [email protected]. 0945.2273216

Email: [email protected]