Reviewed by Aug 27, 2020| Updated on
What is Meant by Social Responsibility?
Social responsibility is an ethical structure and proposes that an entity, whether an organisation or an individual, has a responsibility to work for the benefit of a larger society. It refers to an individual's duty to act in a way by keeping a balance between the economy and its ecosystems.
Businesses should act in a way that benefits society in addition to maximising shareholder value. Social responsibility has become increasingly essential for investors and consumers who explore investment options that are not only profitable but also add to the welfare of society and the environment. Yet, critics contend that the fundamental nature of business does not recognise society as a stakeholder.
Social Responsibility Explained
Social responsibility will need individuals and companies to act in the best interests of their surroundings and the entire society. Corporate Social Responsibility (CSR) is a type of social responsibility that applies to business.
The objective of social responsibility is to establish policies that support an ethical balance between the dual commands of attempting profitability and for benefiting the entire society. These policies can be either omission or commission policies.
An example of omission policy can be the "Say no to plastic bags" initiative taken up to clear the clutter around the streets of a city. The commission policy refers to philanthropy works involving donations of money, time, or supplies.
Moreover, more investors and customers are counting on a company's commitment to social welfare practices before proceeding with the investment or purchase. Therefore, a company can benefit in the prime directive by taking up social responsibility.
It is morally crucial and affects future generations through our actions. In simple words, being socially responsible is a good business practice, and any failure to do so can ultimately have an unhealthy effect on the financial statements.
Generally, social responsibility is more useful when a company takes it up voluntarily, as against forced by the government through regulations. Social responsibility can raise company morale, especially right when a company can involve employees in its social causes.
Means of Practising Social Responsibility
A company can embrace social responsibility in many ways. The principal methods include philanthropy, encouraging volunteering, and concern towards the environmental changes.
Companies looking into their environmental impact may see to lessen their carbon footprint and keep a check on waste disposal. Also, there is a social responsibility of ethical practices for the employees, which can be practised by offering fair wages.