Businesses are increasingly implored to move beyond profit making to solving various social, economic, and environmental challenges in the society and environment where they operate. The phrase responsible business is similar to business concepts like corporate social responsibility, corporate sustainability, sustainable business, corporate citizenship, corporate accountability, corporate social performance, shared value creation, and inclusive business. By definition, “Businesses are responsible when they take into considerations the impacts of their actions on the society. The term responsible business has been defined in many ways but in essence it is businesses taking responsibility for their impacts on the societies, environment and value chain in which they operate.”
Why Should Businesses Be Responsible?
Building socially responsible businesses is vital now than ever before. As the most respected, successful, and desirable businesses hold such positions because they do not only make profit but use their capacity to solve societal and environmental issues. Being responsible through your company’s strategy, policies, and operations assures both short- and long-term benefits. Below are some of the benefits businesses can derive from being responsible in their operations.
Long Term Success of the Business – Businesses whose focus expands beyond making profit to solving socio-environmental issues around them are in for a long term existence. Being responsible as a business creates a win-win situation. For instance, a business that takes up a social project to strengthen the infrastructure (roads, rail, manpower etc.) in its supply chain would inadvertently benefit in the long term from improvements to systems and processes. The goodwill and brand preservation arising from positive social impact in the operating environment is also pertinent to the long term success of the business.
More Profit and Business Growth – Profitability is another important reason for businesses to be more responsible. Simply put, responsible business practices create a competitive advantage for the business.Even where it may seem to cost more in the short term, customers and employees tend to stay loyal to such businesses. When businesses provide healthy and safe working environment for their workers and emphasize good work-life balance, the resulting benefits include: (1) talent retention and dedication; (2) employee productivity, (3) increased brand reputation, customer loyalty, and overall business profit.
Market Access and Investment Incentives – Showing your products have been produced under the right condition gives way for a marketing and sales advantage to gain larger market share . Businesses that have been involved in irresponsible practices lose their brand credibility and in many cases quickly start experiencing a drop in profits. Potential funders and partners today are more conscious of environmental, social, and governance risks. Hence investors prefer ventures that are sustainable and responsible in their business outlook and operations. These investors want to know that your business practices would preserve and uplift both their brand and yours.
The steps needed to ensure you are running a responsible business may not be easy at first but following and abiding by the principles of sustainable business will pay-off in the long run. By way of a general guideline, businesses can develop responsibility by
- Engaging with the communities where they operate;
- Contributing to the protection of the environment by reducing their negative footprints;
- Promoting and advocating for workforce diversity; and
- Developing socially responsible products and services.
Businesses leaders have to recognize that the longevity and success of their businesses depends on their communities, employees, and the environment in which they operate. These major determinants have to be treated as stakeholders.
Join us on October 4-5, 2018 as we as navigate how we can contribute to accelerating positive change and growth on our continent at the inaugural Africa Responsible Business Forum (ARB Forum). Registration has commenced at http://lbsarbforum.edu.ng/
Learn more from:
- Idemudia, U. O. (2011), Corporate social responsibility and developing countries: moving the critical CSR 73 How Responsible is Responsible Business? research agenda in Africa forward. Progress in Development Studies, vol.11(1), pp. 1–18.
- Visser, W. (2008), Corporate Social Responsibility in Developing Countries. Ch 21 in: Crane, A. McWilliams, A. Matten, D. Moon, J. Seigel, D. (eds.) The Oxford Handbook of Corporate Social Responsibility, Oxford: Oxford University Press, pp. 473-479
- Wood, D. T. (1991) Corporate Social Performance revisited. The Academy of Management Review, vol. 16(4), pp. 691-718.
- Porter, M. E. & M. R. Kramer (2011), Creating Shared Value. How to reinvent capitalism and unleash a wave of innovation and growth. Harvard Business Review January–February
- Wright, L.; Kemp, S.; Williams, I. (2011). “‘Carbon footprinting’: towards a universally accepted definition”. Carbon Management. 2 (1): 61–72. doi:10.4155/CMT.10.39