BUSINESS STUDIES (CLASS 11) WORKSHEET 19-SOCIAL RESPONSIBILITY

Social responsibility of business.

· Social responsibility means that besides maximizing shareholder value, businesses should operate in a way that benefits society.

· Socially responsible companies should adopt policies that promote the well-being of society and the environment while lessening negative impacts on them.

· Companies can act responsibly in many ways, such as by promoting volunteering, making changes that benefit the environment, engaging in ethical labor practices, and engaging in charitable giving.

· Consumers are more actively looking to buy goods and services from socially responsible companies, hence impacting their profitability.

· Critics assert that practicing social responsibility is the opposite of why businesses exist.

Corporate Social Responsibility is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.

Corporate social responsibility is traditionally broken into four categories: environmental, philanthropic, ethical, and economic responsibility.

Environmental Responsibility.
Environmental responsibility refers to the belief that organizations should behave in as environmentally friendly a way as possible. It's one of the most common forms of corporate social responsibility. Some companies use the term “environmental stewardship” to refer to such initiatives.

Ethical Responsibility.
Ethical responsibilities include the behaviour of the firm that is expected by the society but not codified in law. The factors of ethical responsibility include that the business must be environmentally friendly. The business should always be aware of its activities and how do they affect the environment. It is the moral and ethical responsibility of every human and every business.

Philanthropic Responsibility.
It’s the philanthropic responsibility of the business to help different groups of the society. It should also work towards providing free education by opening educational institutes and training institutes or helping the people affected by natural calamities such as floods and earthquakes. It is the responsibility of the company management to safeguard the capital investment by avoiding speculative activity and undertaking only healthy business ventures which give good returns on investment.

Economic Responsibility.
The business itself is an economic activity. Its main function is to earn profits. To earn profits means to understand the needs and demands of consumers whether it be regarding the quality of the product or its price.

While understanding the perspective of the consumer and meeting their needs and demand to earn a profit is the economic responsibility of a business. When a business earns a profit, it also means that the employees earn the profit in terms of incentives. The economic growth of a business is not restricted to itself but affects the society as a whole.

India is the first country in the world to make corporate social responsibility (CSR) mandatory, following an amendment to the Companies Act, 2013 in April 2014. Businesses can invest their profits in areas such as education, poverty, gender equality, and hunger as part of any CSR compliance.

NEED FOR SOCIAL RESPONSIBILITY
Companies take their resources from society to run their business successfully and thus, these companies morally have a duty to give back something to the society beyond their commitments to investors or stockholders. This is the basic idea behind ‘Corporate Social Responsibility’ (CSR). It can also be termed as ‘enlightened self-interest’. CSR includes corporations being economically responsible, embracing fair trade, improving labour practices, giving back to the community, mitigating environmental damage, and increasing employee satisfaction.