Responsible Business

Corporate responsibility integrates ethical practices into a business model. This form of self-regulation by businesses is also known as corporate social responsibility (CSR), responsible business and sustainable business. CSR can range from a company simply providing donations or aid to non-profit organisations and local communities to an integrated business strategy that considers ethical values in some or all aspects of a company's operations. Ethical values include consideration of how a company's practices and policies affect the environment and society, including local communities, customers and other stakeholders.

The Origin of Responsible Business

Responsible business and CSR finds its roots in the late 1960s and early 1970s. Corporate responsibility was originally used by multinational corporations to guide their relationships with stakeholders. Stakeholders include groups that are affected by a company's actions, including local communities, consumers, suppliers, employees and other groups. These groups represent interests beyond a company's shareholders, which were the primary consideration of most multinational corporations prior to the advent of a broader concept of 'stakeholders' during this period.

Responsible business or corporate social responsibility takes into account a 'triple bottom line'. Rather than simply looking at profit and the traditional singular bottom line, CSR business practices also consider people (for example, staff and the public) and the planet (for example, environmental impact of business practices). All three are linked and affected by each other. Responsible and sustainable business practices can result in financial benefits. For example, when a business sources from local suppliers this can reduce operating costs related to lower transportation costs. Similarly, there are environmental benefits from reducing the distance goods are transported (that is, lower carbon emissions) and local employment benefits for local suppliers.

The benefits of CSR can be significant. A responsible and sustainable business model can assist with attracting and retaining staff. Adopting CSR policies and practices also improves perceptions of a company among members of the public, government, staff and the broader business community. By considering environmental issues, for example, companies can reduce risks of incidents that often bring negative attention from government, regulators, courts, media and the broader public. CSR can therefore strengthen a 'brand' or a company's reputation. Similarly, it responsible business policies can differentiate one business from another. As a result, CSR plays a role in attracting business. For example, many governments have introduced preferences for green products and services and often look for suppliers with sustainable and responsible business strategies based on ethical or 'green' values.

The Future of Responsible Business

As governments look to make responsible and sustainable business practices mandatory through regulation and legislation, the voluntary approach to CSR will become a thing of the past. To address critics that CSR is 'window-dressing', businesses will need to demonstrate that they are committed to real and significant outcomes form their responsible and sustainable business practices and policies. This becomes even more important as businesses develop strategies that respond to legal or regulatory requirements. A traditional trend of CSR policies and practices was to react to a specific concern or issue. More and more, corporations are moving towards proactive, embedded and strategic CSR policies that consider all aspects of a company's operations.

An important element of any CSR strategy is transparency and communication. Benchmarking and performance measurement will be crucial to any successful responsible business strategy. By tracking performance and communicating results, companies are able to demonstrate their implementation efforts. This also helps to illustrate the effectiveness of CSR strategies, including their impacts on society and the environment. Communicating the particulars of a CSR strategy is also key to raising public awareness of a company's efforts to incorporate ethical business practices into their operations.

Innovation must not be confined to products, but also to a company's services and processes. Ethical products and services play an important role in attracting business opportunities and consumers. Future responsible and sustainable business strategies must look at innovative ways to consider CSR in all aspects of a company's operations. CSR strategies will have to become more creative to address complex social and environmental issues. Similarly, partnerships will be an important part of any Corporate Social Responsible strategy in an increasingly complex and global marketplace. This is necessary in order to provide the greatest and most meaningful social and environmental impacts at a large scale. In an increasingly competitive marketplace with companies adopting CSR strategies at increasing rates, companies will be judged on their innovation.