What Is Social Responsibility and Why Is It Important?

By Indeed Editorial Team

Updated 22 August 2022 | Published 30 August 2021

Updated 22 August 2022

Published 30 August 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

From increased productivity to attracting top talent, there are many benefits to adding social responsibility initiatives within an organisation. It also allows you to improve your organisation's overall reputation, which can increase the number of opportunities you are exposed to. Choosing which initiative is most appropriate for your organisation requires careful consideration, as the endeavour can become costly. In this article, we answer "What is social responsibility?", explain why it is important and share what the four types of social responsibility are.

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What Is Social Responsibility?

What is social responsibility, can be defined as an ethical framework in which individuals or corporations are accountable for fulfilling their civic duty and taking actions that benefit society. If a company or person is considering taking actions that could harm the environment or society, then those actions may seem socially irresponsible. According to this concept, managers are required to make decisions that not only maximise profits but also protect the interests of the community and society. Typically, companies adopt a plan to prioritise social responsibility. Then, the company self-regulates its initiatives and strategies based on those pre-determined goals.

One concept that businesses often use is the triple bottom line, which says that a business has three priorities:

  • Profit: to increase their profit share consistently

  • People: to serve their customers and employees

  • Planet: to prioritise environmental health and minimise the company's negative impact

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Why Is Social Responsibility Important?

Social responsibility can affect the public image of a business, which can impact profits and long-term success. Some businesses use social responsibilities to attract customers. Some customers who value community and social causes may pay more for a product that aligns with their values. Appealing to these customers can be a valid business strategy. Businesses that invest in their local community can see an increase in their own profit, too. For example, a company that invests in improving the infrastructure of the streets and sidewalks around its building is likely to earn more revenues because of the improved community.

Another important benefit is that employees may find purpose and motivation in a company's mission statement if it reflects their own values. Supporting the community employees live in can encourage them to work harder and develop a sense of pride and loyalty to the company. This can increase their productivity and lower employee turnover.

Related: What Is a Code of Ethics and What Are Its Principles?

What Are The Four Types Of Social Responsibility?

There are four types of social responsibility that a business can promote for marketing or mission-driven purposes. These are:

1. Environmental responsibility

This type of responsibility refers to an organisation's desire to conduct its business in an environmentally friendly way. Companies with this intention usually focus on three actions:

  • Reduction: Companies can implement processes and initiatives to reduce their negative impact on the environment. This can include common harmful byproducts of business like pollution, plastic and water contamination.

  • Sustainability: Companies can also use more renewable resources in their everyday business, like switching to renewable energy, using sustainable resources like digital communications and using recycled materials, like paper and plastic.

  • Neutrality: Some companies are leading the corporate environmental mission by pledging to not only reduce their own production of waste but to incorporate initiatives that neutralise existing negative effects. Examples of initiatives are planting trees, donating to research that focuses on removing carbon from the atmosphere and funding charitable organisations.

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Ethical responsibility

Ethical responsibility refers to when an organisation is operating in a fair and ethical manner in relation to its employees, customers and surrounding community:

  • Employees: A business can show its devotion to ethical responsibility by treating its employees with respect and valuing their work. It reflects this in the personal treatment of employees, which may mean it provides them with a safe environment in which to do their work and fair wages.

  • Customers: Upholding a business's ethical responsibility to their customers includes providing a product that is accurate to the promotional material, that lives up to the promises made by the seller and is not harmful to the customer. It can also include making sure there is a fair customer service policy that helps customers.

  • Community: A company has an ethical responsibility to its community, which means that the products that it makes is required not to negatively affect the lives or environment of the people involved with the company or its surrounding community. This may involve sourcing materials from ethical locations to not endanger local communities, like avoiding products that result from slavery or child labour.

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Philanthropic responsibility

This concept refers to a business's stated desire to not only avoid doing harm but to choose to work towards improving the world. Businesses philanthropic contributions out of their profits and allocate them to one of three types of organisations:

  • Outside philanthropic organisation related to their stated mission: Some companies choose charities or organisations that support specific causes to donate to that relate to the overall mission of the company. For example, a company that is brand involves creating school supplies may donate profits to build schools in underprivileged locations.

  • Outside philanthropic organisation unrelated to their stated mission: Businesses do not require to repeat these unrelated donations, though an established pattern of donation can be a good marketing strategy. For example, a company that sells tech can donate to an organisation that provides food to the hungry, and they can use their frequent donations as an advertising point to show their social responsibility.

  • Internal philanthropic organisation: Some companies have created their own organisations to handle their contributions to causes related to the company's philanthropic mission. Sometimes these initiatives are a stated part of the business model, like buy one product, give one product away strategies.

Legal responsibility

This concept refers to the responsibility a business has to uphold and abide by the laws of the society it operates in. Laws are an agreement between a group of people and the rules that govern them. Businesses have a responsibility to abide by those rules at every level of law and government, to ensure the safety and protection of themselves and the other people in the community. There are three aspects of a company's legal responsibility:

  • Regulations: Regulations are in place by the government to protect the customer and the economy. A business has a responsibility to the people the government represents to adhere to those regulations regardless of their impact on the company's profitability.

  • Taxes: It is a company's duty to pay taxes to ensure that the protections they enjoy from the government provided services are still in place. Without corporate taxes, many of the services that improve business capabilities could not exist.

  • Criminal law: A company and its managers are responsible for their adherence to the same legal practices as a private person. This means they cannot endanger the lives of others, steal property or engage in any illegal behaviour.

Social Responsibility And Ethics

Ethics refers to a set of moral principles that govern a company's behaviour. Companies can incorporate ethics into their daily activities. They can apply a code of social responsibility and ethical behaviour within an organisation and during interactions with others outside of the company. As long as a company upholds strong ethical standards and maintains social responsibility within the company, then the environment and employees can focus on profitability. But, if the company ignores its ethical standards and takes actions that are socially irresponsible, such as disregarding environmental regulations to increase profitability, government interference is often necessary.

Related: Business Ethics: Definition, Principles and Importance

Examples Of Social Responsibility

Here are a few examples of corporate social responsibility initiatives that companies have taken:

  • Charitable giving and volunteer efforts: Companies are giving employees time off for volunteering every year and also donating portions of revenue to a charitable organisation.

  • Changes to company policies to improve or benefit the environment: Companies are holding tree-planting events, minimising paper waste, switching to energy-saving bulbs, setting up recycling bins and allowing remote work to reduce the negative impact of commuter traffic.

  • Improving labour policies and embracing fair trade: Brands are striving to improve working conditions and the well-being of employees. They are giving parents significant periods of paid leave, unlimited holiday time, more natural lighting, soft seating and plants to boost energy and morale.

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