Social responsibility is defined as a theory that obligates individuals and groups to act in a way that benefits the greater good of the society. Applied to businesses, it means that a company can be defined as socially responsible if its main objectives, practices and processes not only respect laws and regulations, but also contribute to the growth and well-being of the community.
Corporate Social Responsibility
Conducting socially responsible business can bear many other names, including corporate social responsibility (CSR), social performance and sustainable responsible business. CSR, the most common term, was first used in the late 1960s by multinationals. It is defined as a form of self-regulated social responsibility within a business model. The objective of CSR is to encourage actions that promote activities that have a positive impact on employees, stakeholders, clients and the environment.
The community-base development approach to CSR encourages business to work with local communities to better themselves. A good example of this is Tyson Food, the biggest producer and marketers of chicken, beef and pork products in the world. The food giant practices community-based development through its KNOW Hunger program. By collaborating with the Food Research and Action Center, the Tyson initiative helps raise awareness of hunger in America.
Another common approach to social responsibility in business is through philanthropy. This can include financial aid and donations of time, gifts or expertise. When companies decide to make donations to a community that is faced with a natural disaster such as a flood or an earthquake, they are exercising philanthropic social responsibility.
Creating Shared Value
The shared value model is based on the belief that a company and its community’s well-being are interdependent. This approach encourages businesses to create economic and social value toward the community by focusing on social issues it can help resolve through its own specialization. For example, car manufacturers have been introducing hybrid and electric cars to the benefit of a healthier environment.
Laws and Regulations
A particular feature of CSR is that it is a self-governing principle. Although this means no law or regulation makes CSR obligatory, ISO 26000 was put in place in November 2010. ISO 26000 is a recognized international standard put in place to provide guidelines and encourage voluntary commitment to social responsibility. It targets a wide range of organizations in both the public and private sectors.