Social responsibility means that businesses, in addition to maximizing shareholder value, must act in a manner that benefits society. Social responsibility has become increasingly important to investors and consumers who seek investments that are not just profitable but also contribute to the welfare of society and the environment. However, critics argue that the basic nature of business does not consider society as a stakeholder.
What is Social Responsibility?
Understanding Social Responsibility
Social responsibility means that individuals and companies have a duty to act in the best interests of their environment and society as a whole. Social responsibility, as it applies to business, is known as corporate social responsibility(CSR).
The crux of this theory is to enact policies that promote an ethical balance between the dual mandates of striving for profitability and benefiting society as a whole. These policies can be either ones of commission (philanthropy – donations of money, time, or resources) or omission (e.g., “go green” initiatives like reducing greenhouse gases or abiding by EPA regulations to limit pollution).