Businesses now realise that they have the genuine potential to improve people’s lives and – by stimulating economic growth – alleviate poverty. There are two different ways that a business can be socially responsible; actively and passively. Passive social responsibility means a company must avoid engaging in socially harmful acts, while active responsibilities will directly advance social goals pertaining to the economy, the environment or society itself.

But what are the advantages and disadvantages of behaving in an ethically sound way? We take a look at four pillars of corporate social responsibility in a little more detail…

The Environment

It is without doubt cheaper for a company to conduct its business with little or no regard for the environment. A factory that emits harmful chemicals into the atmosphere will be cheaper to run than one that disposes of waste carefully. Packaging made from non-sustainable materials will usually be cheaper than recycled eco-friendly packaging. And drilling that takes place with disregard for the local ecosystem will be cheaper to conduct without environmental surveys and safeguards.

But conducting themselves responsibly can help companies to cut costs in the long term. Taking the example of oil, if it isn’t transported at some cost and with great care then a spill will be far more likely. The ramifications of this can be particularly costly, both in terms of practical cleanup and the damage that negative PR can do.

In terms of active environmental corporate responsibility, Sony are all too happy to share their success stories. These include employees at the Sony Semiconductor Corporation Oita Technology Centre gathering to pick up litter voluntarily each year. The team’s efforts have resulted in a great improvement on the southern coast of Kyushu on Kurotsuzaki Beach. So much so, that 2009 saw the first return of endangered loggerhead sea turtles, which had not laid their eggs there in decades.

Taxes

This is the ultimate in passive corporate social responsibility, because with big companies there are seriously big tax bills. Dodging these is not only irresponsible but illegal too. Let’s look at the example of Enron here. This energy company was actually well-known for its socially responsible initiatives and put a lot of work into publicising them. What it did not publicise however, were its profits. In fact the company chose to hide those to reduce the amount of tax they would have to pay.

Inevitably they were found out, which led to the company’s collapse in 2001 and jail terms for the top executives, who were charged for conspiracy and fraud.

This serves as a cautionary tale for many big businesses. But instead of focussing on the metaphorical ‘stick’, companies would do well to turn to the ‘carrot’. By paying tax, a company is essentially investing in a country, contributing to its revenue, which will then go on to finance schools, hospitals and other public services. This can be of the utmost importance for a company based in the developing world, where they can help to remedy some serious social and economic problems.

Employing people

Any company opening up a factory, office or branch will tend to do so on the proviso that it will be beneficial to an area. In 2013 the Conservative minister Matthew Hancock said “The responsibility of employers is to the communities they live in as well as to making a pure profit.” He went on to say during an interview on Radio 4, “this is about a change of culture. I am arguing that it is companies’ social responsibility, their social duty, to look at employing locally first.”

As well as being socially responsible, adopting an ‘employ locally’ stance can be beneficial to a company. Let’s look at a small company, BoxVan Removals, for an example. This removals business is located in Llandybie, Carmarthenshire, where they have a strict policy of only employing locals. They do this because not only do locals already have a vast knowledge of the local area but also because they all speak Welsh, which is vitally important when interacting with more elderly customers. BoxVan Removals may only be a small company but the advantages brought about by their hiring policy could be enjoyed just as easily by a larger firm.

Mutual benefit

As we have seen, corporate social responsibility comes with some serious kudos. In this age of social media, where feedback is given very publicly and is very hard to contain, companies are more desperate than ever to be liked. “Just as character matters in people, it matters in organizations,” says Justin Schultz, a corporate psychologist in Denver. Doing something like helping endangered turtles is a great way to boost your company’s profile, which will hopefully translate into revenue.

One company who have jumped on this to great effect are the mobile phone provider, Orange. Their involvement with RockCorp gave them a credible ‘in’ with their teenage demographic and was great for society too. The idea behind RockCorp is a gig for which you can’t buy a ticket, or win a ticket. Instead you have to ‘earn’ the chance to see your favourite band or performer by giving four hours to do volunteer work within your community. In one fell swoop teenagers buy into an idea and a brand while doing good and then, ultimately enjoying themselves. Now that’s smart social responsibility.

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