The context of social responsibility gains prominence from the fact that companies are no longer a means of running economic activity, but have grown on to become the environment in which we live in. Social responsibility goes beyond basic commitment to justice and law of the land (avoiding wrongs, honouring contracts, obeying laws by the written letter etc.) and encompasses fullest commitment to welfare of humanity in general (promote human dignity, improve community, follow the law by its spirit etc.). What companies are expected to concentrate on is civic positioning, apart from market positioning – by building a stock of reputation capital to gain extra mileage of goodwill (which comes handy during times of difficulties and crisis). The leadership challenge is charting a reasonably workable strategy that is both financially and morally sustainable. This requires both intelligence and imagination and will to engage with external partners and industry wide coordination with governmental and non-governmental agencies. The question for leaders to answer is not whether or not ethics pay; it is how ethics can be made to pay.
In general, following elements drive the corporate social responsibility of companies:
- Building reliable and fair relations with non financial stakeholders and meeting their expectations
- Creating social relevance of the business activity (essentially a leadership responsibility)
- Involving community in the achievement of business goals (creating job opportunities, development of local ancillary and downstream industry etc.)
- Compliance to local laws
- Eliminating negative impact of company’s operations
- Protecting natural environment
- Information disclosure (product risks, environmental risks etc.)
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