May 05 ,2015 | by Erin O’Neill
UK Elections: getting the balance right on business and social needs
What can we say about the future relationship of business and society in the modern era?
What is a business and does it have an obligation to society? This important question has sprung up once again, especially considering that 2015's General Election is just around the corner on May 7th.
British businesses will be watching avidly for the outcome of the election, as many benefits will hinge upon who steps through the door of 10 Downing Street on May 8th. However, what function can and should businesses have to the broader community?
Society is becoming increasingly connected, with individuals more easily and speedily accessing information and news about corporations. Will this change the dynamic between the community and businesses as a whole?
It’s always been a tricky subject and will likely remain so for decades to come. But should businesses strive to support the society they operate within?
There’s no doubt that capitalism has advanced society hugely, but it’s hard to miss the downsides. Along with a reduction in global poverty and expanded access to healthcare and education, we’ve seen public and private debt balloon to unsustainable levels.
Many capitalist organisations have failed to focus on the effects of businesses that expand past stakeholder impact. It’s often found that this leads to a decline in social, environmental and financial value.
Capitalism with a long-term view is a growing trend in which organisations are recognising that the interests of stakeholders and the community can be united under one common goal.
“The actions of any one company may reverberate throughout the various systems in which it operates, generating second- and third-order benefits as well as negative externalities,” said a McKinsey article authored by Walmart’s chief executive officer Doug McMillon and senior vice president of sustainability Kathleen McLaughlin.
“Under long-term capitalism, companies recognise that fact and, through concerted action with others of sufficient scale, work to ensure constant improvements to those systems,” it added.
The globalisation revolution has heightened the interdependence of social, environmental and financial systems, which in turn has changed the way that companies look to add value to society.
Corporate Social Responsibility (CSR)
The idea behind CSR is that ultimately corporations take responsibility for their impacts on social welfare and the environment. It’s likely to be a stakeholder oriented notion that applies to the efforts that a business goes to in order to surpass what is required by regulations or environmental protection groups.
Some firms might only be using CSR in order to promote their public image, but many large corporations are shown to be investing significant amounts of money and time into environmental sustainability programs, renewable/alternative energy and initiatives that benefit the broader community.
In the long-run, CSR benefits not only the shareholders and community, but the corporation itself.
Google Green is one such CSR initiative that has promoted more efficient use of resources while supporting renewable power. Its environmental angle can have far-reaching effects, especially with such a massive company like Google. Through this initiative it has halved the use of power in their data centres, this then translates to massive cost savings that can be channelled into other areas of the business.
Society and business go hand in hand
It’s clear that the relationships between businesses and society are increasingly complex, but it’s apparent that each share a common goal and are increasingly interdependent.
Organisations are not forced to take responsibility for their impacts on social welfare and the environment, but those that do will find they can provide lasting benefits to stakeholders and add value to society in a manner that enhances their own business.
Erin O’Neill is an LSBF News Writer who reports on small business, careers, technology and education news.
Latest posts by Erin O’Neill (See all)
- Job satisfaction higher in large accountancy firms February 14 , 2018
- Financial services firms must focus on security, says FCA January 31 , 2018
- Research shows high demand for specialist finance skills January 30 , 2018