Question

International Business Quiz:

Question 6 – Describe the role of a company in terms of social responsibility and sustainability.

Question 7 – Based on the answer to question 6, define the role of regulations supporting social responsibility and sustainability.

Answer 1

6. Corporate social responsibility implies the obligations of a corporate management to protect the interests of the corporation. Under the concept of social responsibility, the business decision-making objective of managers is not only to maximize profits or the value of shareholders, but also to serve and protect the interests of other members of a society such as workers, consumers and the community as a whole.

Although the business activities of a corporate enterprise affect all stakeholders, including society in general, managers may not accept responsibility for them. Corporate Social Responsibility implies that corporate managers must promote the interests of all stakeholders, not just those of shareholders who happen to be the so-called business owners.

The company should respect the best code of conduct in its dealings with the shareholders. The corporate board and management, however, try to increase profits or the value of shareholders, but they should protect the interests of employees, consumers and other stakeholders in pursuing this objective. Its special responsibility is that it should not pollute the environment in its efforts to increase profits or the value of the shareholders.

A corporate enterprise's most important responsibility towards employees is to pay them fair wages and provide them with healthy, good working conditions. Business enterprises should recognize the need to provide their employees with essential labor welfare activities, especially women workers should be cared for. Furthermore, the undertakings should arrange for proper training and training of the workers in order to improve their skills.

7. Public performance reporting through global reporting initiatives, integrated reporting and rankings has greatly influenced profiling and expanding CSR-related activities. Established in 1997, the Global Reporting Initiative encourages companies to report on their compliance with the standards of human rights and equality. Integrated reporting, in which companies together with their CSR initiatives make their annual financial reports, is also beginning to take hold.

Global guiding principles requiring companies to meet specific environmental, health, safety, and working conditions standards have been instrumental in directing efforts by companies to fulfill their social responsibilities.

While there is no specific corporate social responsibility legislation, there are laws that affect it. For instance, the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act requires public companies trading on a major American exchange to report the use of conflict minerals in their products, and also to work with diversity statistics to ensure equality and sustainability. Changes in the Federal Tax Code to encourage businesses to make charitable deductions of up to 5% of their income also served to foster corporate social responsibility.