US Businesses are Starting to Take their Social Responsibility Seriously

by Catherine Rafferty

Companies are starting to see the importance of acting with social responsibility in mind.

Large U.S. firms have also made it their responsibility to become more politically engaged, publicizing their stances on polarizing issues and policies. Companies like Lyft, P&G, Airbnb, Gucci and others have come out with statements defending LGBTQ rights, climate change, gun control or immigration reform in response to changing consumer expectations.   Businesses have been employing non-market strategies for years. They can lobby, endorse political candidates and fund political campaigns to shape public policies in their favor. Corporate social responsibility, or CSR, is the idea that businesses should be conscientious of their impact on the communities they serve and be actively seeking to benefit society at large.

Research shows that corporations engaging in socially responsible ways benefit from their investments. According to a study by Nielsen, 48 percent of U.S. consumers said they would “definitely or probably change their consumption habits to reduce their impact on the environment.” Another study done by University of Toronto sociologist Josée Johnston found that nearly two-thirds of consumers resonated with the statement, “shopping is a powerful force for social and environmental change.”

48% of U.S. consumers said they would “definitely or probably change their consumption habits to reduce their impact on the environment.”

Gretchen Wainwright, senior lecturer in the Department of Civil Engineering Technology, Environmental Management and Safety at Rochester Institute of Technology, explained that businesses are now issuing CSR reports to be more mindful of their impacts on sustainability efforts. There are two main frameworks in place for companies who want to be more sustainably minded — becoming a certified B-corporations or issuing a GRI report.

Becoming a B-corporations enables a company to pursue its non-economically driven goals without harming profits because the certification builds stakeholder impact into the legal structure of the company. GRI Sustainability Reporting Standards is the first and most widely adopted global standard for sustainability reporting.

Wainwright said that before these new standards, companies could not fully commit themselves to social change.

“They weren’t necessarily standing up or supporting some of the big social issues and social change that needs to take place. Especially when it comes to governments, democracy and freedom. They were essentially just paying lip service to it,” she said.

Robert Barbato, professor of management at RIT who teaches a class on business ethics, said businesses do not necessarily have to sacrifice profits to be socially aware. In fact, in order to do good business, the company should have been considering their social standing from the start.

“This requires a moral awareness, moral sensitivity, moral imagination, sometimes moral courage on the part of companies.” he explained. “And it requires a balance, being able to understand that there are different competing tensions [and] goals that have to be addressed at the same time.”

Barbato emphasized that businesses must protect capital in order to operate properly, and if they do their jobs right, the exchange of capital should be helping people.

Critics of social responsibility, such as American economist Milton Friedman, defend the idea that business’s only responsibility is to make a profit. In a 1970 New York Times op-ed, he wrote, “Only people can have responsibilities. A corporation is an artificial person and, in this sense, may have artificial responsibilities, but 'business' as a whole cannot be said to have responsibilities, even in this vague sense.”

However, some companies are now realizing how social missteps can have costly affects. A recent tweet by Daryl Morey, general manager of the Houston Rockets, supporting Hong Kong protests caused two major Chinese National Basketball Association sponsors to pull funding. The NBA’s decision to remove the tweet and issue a public apology sparked controversy, drawing critics to question if profit was more important than defending the value of American democracy.

CSR is more important now than ever before. According to a 2018 study by Global Strategy Group, 77 percent of Americans believe that corporations have a responsibility to take action on important issues. Businesses should be wary of how their core values impact their business strategies and how the public views them because it could be the difference in making the sale or not.