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The Social Responsibility of Business is Natural Resource Protection

| Friday September 7th, 2012 | 4 Comments

Over the next couple of weeks, we’ve asked our writers (and guests) to respond to the question” What is the Social Responsibility of Business?”  Please comment away or contact us if you’d like to offer an opinion.

One cannot write about the ‘social responsibility of business’ without mentioning Milton Friedman who stated in 1970 that, “There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”

This view is now considered to be outdated and conservative as more and more businesses are finding their value outside of simply making a profit. I do not disagree with the notion that the primary purpose of any business is to make profits – indeed that is how any business can stay afloat. I disagree that it is the only purpose of business, as it takes away from the aspect of capitalism that is ultimately very humanitarian.

One of the reasons that making a profit cannot be the only responsibility of business is the increasing resource crunch. During the age of the Industrial Revolution and up until Friedman’s time there was little talk of natural resource depletion. Indeed, pollution was still an externality and the great cogs of industry made up society.

Now however, current economics prove that functioning without any regard to natural resources leads to the destruction of the ecological system, which leads to eventual collapse of the economic system. The social responsibility of business therefore is to protect the economic system and by implication the bigger socio-environmental system upon which it rests.

Business has the social responsibility to factor in ‘negative externalities’ like pollution -  in fact any economic model that still regards the environment as an externality is ultimately an anti-growth model. As the economic system has grown more interconnected and vast over the years, so too has the idea of business itself.

Today business has a responsibility towards its stakeholders – customers and society at large are more aware of the negative impacts of business as usual. They want cleaner and more ethical products and services. Business today also has a responsibility towards the environment – it cannot keep endlessly extracting resources without consequence.

Resources like air, water, biodiversity, fossil fuels are the very building blocks upon which a successful business is built. With the rapid depletion of these essentials, business needs to learn to deal with the ominous constraint of environmental degradation. Even big business today needs to adapt towards a social entrepreneurship model in order to survive.

The social responsibility of business is not just the limiting aspect of its responsibility towards societal and environmental protection, but it is towards the protection of the notion of business itself. The responsibility of business therefore is to not merely to generate profit, but to ensure a steady flow of capital that can be diverted towards the higher pursuits of society building. Without the realization of this responsibility, business will soon burn itself out.

Image Credit: Akhila Vijayaraghavan ©

 Akhila Vijayaraghavan is the Founding Director of GreenDen Consultancy and has been a Triple Pundit Staff Writer for over a year. She has covered various topics pertaining to CSR, sustainability, social innovation, and renewable energy. She can be followed on Twitter.


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  • Nicholas Gower

    This perspective seems hearkens back to the idea of long term sustainable profits http://www.hipinvestor.com

  • LYP

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  • Mary

    I agree. Where there is a
    will, there is a way. There is no doubt that the primary aim of any business is
    to maximise profit which can be regarded as a will, however the way of going
    about it is what makes the difference.

    The environmental issues
    are generally nothing new, however they differ from one business to another,
    for example; a manufacturer of cars will not produce the same amount of
    pollution as a manufacturer of confectionary items. Moreover, we cannot deny
    that the changes in the environment are due to the activities of humans in
    general which cause harm to the environment as well as to the creatures which
    inhabit it. In my opinion, these harmful doings can be seen as an abuse to the
    environment and utter disrespect to all those who live in it including the
    person/ people committing these harmful actions.

    The economic system relies
    heavily on the welfare and maintenance of the environment. This awareness did
    not come about on its own. The warning had come into focus during the 1960’s
    where the damage could not only be seen, but could also be felt as everyone had
    started to suffer the consequences of the pollution or what is more famously
    known as the ‘eco-catastrophe’ (business and environmental ethics, 2012).

    My point is that the
    warning had come about only when catastrophe struck. Does the environment have
    to suffer before we can realise how much we need it? There are no specific laws
    made for specific businesses that cover the environmental awareness. Laws are
    made to protect the right of others and hence the environment much like human
    beings has the right to be protected.

    The utilitarian approach
    to this issue suggests that when an industry pollutes the environment in the
    making of its products; the price of the production does not reflect on the
    damage made to the environment. The result is an escalation of waste which
    thereby affects society due to the decline in economic welfare. The
    utilitarian’s also argue that all individuals should also contribute to the
    environment by protecting it which will in turns avoid any harm to the
    society’s welfare (ethics and the environment, 2004).

    So going back to the
    beginning, manufacturers, companies and other businesses big or small must
    consider this social responsibility and take into account the damage it may
    cause in the production of goods and services. In this manner, a business is
    able to find ways of maximising profit while respecting the responsibility.

    Another important aspect
    which is to be taken into account is the fact that running a business will not
    always but sometimes cause damage. Prevention of damage is not always
    successful. However the utilitarian theory would suggest that a maximum amount
    of happiness and the least amount of harm should be achieved (The open
    Polytechnic of New Zealand, 2013, P. 19). This implies that if prevention
    cannot take place, then the least amount of harm should be administered.

    Similarly and under virtue
    ethics, this situation involves the business, the environment and the rest of
    society and according to practical wisdom and in terms of virtues; to take care
    of something is to have the virtue of being caring (The open Polytechnic of New
    Zealand, 2013, P. 37). In this case the business as well as the rest of society
    has the moral obligation of caring for the environment.

    A Friedmanite position
    advocates that a business has the responsibility of complying with current laws
    and business regulation which surround the environment and to be truthful with
    regards to the activities which have an impact on the environment (The open
    Polytechnic of New Zealand, 2013, P. 18). If we analyse this suggestion, we
    start to find impurities. Not all countries have strong laws against causing
    harm to the environment. This implies that a country with reasonably weak laws
    protecting the environment becomes vulnerable to environmental exploitation and
    gives its businesses the advantage of using these weak laws against the
    environment and therefore affecting all of society.

    At this point, it is the
    society’s job to make sure that strong laws are put in place to avoid
    businesses from taking this advantage on board. On the contrary, making laws is
    time consuming and risks the exploitation of the environment during the
    process. This indicates that if a country does not hold the business
    responsible of its actions towards the environment and thereby towards society,
    it is risking the collapse of its economic system.

  • Kataline

    I agree.