Corporate responsibility is a phrase being used, yet finding the exact definition for it seems elusive. Financial Times states that “Corporations have a responsibility to those groups and individuals that they can affect, i.e., its stakeholders and to society at large.” Basically, for many people, corporate responsibility is simply wanting a corporation to do the right thing for both its investors, as well as the world around it.
While some might see corporate responsibility as simply a marketing ploy, the benefits found when corporations work to make sure that they create a positive effect on all fronts reveals benefits on both the financial front, as well as from the standpoint of helping the general population.
Corporate Responsibility Roots
To find out how corporate responsibility became a force to be reckoned with, a look back at the late 1990s shows that events such as Nike CEO Phil Knight joining with UN Secretary-General Kofi Annan to undertake massive changes in the Nike supply chain. As Georg Kell, a contributor to Forbes, points out in the article, “The Future of Corporate Responsibility,” there was a time when corporations did not really worry about human rights in the supply chain. However, in today’s environment, many corporations are treating corporate responsibility very seriously.
One area of corporate responsibility getting a lot of attention is gender inequality. Many corporations are taking a hard look at their own policies and doing their best to ensure that both men and women are receiving the same pay for the same work effort. Forbes, reporting on corporate social responsibility trends for 2018, placed gender inequality at the top of their list.
Another area that corporate responsibility is paying a great deal of attention to is in the area of diversity. Corporations are seeing where having a diverse workplace can lead to many advantages, including innovations caused by thinking outside the box, as well as favorable public relations.
In an article in The New York Times, it was reported out that the top executives in Fortune 500 companies were perceived as lacking in diversity. Less than 7 percent of those executives were women with only two being minorities, highlighting both the need for more diversity within the executive levels of corporations, as well as a demand for gender equality.
As public awareness of climate change issues has grown, so has interest in companies to ensure they are doing their best to lessen their impact on the environment. Not only does this have an impact on their global footprint, but it also creates a public relations platform that allows companies to showcase their willingness to do what it takes to be a better corporate citizen.
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The days of corporations being beholden only to their shareholders are coming to an end. With more public awareness and more outside scrutiny as to their operations, corporations across the board are seeing the need for corporate responsibility in order to maintain sustainability and to generate public goodwill.