Business Law and Social Responsibility - Research Paper Example

Business Law and Social Responsibility With the advancement of new challenges facing the corporate sector, it is imperative that companies rethink responsibility. It is more critical than ever for corporate entities to ascertain new means of getting beyond the mere talk and sincerely place corporate values at the same level with profits. The costs of failing to do better at doing good are far too high. The basic principle is that corporate entities will have to revolutionize to become broadly and deeply liable for their acts on different systems such as social, environmental and governmental among others. This is unavoidable and will take place either willingly or in response to external obligations. While staying out of trouble is no longer enough, corporate entities ought to try to execute a globally valuable mission actively. In order to earn trust, they ought to ensure transparency to enhance accountability (Savitz & Weber, 2006, 41-64). They should also ensure facilitation of communication, values and cooperation. This paper seeks to observe ways in which corporate companies ought to embrace changes as pointed out in Hollender and Breen’s The Responsibility Revolution. It further explores and reviews the six principles listed in the book. The Responsibility Revolution describes the means by which the American consumer has transformed from the time of the Great Depression until the Great Recession period in 2009. The way in which social responsibility is developing amongst the American people is by considering their spending trends on organic items and green products, which the corporate sector in America is presently exploiting, as they were aware this would draw investment and customer allegiance (Friend, 2009, 81-84). This finding led to rivalry amongst corporate entities trying to get greener than others did. The rivalry, though, is good for the environment as well as their revenue. During his campaigns, President Barrack Obama persistently solicited the notion of green products, social responsibility and the consequences of the evolving attitude of the consumers. The corporate sector, however, refused to embrace this revolution and instead acted defensively. The consumers, activist groups and government regulatory retaliated to this refusal by calling for commitment and responsibility and as a result, corporate entities responded in different ways including setting up of consortiums to run their projects, setting up of individual, ecological, and energy reduction schemes and contribution of at least one per cent of their income towards the Global Fund (Desear, 2011). Creating a corporate entity that not only upholds, but also exceeds is a move beyond the need to be ‘less bad’ and grips the culture of ‘all good.’ The Responsibility Revolution discloses the most brilliant ways for corporate entities to fabricate an enhanced future and hold themselves responsible for the outcome. The Six Principles to Help Evolve Responsibility Many corporate entities think they can hide their faults and only depict their achievements in the media. Blog posts, cable news and even traditional media are filled with examples of the breakdown of this system, with British Petroleum (BP) being merely the most recent and clear example. On the other hand, the Responsibility Revolution outlines corporate entities that dodge ahead of their own bad media, revealing their faults to the press and critics. The result drives corporate entities like Patagonia, Seventh Generation, Timberland and Novo Nordisk to act not only more conscientiously but also neutralizes external pressure against them. In a 2010 article, it was quoted that, “Most companies understand that pursuing a laudable mission can amount to a land of rich opportunity. But to successfully travel the road to corporate responsibility, an enterprise must navigate around six daunting land mines…” (Huffington Post, 2010). Jeffrey Hollender and Bill Breen in their book The Responsibility Revolution: How the Next Generation of Business Will Win provide for what corporations like the Seventh Generation and others have done to be environmentally, financially and socially sustainable. They explain how most companies can attain and sustain profitability while flourishing in accord with the environment, how they can convert themselves by altering their priorities, their operations, and face competition and how they associate globally. They argue that the definition of responsible corporate behavior has been too timid and that corporate entities have to do more than overseeing factories trumpeting endeavors to be a bit less bad and donating to charities, including tackling the overwhelming challenges facing society and the economy. They elaborate that more innovative thoughts need to be improvised if the world has to be transformed into a better place. They go ahead to lay out six fundamental principles that they claim would help evolve responsibility and define responsible businesses. The principles include; mission, authenticity, consciousness, community, transparency and collaboration. The book provides that one should learn the importance of mission, and what a corporate that is driven by mission looks like. A published quote in 2010 provided that, “While outwardly your business is driven by your social mission, what happens inside your company is an expression of that mission, as well. That means also focusing your passionate energy inward to create a fair and beneficial work environment for your employees” (Inc, 2010). Collaboration is provided in the book based on how to build a community inside your corporation. Producing and supporting a custom of collaboration both within and outside is the meaning of this principle. In his words, Louis Brandeis, a former Supreme Court judge said, “Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.” Revealing of information is what contributes to the effectiveness of markets. Interested parties should be given chances to respond or object to company actions rather than have regulators controlling them (Minow). Hollender and Breen (2010, 79-107) provide the meaning and implementation of transparency to mean having clarity of operations and purpose. In the Seventh Generation, one of the Operating Values is radical transparency, whereby it is provided that, “We believe that the best way to ensure that we live up to our aspirations is by being transparent about our business and product practices. You should expect to see all of our values and principles in all we make, say, and do. It’s really that simple.” In their book, the two elaborate that corporate entities can have transparency demands issued upon them suddenly and must, therefore, seek ways of responding effectively. To facilitate transparency to execute their strategies, companies must open up their business for analysis (Werbach, 2009, 91-120). The authors also issue cultivation of authenticity to elaborate the independence between behavior and principles. Many corporate entities raise their concern that the practice of corporate responsibility is ‘green-washing’ (Makower, 2009, 58-60). However, responsible corporate entities view the various global crises and environmental challenges as a chance to innovate and adjust activities around doing better. For example, in March 2008, Seventh Generation faced claims of contaminating consumer products with carcinogenic chemical that causes cancer. This challenged their honesty and compromised their reputation. Although this was not the genuine report, the mistake that led to the issue was pointed out by the company as excluding consumers and interested parties from the dioxane dialogue. They edged the transparency test. This again leads to the issue of authenticity and transparency in companies (Hollender and Breen, 2010, 71-130). Under the principle of Community, they introduce crowd sourcing and collaboration with an emphasis on how companies can have a competitive advantage if they turn consumers into contributors. In the Seventh Generation, ideas are not formed in isolation. Rather, customers and stakeholder are the ones who inform them. In 2009, for example, the company engaged the public repeatedly in a dialogue concerning the status of the company. This helped shift employee perspective. Similarly, in 2008, the company initiated its first survey of the community to evaluate engagement. Part manual and part policy, The Responsibility Revolution, does issue several examples for rising corporate entities that benefit both the community and shareholders (Speth, 2009, 165-184). The final principle the book provides is consciousness, whereby it provides for what corporate consciousness is and the way it is created. Hollender and Breen provide in their book, The Responsibility Revolution that, “Building a corporate consciousness means striving to ensure that ‘sustainability’ does not belong in some outlier department, but in the heart and mind of every associate; to ensure that we first conceive, and then seek to create, a promising future.” In many corporations, only few people deal with responsibility. At the Seventh Generation, one of the focuses is to inspire conscious consumption whereby it provides that, “Our focus is to inspire thoughtful consideration of each purchase - from the immediate impact of the products you buy (Is it safe? Is it gentle on the Earth? Does it work?), to the broader impact throughout their life cycle.” This implies that they seek to ensure an advanced level of consciousness to all their work. They act collectively in each of their deliberations, and hold discussions before making decisions. The corporation has further gone ahead to call their annual reports “Corporate Consciousness” reports, and since the future generation is entrusted to the present generation’s care, the corporation has set a road to ensure it achieves a higher level of conscious to their work. According to Hollender and Breen, to give a definition and develop collective consciousness is to build up a clear line in a company’s sight, including long lens that can uplift the social and business purpose into focus and, as a result, enhance the corporation’s performance. As society turns to ecological sustainability, many corporate entities have vowed to be good company citizens and have changed their values and principles to become environmentally, socially and financially stable. For example, the Seventh Generation has been on the frontline with regard to cultural change in consumer conduct and business principles. It functions in accordance with a new and dissimilar set of doctrines and ideals that are a clear exit in many ways from the long-considered traditional theme. In 2007, it became a founding member of B Corporation, a firm that constitutes responsible companies that obtain transparent and complete environmental and social performance values. The corporation requires focus on the interests of stakeholders like the community, workers and even the environment. Responsibility is taking center stage amongst corporate entities, and should be emulated further. It elaborates means for ensuring good conduct, as seen in the case of Marks and Spencer, and Nike’s Considered Index that enumerates the ecological impact of design alternatives, and Patagonia’s Footprint Chronicles that feature processes categorized as the good, bad and ugly, and substances that go into merchandise. Corporate entities continue embracing sustainability, with examples of Organic Valley’s ditching of Wal-mart in 2004 as a client to uphold a livable remuneration for its farmers. Nike on the other side listens to criticisms of its offshore plants and uses them as channels to alter factory settings. It is also making wise sustainable alternatives from product inauguration by getting in front of leveraging and directive systems. IBM has turned to use of online crowd sourcing to serve its innovations. Hollender and Breen issue a persuasive argument "that when companies shift their value proposition from selling desirable products to solving difficult social and environmental problems, whole new opportunities arise; that when they frame their conventional notions about what it means to act responsibly, they move from thinking incrementally about doing less harm to thinking expansively about leaving things better than they found them." They elaborate the principles of changing missions and values and the importance of sustainable business practices aimed at protecting employees and the environment. However, they fail to answer criticisms that corporate entities can uphold their competitiveness and prosperity while going through the transaction in order to become more conscious to environmental concerns. They, for example, mentions Patagonia, a corporation that changed from using cotton that is chemically grown or treated to natural cotton, but then realized that the demand exceeded the supply. As a result, Patagonia had to introduce farmers to new techniques of growing hence increasing the product price. This complication emerges because of corporate responsibility, as what the company got as profits remains questionable. Conclusion It is imperative that companies create corporations that are collaborative, authentic and sustainable. They should use the standards stipulated above to guide them from being profit mongers to responsible corporation. The Responsibility Revolution should be a guide for emerging companies to understand the importance of redefining the purpose of the business, innovating new mechanisms of working, and implant new sense of competing (Hawken, Lovins & Hunter, 1999, 234-259). Works Cited Desear, Jonathan. Precise: The Responsibility Revolution, 10/23/2011. Web. November 11, 2011. Available at: . Friend, Gil. The Truth about Green Business. New Jersey: FT Press, 2009. Print. Hawken, Paul, Lovins Amory, and Hunter Lovins L. Natural Capitalism: Creating the Next Industrial Revolution. New York: Little, Brown and Company, 1999. Print. Hollender, Jeffrey, and Breen Bill. The Responsibility Revolution: How the Next Generation of Businesses Will Win. New Jersey: Jossey-Bass, 2010. Print. 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