by Candra French-Teshome

Created on: November 08, 2009   Last Updated: December 31, 2009

The Benefits of Ethics and Corporate Social Responsibility

Social responsibility is the act of building a business model structured around ethical decisions related to the environment, global community and the human condition. CSR and ethics go hand in hand. There are many benefits to adhering to a philosophy of corporate accountability.

Companies that implement business models around a framework of communal concern and ethical treatment are more likely to build customer loyalty and have high employee retention rates. Organizations with reputations for community service appear more trustworthy to consumers. Would you do business with Company X who is known to discard computer equipment in landfills? Or would you rather do business with Company Z who runs worldwide programs to limit the number of computers that impact the environment? As a result of social responsibility; loyalty, referrals, repeat business and satisfaction increase which has a direct impact on increased revenue.

When job searching, many employees ask potential employers what they are doing to contribute to society. Employees are more likely to stay with a company they feel contributes to the values they hold close to their hearts and considers their individual needs. For example, if I am dedicated to reducing my carbon imprint at home, why wouldn't I want to work for a company that does the same?

In addition, let's consider the contribution of the three work styles environment to the triple bottom line. With the advance of technology, three work styles have emerged - mobile worker, telecommuter and in-house worker. When companies implement a three work styles environment, they find employees are more likely to stay. The benefit of a company with a mixed work style is the reduction in impact of commuting on the environment and increased employee retention.

Some areas of social and ethical duty have impacted society so greatly; they have become law. For instance, equal opportunity, environmental protection, and consumer laws are areas that are monitored by government agencies. Therefore, it benefits a company to abide by these concepts to avoid legal action, fines and loss of income due to damaged reputations.

People, Planet, Profit: The Triple Bottom Line

The Triple Bottom Line business model is designed to account for financial, social and ecological performance in business. There are many companies that have successfully implemented this model. Social entrepreneurs have an opportunity to get in on the triple bottom line by investing in companies worldwide using services like Kiva.

Case Study 1: Better World Books

Better World Books operates from a socially responsible business model. The company manages profits to shareholders, reduces environmental impact and addresses world illiteracy rates - at the same time. You can easily turn a profit by rescuing discarded books from landfills.

Case Study 2: Peugeot

Peugeot took the first step to consult with its stakeholders by asking questions on vehicle improvement. It then developed improvement indicators for engineers to begin working to resolve. This is social responsibility with a dash of ethics.

Some argue that corporations are only responsible for maximizing shareholder returns. Additionally, some insist that achieving social responsibility and maximizing profit is not an easy combination or worthwhile cause. Generally, nothing worthwhile is easy to accomplish. CSR is a common sense opportunity, though challenging, to increase shareholder profits and be accountable to stakeholders and the environment.

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