Responsible business is an excellent thing. The most responsible businesses we have manage to improve their communities and the environment while making a profit.
However, this is all rather nuanced and complex. Managing a wide range of stakeholders isn’t easy for organizations. When returns are increased for one set of stakeholders, they usually are reduced for others, at least in the short term.
What this means is that the level of responsibility that an organization exhibits is really the product of the competing influences that its stakeholders have over it. Some stakeholders will push more for responsibility than others, and some stakeholders have more influence than others. And many stakeholders have little immediate incentive to influence their businesses to behave in responsible ways.
Because of this lack of immediate incentive for many organizations, alternative levers of influence are often required to move organizations towards responsibility. These levers include things like consumer action, regulators and legislation. While many industries push for self-regulation, this often leads to poor outcomes for the majority of stakeholders.
In our view we, as members of society, need to do more to drive our organizations towards responsibility.
Of course, responsible business brings together many complex, interconnected and systemically linked topics, so we’ve not even really scratched the surface of it here. We know we’ve not been broad or deep in this post, but it’s a subject we’re passionate about, so we wanted to at least get into onto the table for discussion!