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Social responsibility

The concepts of social responsibility and corporate responsibility refer to the liability that companies, public administration and work communities have for the impacts of their operations on the surrounding community, interest groups and environment. According to the definition of the European Commission, a responsible company includes perspectives linked with the community and environment in its business operations as well as operations in interaction with its interest groups. Moreover, a responsible company goes beyond the minimum requirements of the legislation. Several concepts are used for responsibility, such as responsible business operations, responsible entrepreneurship, corporate responsibility, corporate citizenship and social responsibility. These concepts mean the same thing for the most part, but the extent of responsibility varies.


Social responsibility on the part of companies is divided into financial, ecological and social liability (the ‘triple bottom line’). Financial responsibility represents being responsible for owners’ expected returns as well as participation in the production of economic well-being for the community. Ecological responsibility refers to taking care of the environment and natural resources as well as safeguarding their diversity. Social responsibility implies, among other things, that the company applies concern for the well-being of its personnel, product safety and consumer protection, and complies with good operational practices in all interest group relationships. A successful enterprise harmonises all components of social responsibility in a balanced manner.


Also in projects supported by Finnpartnership’s Business Partnership Support, local legislation projects should comply with internationally approved environmental and social responsibility standards concerning, for instance, the environment and employees' rights. Environmental and social responsibility standards and guidelines of the World Bank and IFC (International Financial Corporation) are used (for more information, see IFC Performance Standards and World Bank Group EHS Guidelines) as the basis for environmental and social responsibility in the assessment of projects.


Why should social responsibility issues be considered in business operations?

Responsible action is regarded as the prerequisite for the long-term profitability for a business enterprise. A company can build up its responsibility also for managing operational risks. The management of social responsibility is quickly reflected in the corporate image: for this reason, it also helps to manage the reputation risk of the company. In addition, a competitive advantage can be obtained from social responsibility. By developing solutions to social problems, the company can meet the expectations of customers, employees, owners and investors as well as stand out from the competition. Moreover, social responsibility affects the company’s relations with the media, journalists, partners and surrounding community.


Each enterprise must itself evaluate what social responsibility means within its own operations. This is affected by the company’s own values and aims as well as the legislation and expectations of interest groups. Moreover, the character of the company’s operations and operating environment affect the content of social responsibility.


Taking environmental and social impacts and risks into consideration as well as their management is important, and it is advantageous for the company already at an early stage in preparing tentative plans for the project. Business Partnership Support can already be applied for assessment of environmental and social impacts as part of a feasibility study (e.g. environmental and social responsibilities connected with the selection of the business partner’s operations and location).

Finnish firms aspiring to become forerunners in social responsibility issues

The goal of the Government’s social responsibility decision in principle (approved 22 November 2012, in Finnish) is to raise Finnish companies and government to the position of forerunners in social responsibility issues. Since responsibility is a significant factor for Finland’s competitiveness, enterprises and public organisations should commit to assessing their operations’ social impacts. The decision in principle is built on the concept of social responsibility as the liability of various operators for their own social impacts. In addition, Finland’s Development Policy Programme (2012) obligates the execution of a human rights based approach on all Finland’s development cooperation. A human rights based approach on development means the promotion of human rights through development policies and cooperation. Finland’s human rights concept is comprehensive, containing – in addition to political, economic, social and cultural rights – rule of law development as well as democracy and the advancement of good governance and anti-corruption activities. These are also required from projects supported by Finnpartnership.


Nordic enterprises include corporate responsibility more and more as part of their strategic operational plans, and they expect the same from their business partners and suppliers. European Union legislation is consistent with Nordic corporate responsibility practice. In the EU, a directive is under preparation regarding responsibility reporting whose aim is to have all of Europe's large companies report on their responsibility as of 2017 onwards.


FIBS

Corporate Responsibility Network FIBS is the leading non-profit corporate responsibility network in Finland. The aim of FIBS is to help companies find competitive responsibility: to innovate more cost-effective and sustainable products, services and operational modes that bring added value both to the enterprises and to society. A corporate responsibility databank, for instance, is found on FIBS' website, where the main publications in the field are compiled – from guidelines to research studies. More information about FIBS.