Role Of Business In Society: Critiquing Responsible Enterprise
Challenges for Private Enterprise in Relation to SDGs
As the name implies Sustainable, Development Goals (SDG) have been developed to ensure the sustainable development while ending poverty, protecting planet, consuming energy effectively and by doing other helping tasks. In the presented essay, focus will be made upon challenges for private enterprise in respect to the chosen goal, role of MNCs, aspects related to responsible enterprises and role of government in society. The purpose of this essay to develop an understanding on the role of private enterprises and government while dealing with sustainable development goals. For the presented essay, the selected SDG is number 7, which is related to effective energy consumption.
Three pillar of sustainability are defined there. The same are social, environmental, and economic pillars. More often, they can be understood as people, planet, and profit. If any of the pillars is weak then the whole system cannot be termed as sustainable. It means in order to become a sustainable enterprise, an organization need to make a good, ethical, and reasonable balance among these three factors. Focusing on one and ignoring others can create an issue. Behind the development of this goal, many of the challenges acted as a force or it may say that many of the challenges were there which underlie this goal. Behind the development of the subjective SDG i.e. SDG 7 too, there were certain social, economic and environmental challenges which the private enterprises were facing.
The primary challenge behind the development of the goal is that the energy is regarded as the central element of the various functions and the opportunities of the world today. It is essential for not only the jobs, food production, climate balance, but also for the overall economic development of a region. The goal is significant on the lines that it links various other sustainable development goals with each other. In general, terms, the challenge that underlies the development and work towards the goal is that universal access to energy is essential together with the increased efficiency and use of the renewable energy. This is because these are further necessary to combat the issues of climate change and creating more sustainable communities. In the words of Martin Freer, the director of the Birmingham Energy Institute at the University of Birmingham, the greatest challenge that lies with the use of the energy resources is “cooling” (Gray, 2017).
Three Pillars of Sustainability
In terms of the economic challenges, the scarcity of the energy resources lead to the scenarios like economic disruption at international, national, and local levels; price rises, balance of payments problems in terms of the international trade, hurdles in the availability of capital and many more (Schandl et. al, 2016). The oil shocks of the 1973 and 1979 are some of the examples of the economic disturbances caused by the energy resources use.
In terms of the political challenges, the lack of control over the energy resources has highlighted the major challenge for the nation to be self-sufficient in terms of the energy resources.
The social challenges of the energy use arise from the three main reasons namely the want of the nations of higher living standards, economic booms in the large regions and the increasing numbers of population at national and international levels. As the energy resources aid in the activities like the agriculture, mining, commerce, manufacture and industry; the lack of the same leads to the social issues namely the poverty, urbanization, economic declines for women, lifestyle issues and demographic transitions (Sorrell, 2015).
Business plays their significant role in the society. The role becomes more vital and important when such businesses are multinational companies. According to business dictionary, a multi nation company is an organization that operates it is business in more than one nation. For any society, businesses are the important tool as they provide goods and services and use the natural resources in a commercial manner. Further businesses plays central role in granting financial prosperity. In order to check the impact of multi-national companies in society in relation to SDG 7 this is to be stated that these companies are bringing negative impacts to the society. Businesses are useful for many groups of the society as they provide benefits to all of them. For instance, businesses provide employment to the citizens of a nation, dividend, and interest to shareholders and lastly revenue to governments in the forms of taxation. These private business works according to shareholder theory. It means they only consider SDG 7 ensures the access to reliable, affordable, sustainable, and modern energy of all (Sustainabledevelopment.un.org, 2018). This goal makes it focus on the effective energy consumption of industries. The multinational corporations are usually of private sector and profit-making organization that only focuses on the economic side and in order to make number one among the competitors ignore the SDGs. According to this goal, it becomes the responsibility of organizations to consume the energy in an effective energy and to leave the same for the uses of others. Nevertheless, the private sector ignore the same their access to energy is not sustainable.
Economic, Political, and Social Challenges
However, this would wrongful to state that multinational companies bring negative impacts in relation to SDG 7 always. Apart from the traditional corporations, some socially responsible corporations are also there. These corporations have their defined strategies and being a multi nation operating organization, they usually consider SDG in their plans and policies (Iisd.org, 2018). With the local business, there is often an issue of lacking of financial resources. This is the reason that the local business cannot comply with the SDG even when they want to. Here the MNCs bring important impacts. In addition to this, these corporations are preparing sustainability report in which they provide the level of achievement with the SDGs. By doing this, private sector businesses including MNCs are fulfilling the requirements of SDG 7. These responsible steps taking by them are bringing positive impacts on the societies of different nations. In conclusion, this is to mention that earlier MNCs were ignoring the SDG 7 and they were only focusing on profit. In such a manner, the same were putting the adverse impacts on the society by making ineffective use of energy but now the situation is different.
In respect to the meaning of responsible enterprise, many of the interpretations are there. As the name implies itself, in the general sense, a responsible enterprise can be understood as a business that considers some aspects such as business ethics, sustainability development and corporate social responsibility in it is dealings (Edgeman, Neely and Eskildsen, 2016). Different authors have suggested different feature of a responsible enterprise. According to Oliver Laasch and Roger N Coneway, sustainability is one of the features of a responsible enterprise. Suitability is a balancing act. Further, two more authors named as Andrew Crew and Dirk Matten focused on different terms such as corporate citizenship and business ethic in their book titled Business Ethics: Managing Corporate Citizenship and Sustainability in the Age of Globalization”.
For the purpose of compare and contrast, the selected concepts are corporate social responsibility and corporate citizenship. Many of the scholars and writers find similarities between these two concepts and therefore treated them as a single term, but the same is not correct. There are some differences between both of them. Firstly, in order to understand the meaning of corporate social responsibility, this is to mention that it is a management related concept where an organization considers the interest of society and environment in it is operations (Unido.org, 2018). On the other side, corporate citizenship is a concept that treats an organization as a natural person/citizen. According to this concept, a business can be a good citizen or a bad citizen (Jhingan, 2018). Corporate citizenship can be defined as a way in which a company exercises it is rights, privilege, obligations, and overall corporate social responsibility. It may say that where CSR focuses on the policies, corporate citizenship is more about practices. Corporate citizenship is limited and only considers the welfare of community at a local level. This is necessary to mention that the lead concepts of CSR are to ensure the practices which are responsible towards the society. However the lead elements of corporate citizenship is not so much different from the concepts of CSR as the same consist social obligations, legal requirements, voluntary actions and integrated ethics. In order to define the lead difference between CSR and CC, this can be stated that not similar to CSR, CC does not make it is focus of environmental factor and sustainability as much. As mentioned earlier that under corporate citizenship concept, a company is treated as natural person, certain problems are there. In such cases, the rights of the corporates are protected but their responsibility remains unrestricted. This is also necessary to mention that a corporation can only be treated as a person as far as legal status is concerned. Moving towards the similarities between the two discussed concepts, this is to mention that both of these concepts adhere to good practices and can be understood as a feature of responsible enterprise. Both of these concepts faces the issue of “managerial capture”. Managerial capture is a situation where the managers of an organization show their reluctance to set the profits aside in order to become a responsible enterprise.
Impact of Multinational Companies in Society
Kim Alter (2007) had worked towards the development of the sustainability spectrum (Ridley-Duff and Bull, 2015). This spectrum was a further extension of the Dees’ model that led to the understanding of the social enterprise. The Alter’s spectrum states six gradations that separates the “traditional for profit” and the “traditional not for profit” enterprises. According to the said model, social enterprises are nothing but a cross section where the economic exchanges are used to create the increased opportunities for the creation of the social values.
On application of the sustainability spectrum, the ethics of the responsible enterprise can be stated to be as follows. Such enterprises are capable of fulfilling their obligations not only towards stakeholders like the shareholders, investors, suppliers and employees; but also towards the use of the resources. These are further engaged in transparent reporting practices as required by the applicable regulatory framework. The reports demonstrate the amount of consumption of resources, the saving of the same and the steps taken for efficient utilization. These enterprises are accountable for their actions and policies adopted and thus engage in various agreements on the lines of the resource and energy use, transport planning, environmental product responsibility and the pollution and waste management.
The fact that their ethics go beyond the mere provision of quality services and products and earn the economic returns, is what makes them different from the private businesses (Cramer, 2017). Thus, the success is not only limited to the numerical figures, but also in the form of an overall impact on the environment and contributing towards the national and social issues. The responsible enterprise achieve their social goals either on their own, or by entering into partnerships with the government, local communities, non-governmental NGOs and also involving the various stakeholders. Thus, the priority is on creation of the long term meaningful relationships with the environment, society and stakeholders.
During the years 1970s to 1980s, a number of codes and legislations were passed on to transform the relationship between an organization and its constituents, i.e. the employees, investors and the natural environment. The Cadbury Committee laid down the first code best practice in the UK for the companies in the year 1992, which laid down the base for the company’s responsibilities towards the preservation of resources. The Environment Protection Act 1995 was an important move towards the up gradation of the corporate responsibilities towards the surrounding environment as well. Thus, the government has been playing an empirical role since the historical times towards issuing the guidance and stating the importance of the conservation and effective utilization of the natural resources and corporate social responsibilities of the enterprises. The agencies developed under the Environment Protection Act have been responsible for the monitoring and the enforcement of the European Union’s Integrated Pollution and Prevention Control (IPPC) Directive. According to this, the companies are required to conserve energy, recycle to the maximum extent possible and use natural resources in the best manner possible.
In this series, the government agencies like the Department for Environment, Food and Rural Affairs (Defra) and the Department of Trade and Industry (DTI) have also supported the businesses towards the formulation and the implementation of the guidelines for different industries for achieving sustainability and improving conservation of natural energy resources (Fawcett and Parag, 2017). On the above lines, the Office of gas and electricity markets (Ofgem) which regulates the electricity and the gas industry in the UK develops a yearly plan for the execution of the environmental and social objectives (Hall and Roelich, 2016). Thus, the government takes the assistance from the Ofgem in the form of development of action plan in the areas namely the energy efficiency commitment, energy services, energy efficiency, renewables, and others.
Another important role of the government is highlighted by the fact that government can levy taxes on the uses of energy resources. For instance, the UK government climate change levy is a significant move in terms of levying the use of the energy for the domestic purposes. Thus, it can be stated that role of the government is comprehensive and includes policy formulation, development of support agencies, implementation of necessary levies and incidental roles, for the conservation and efficient utilization of energy resources. The above role leads to the monitoring of activities of organizations and thus the facilitation of the responsible enterprises.
Conclusion
As per the discussions held in the previous parts it can be stated that business leave a deep impact on the society and overall national development. This is because they not only use the resources of the society, but also because the practices and policies adopted by the enterprises make them accountable towards the various stakeholders. The work explored the importance and challenges underlying the sustainable development goals as laid down by the United Nations and the same are required to be followed by the enterprises while carrying on the business operations. The work considered the sustainable goal number 7, i.e. based on the use of the energy. In addition, the work further explored the meaning and the roles of the responsible enterprises in the light of the globally essential concepts like corporate governance and the corporate social responsibility. Further, the work also shed light on role of the regulators or the government in overseeing the activities of the organizations and the use of the resources of the nation. Thus, it can be stated that in order to succeed at global and national level in terms of the conservation of resources and societal development, the enterprise, the government and the stakeholders must align their goals and actions.
References
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