Global Responsibilities of a Business

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  • 0:01 Global…
  • 0:42 Environmental Responsibility
  • 1:25 Social Responsibility
  • 2:32 Where Did All of This…
  • 3:29 Incentives for the Company
  • 4:02 Lesson Summary
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Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught history, and has an MA in Islamic law/finance. He has since founded his own financial advice firm, Newton Analytical.

As the world has become a much more connected place, people have begun to look to businesses to play a more responsible role. This lesson is on how the global responsibilities of business are evolving.

Global Responsibilities of a Business

Once upon a time, companies had one primary goal- make money for their owners. However, in the past few decades, times have certainly changed. Now companies are not only expected to turn a profit and a substantial one at that, but also fulfill certain responsibilities on both a community level and a global one. This means that companies have to be even more aware of what they are doing and not doing in order to meet these responsibilities.

However, there are often plenty of incentives for a company to meet these new demands. In this lesson, we'll look at the new responsibilities of companies, including environmental and social duties. We'll also look at why these have suddenly become obligations and how companies are benefiting from the new expectations.

Environmental Responsibility

While politicians in the United States still heavily debate the merits of human-caused climate change, the rest of the world is pretty much resolved that humanity is indeed causing climate change. As a result, companies are expected to be conscious of their impact on the environment. Companies are encouraged to pursue more green trade practices that have less of an impact. In some places, this is becoming the law.

For example, some countries have banned plastic bags to curb trash and litter, and also in recognition of the fact that oil is used to make them.

Social Responsibility

However in much of the world, it is not law but social pressure that drives these actions. Investors and customers want to be sure that the companies that they support have the best interests of the world's environment in mind.

Of course it's not just the environment that customers and investors are now pressuring companies to be more mindful of. More and more companies are being pressured to accept a considerable amount of social responsibility.

This is especially new. As recently as a few decades ago, massive disasters that resulted in hundreds of deaths could be swept under the rug, as was the case of the Union Carbide disaster in Bhopal, India. That is certainly no longer the case. Instead, more and more people are concerned about the well-being of their fellow humans on the other side of the globe.

Jewelry companies are pressured to be sure that their diamonds are conflict free, while manufacturers of all types, particularly clothing, are encouraged to make sure that their supply chains do not engage in practices with sweatshops, where people work for low wages in near-slavery.

In fact, even investment banks are expected to treat their employees better, as evidenced by the fact that they are now making efforts to make sure that young bankers have at least a day off a week.

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