What does responsible business mean?
"For those who think business exists to make a profit, I suggest they think again. Business makes a profit to exist. Surely it must exist for some higher, nobler purpose than that?"
- Ray Anderson, founder and chairman of Interface Inc.
Profit is what drives many businesses. But responsible business recognises that it must be driven by more than just the pursuit of money, looking also to improve society and nature that its profits – and very existence – depend upon.In the past, being responsible meant that business endeavoured to behave ethically, operated in a sustainable way or engaged in corporate social responsibility (CSR) initiatives, such as donating to charities. But responsible business is now recognised as being much more aspirational and holistic, involving all those things and much more.
Whether it’s tackling climate change, creating a fairer and more equal society, or encouraging biodiversity, responsible business needs to engage with all the world’s biggest problems. There can be no trade offs between people, planet and profit – they are interconnected and dependent on each other.
While academics are still debating and practitioners are still discovering what responsible business looks like, the most authoritative definition and principles (below) have been developed by the Centre for Responsible Business based on the latest research, policy and best practice.
Responsible business at Birmingham Business School
What is responsible business?
A responsible business is a company that judges its purpose and practices against all of the United Nation’s Global Goals (see below), embedding them in its strategy and operations. These companies aren’t only driven by profits but by their desire to help make a better world, contributing to the health and wellbeing of society and the environment.
Sustainability is just one vital part (and consequence) of being a responsible business, which encompasses every facet of a company from its governance and leadership to its production methods and relationships with customers and stakeholders. Being responsible will naturally mean different things for different companies, depending on where they are. The priorities for responsible businesses in Malawi, for instance, might differ from those in Sweden.
Our leading research has identified the following common traits of responsible businesses and how they behave, no matter what size or sector:
- They aren’t just growing or profitable but purposeful.
- They manage even what they can’t measure and are fully transparent to their stakeholders.
- They recognise the value of connected and circular thinking and respect planetary boundaries.
- They don’t wait for consumer demand to make sustainable changes and embrace their role as citizens in society.
- They use protocols and inclusive, collaborative working to avoid making irresponsible decisions.
At its root, being responsible is a proactive mindset that constantly asks questions about the sustainability of a business and never accepts ‘don’t know’ as good enough. Those championing this mindset are helping to co-create a new science of responsible business by venturing out of their zones of ignorance, testing new theories and sharing their unique and different experiences of sustainability.
December 2019: What is Responsible Business?
Jargon Buster
Struggling with academic language? Lost in business acronyms? Our jargon buster has a list of helpful definitions for the most common (and more obscure) terminology in responsible business.
Our jargon buster
The Global Goals
The UN’s 17 Sustainable Development Goals (or Global Goals) were agreed by world leaders in 2015 and adopted by 193 countries. Together, they are a blueprint for a more harmonious, equitable and resilient world that is fit for the future, calling for an end to poverty, protection for the planet and peace and prosperity for all by 2030.
Through 169 targets and 232 indicators, the Global Goals provide a pragmatic statement of contributions required from governments, businesses, civil society and individual citizens to realise these aspirations.
Most importantly for business, they also help to define what ‘doing business responsibly’ actually means, translating a fuzzy concept that has been in use for years into specific goals and measurable targets that – even if imperfect – everyone can understand and agree on. They provide a new consensus and vocabulary for negotiating the purpose of all organisations and account for what is valued, valuable and socially acceptable.
The Global Goals are all interconnected and action in one area will affect outcomes in others. They can be grouped in many different ways, but it is useful to think of them in three clusters:
- Economic (Global Goals 7, 8, 9 and 12)
- Societal (Global Goals 1, 2, 3, 4, 5, 10, 11, 16 and 17)
- Planetary (Global Goals 6, 13, 14 and 15)
The Sustainable Development Goals
The Responsible Business Manifesto
While the practical science of responsible business is still being explored and understood, we have distilled some underlying principles into a 15-point manifesto that will help guide responsible business thinking and combat damaging myths that trap companies in unsustainable habits.
The Responsible Business Manifesto
1. Make profits in pursuit of purpose rather than maximising profits >
2. Choose whether to grow or not and minimise any damage of expansion >
3. Balance the interests of all stakeholders and ecosystems, not just of the owners >
4. Use performance metrics that accurately measure impact and align with the Global Goals >
5. Be fully transparent by using open-access reporting based on the Global Goals >
6. Use technology, including AI, to help avoid triggering unforeseen tipping points in our ecosystems >
7. Respect planetary boundaries and seek collaborative, circular solutions >
8. Work collectively to build society and nature’s resilience and avoid systemic risks >
9. Understand the systemic nature of any problem to find its most effective solution >
10. Give your consumers clear and trusted information to enable responsible choices >
11. Value the trust and support of the people you depend upon >
12. Use your privilege to enhance society and nature >
13. Don’t reward or incentivise irresponsible behaviour >
14. Create an inclusive culture that respects the dignity of staff and stakeholders >
15. Prioritise the sustainability of the planet over your business >
Five Pillars of Responsible Business
In order to understand responsible business behaviour and take meaningful action, it’s useful to break it down into five key pillars:
- Governance
- Accountability
- Production
- Consumption
- Leadership
For each pillar, we’ve identified a four-step ‘positive pathway’ that any business can take to become more responsible in that area.
But these are just the actions we know are proven to work so far. The science of responsible business is growing all the time and below you’ll find lots of inspiring ideas, theories and research from a range of academic disciplines, businesses, organisations and countries that are leading the way in responsible business practice.
Responsible governance
Responsible businesses balance the interests of all stakeholders – employees, customers, suppliers, the community and wider society – not just those of the owners.
Responsible governance
Responsible accountability
Formal scorecards and financial accounting systems aren’t set in stone. They represent past choices as to what and how to measure things in business – past choices that may be steering us in the wrong direction.
Responsible accountability
Responsible production
Responsible businesses already recognise that an extractive, ‘Take-Make-Waste’ approach to production is reckless and unsustainable, and that circular, ‘closed loop’ strategies which seek to reuse, recover and recycle resources are the way forward.
Responsible production
Responsible consumption
Ethical consumers have played a vital role in driving companies towards more sustainable products and practices over the years. But a responsible business shouldn’t wait for consumer demand to make this transition since, ultimately, businesses have the power to make every consumer choice an ethical one.
Responsible consumption
Responsible leadership
Even business leaders who are proudly committed to sustainability can unwittingly find themselves making irresponsible decisions. But a new model of inclusive, teams-based leadership can help mitigate against these oversights and improve decision-making by encouraging more methodical processes that listen to all stakeholders and employees.
Responsible leadership
