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The rise of responsible business (2)

…Upholding ethical business conduct and the compliance of sustainable principles for societal good.

Many leading businesses have recognized an integrated view of sustainability and responsible business conduct as key strategic priorities. These encompass a commitment to issues such as climate change, tackling corruption, strengthening the rule of law, the empowerment of women, diversity and inclusion, respecting human rights, efficient consumption, responsible sourcing and supply chain practices.

For as many businesses, the competitive and resilience benefits and opportunities in responsible business practice remain increasingly compelling that, circumstances which ought to lead to the inaction in addressing ethical concerns of such businesses is no longer a viable strategic option but an imperative act on which it assesses either its being responsible and or sustainable in character or not.

Though most businesses want to do the right things, behave in a way that is responsible and a way that leads to positive outcomes, it is rare that some intentionally set out to do something that has negative consequences for others.

However, this is exactly what happens when we live in unsustainable ways making decisions and choices that benefit us as a business alone but the same decision has serious damning effects on society.

While the business environment landscape I must emphasize continually experiences significant structural changes such that, strengthening ethical conduct and business integrity highlights the guiding commitment and principle that, behaving ethically is considered a business advantage and competitive, the significant, impact is that, practicing business integrity and adopting responsible sustainability principles will require that companies develop a culture of integrity that goes deeper than merely following rules, laws, and regulations.

Notably, for all business integrity initiatives trump on principles and corporate governance systems for its success. With this understanding, it is conclusive that anytime a business dissents from a culture of the rule of law and ethical governance principles, we are most likely to witness systemic corporate scandals and unethical ruling behaviors.

Again, we acknowledge that ethical businesses build stronger trust with stakeholders, that business ethics and integrity standards are seen to have positive spillover effects that go beyond internal company policies. Here, organizations implementing business ethics and integrity standards tend to strengthen trust with employees, customers, partners, and government counterparts.

So whilst business sustainability clearly seeks to maximize performance opportunities, it also recognizes business social responsibility associated with its own conduct and business relationship that may destabilize this intergenerational balance through adverse impacting their stakeholders interest in respect of the environment, climate and social human that underpin a business social license to operate.

Therefore, the interaction of businesses with sustainability concepts primarily seeks to integrate into business models, decisions that impact products and services and the entire value chain, sustainably. This guiding principle see the business play in building a healthy business environment through an entrenchment of ethical business conducts and behavior.

The need for responsible business

Responsible business conduct is an essential part of an open international investment climate. Although many businesses demonstrate respect for high standards of business conduct, some neglect the appropriate principles and standards of conduct in an attempt to gain undue competitive advantage.

This may particularly be true in environments where regulatory, legal and institutional frameworks are undeveloped or fragile. More so, more and more enterprises are responding by committing to responsible business practices, promoting dialogue and engaging with stakeholders.

However, building a healthy business environment is in the interest of all stakeholders and demands effort by all. Government have a responsibility to protect internationally recognized fundamental rights and to improve the functioning of markets through good governance, fair regulations and transparency. Business have a responsibility to adopt responsible business practices that take into account both the bottom line and the impact their activities on society may have.

Businesses have a strong incentive to act responsibly aside from the expectations placed upon them and the baseline standards that they have to meet.

Responsible businesses are more likely to obtain and retain the social license to operate a critical component of long-term business strategy. Responsible business practices are also an efficient way to manage risks, diversify portfolios and increase productivity.

The principles of sustainability

The principles of sustainable business encompass a holistic approach that seeks to balance economic success with environmental responsibility and social equity. Interestingly, embracing these principles by all businesses allow them to create a framework that not only prioritizes profits but also contributes positively to the planet and its people. These principles guide sustainable business practices, shaping a path towards responsible and resilient operations.

For a business to be sustainable, they need to emphasis resilience as already intimated. The focus on resilience is not only the recognition of the importance of profits but also placing value on longevity and the ability to bounce back from shocks.

Here, I make a case for sustainability debate where the essence is to consolidate the shift in paradigm from business-centric to recognizing that businesses are part of a wider system and may thrive only on resilient relationships.

A responsible business however remains sustainable through;

Environmental stewardship

Prioritizing environmental stewardship ensures sustainable businesses prioritize environmentally friendly practices throughout their operations. This involves reducing carbon footprints, conserving natural resources and adopting measures to minimize pollution and waste. The aim is to contribute to ecological health, which may involve the use of renewable energy sources, sustainable materials and environmentally conscious production process.

Social responsibility

Through social responsibility, the business aims to prioritize people and communities. It emphasis on the core principle for fair treatment of employees, ethical sourcing of materials and positive contributions to local communities.

By social responsibility principle, sustainable business recognizes their role in society and aim to make a positive impact by ensuring fair labor practices, promoting diversity and inclusion and engaging in community development initiatives.

Economic viability

Economic viability is considered a fundamental sustainable business practices for all responsible businesses. Under this principle, pursuing environmental and social goals is as crucial as the need for financial stability for all responsible businesses. Sustainably responsible businesses seek to align their economic objectives with ethical considerations, investing in sustainable practices that can reduce operational costs, enhance efficiency and open up new opportunities in emerging markets.

Transparency and Accountability

The objective to build trust through open communication is imperative for businesses that seek to remain sustainable. Transparency, which involves openly sharing information about business practices, including sourcing, production processes, and overall impact build the capacities of sustainable business to prioritize accountability, taking responsibility for actions and actively work to address any negative consequences.

With open communication builds trust with consumers and stakeholders which fosters a culture of continues improvement and demonstration of commitment to ethical and sustainable practices.

Innovation and adaptability

By fostering a culture of innovation, sustainable businesses position themselves as leaders in the pursuit of a more sustainable future, adapting to new challenges and technologies to maintain their commitment to sustainability. By enhancing change and fostering innovation, sustainable businesses become agile and forward-thinking. This makes them active while they seek innovative solutions to minimize environmental impact, improve efficiency and stay ahead of industry trends.

Understanding the call for responsible business practice

Leveraging the tools that drive and influence responsible business behavior is a link to an enterprise wide business relationship in good corporate governance practices and adherence to ethical standards and conducts.

To comply with legislation and regulations and the principles of corporate governance, addressing environmental issues promote sustainability, avoid accusations of corruption, fair trade employers, providing fair working conditions, subscribing to professional bodies code of conducts signify some major practicable means applicable to adopt and uphold to guide a business ethical values, corporate social responsibility and the enforcement of laws.

Through human resources, production, marketing, finance and local community ensure payment of fair wage, good working conditions, responsible sourcing of raw material, waste reduction, reduction in energy consumption, reinforcing social and ethical values, pricing strategies, applying ethical accounting methods, considering the impact on local environment, support for local charities, sponsorship and charity involvement as key strategic initiatives that drive responsible business practices.

The case for compliance with ethics and integrity

While nuances exist, sustainability and ESG framework encompass the broad set of environmental, social and governance considerations that impact a company’s ability to execute its business strategy and create value. That sustainability development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

The quest for a business integrity program is getting the company’s leadership engaged and on board. To do this, company leaders need to establish and formalize their commitment to anticorruption and ethical business practices.

By this company directors and managers can sign a Declaration of Intent to develop a business integrity program that reflects the company’s commitment to honest behavior and practices. Again, company leaders need to decide how they will set the tone from the top and establish a standard of ethical culture for the entire company.

In addition, company leaders should also understand that a robust business integrity program serves as an excellent risk management tool that allows companies to detect, respond to, and prevent corrupt and other illegal and unethical activities by employees, business partners, and third parties.

Providing compliance standards materials such as manuals, videos, and training sessions and regularly evaluating performance on these standards, ensuring that compliance personnel report to the company’s board of directors periodically is recommended.

A business integrity framework as a tool for responsible business measure

Having said that, sustainability and integrity are essential to the long-term prosperity of all businesses. Today, smart business leaders know that they are operating in a fishbowl where everything they do is on display and social media enables news and information to travel around the world quickly. By this, there is the need to incorporate broader principles of integrity in everyday business decisions. This is not simply a matter of doing the right thing but a measure considered as smart business.

Before setting up a business integrity framework, a leader in the organization must be made responsible for it. A board member may also be assigned to oversee the program’s implementation. In the pursuit of business integrity, company leaders should ask:

How will the designated manager ensure that employees understand applicable local and international anti-corruption laws and regulations? Who will prepare business integrity and compliance reports? Who will the reports go to, and how often will they be filed? Should a new department be created to handle the required advisory and complaints function, or can existing departments cope with these demands.

A business integrity collective action initiative brings together private sector stakeholders, including companies and business associations, who commit to and verify compliance standards to eliminate corruption and unethical behaviors. Here, collective action initiatives provide “power in numbers,” strengthening and normalizing the integrity commitments of the business.

In summary, the notion that profit may not always pay and ethics may always cost epitomizes the need for greater efforts by all businesses to work to uphold stronger ethical standards to remain sustainable now and for future.

Frank is the CEO and Strategic Partner of AQUABEV Investment and Discovery Consulting Group. He is an Executive Director and the Lead Coach in Leadership Development and best Business Management practices for Discovery Leadership Masterclass.

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