The responsibility of business action towards the social environment
Article by Mr. Vitounis Spyros, Economist, MSc, Mphil
The article was published in the February STIGMA magazine entitled "Today's Social & Business Actions"
We all look forward to living in an environment of clean air and water, safe roads, respect for human rights, work, peace and so on - what we call a prosperous society in a prosperous environment. When this happens it is not accidental, as it requires a combination of actions of two key institutional actors of society, government (through regulations, taxes and policy) and business (through the implementation of their strategy). They both make and implement decisions that can have a significant and lasting impact. It is in the interest of business to operate in a prosperous society and in a prosperous environment, but to be successful, there are very clear relationships, implications and dependencies that must be recognized, valued and managed.
One of the first lessons in economics universities is the phrase "the purpose of business is to maximize profits". This phrase includes the usual practice of companies for making strategic decisions regarding their operation, which includes the assessment of only quantitative financial measurements. In this way, however, companies are unaware of the overall impact of their operation on society. Questions such as what are the consequences of the operation of the company on the environment, society and the economy are not asked urgently and consistently and are part of common expressions in the field of non-financial reporting of financial statements. But this is changing internationally as the need to capture business activities becomes increasingly imperative. According to a recent survey by Ernst & Young (EY), 97% of institutional investors evaluate the non-financial disclosures of the companies in which they intend to invest, with their decisions often being influenced by them, considering it a key pillar of increasing its long-term value. The fact that its management evaluates and evaluates the environmental and social impacts of its activity.
Society is the environment in which the business operates. "Social capital" is the intangible asset of all companies operating in a particular society as it represents the sum of the benefits gained by those individuals who belong to a particular society. Many scientific studies have shown that in countries with high social capital accumulation, the best conditions are created for the development of entrepreneurship, ensuring stable and long-term prosperity. The concept of economic development now goes beyond the limits of simple arithmetic of measurements of traditional economic quantities such as e.g. the Gross Domestic Product (GDP) and extends to the assessment of the overall well-being of society.
Assessing the non-financial impact of a business on society is a difficult and complex task. Finding a way to quantify the effects so that they can be compared to normal economic data is not always easy. Ignoring them, however, often leads to wrong decisions, often causing problems in terms of reputation, lost revenue and ultimately to the detriment of the very environment in which the company operates. Business managers, assessing the social, environmental and economic impact of their activities, must be able to compare the overall impact of their strategies and investment choices and give value and prestige to their business.
We have the privilege of operating in Epirus and the wider region of Western Greece, a region composed of societies with a high sense of responsibility towards the local economic and environmental environment. Many companies have their brand name inextricably linked to the existence of a high social capital of the societies in which they are "members". In view of the new decade that has already begun with positive prospects, both for our country and our region, the upgrading of the business decision-making process towards a holistic assessment of business activity is the bet they are called to make with themselves. Through the increase of social capital to achieve the goal of long-term and steady growth of corporate capital.
