To be in ownership of a company is to hold a lot of responsibility, most of which will extend beyond your business to the world around you. Whether it’s the welfare and livelihoods of your employees, the satisfaction and safety of your consumers, or your impact upon the society and environment in which you operate, the actions of a business have huge ramifications.

It is an unfair but not entirely unearned reputation among corporations to place profit above all other responsibilities, but leadership in business can, has, and will continue to be exercised.

As the world changes, new challenges develop and new opportunities emerge. The crucial skill for the next generations of leaders in the corporate world will be knowing how best to manage their businesses in a responsible and socially conscious manner.

What is responsible business?

The Responsible Business Summit in New York, which has now been postponed to September considering the recent pandemic, seeks to examine what socially responsible leadership in a business looks like. Further, how can it be cultivated in growing businesses today?

In a study conducted by the Confederation of British Industry, 90% of the British population expected companies to stand up for social issues. A further 72% indicated that they’d lend greater support to companies that do exercise social responsibility.

As such, there are real reasons to be interested in cultivating a responsible attitude in business.

Corporate responsibility covers many issues and topics but can be broadly summed up as the way in which a business can positively interact with the world in which it exists.

At the most immediate level, the responsibilities of a business lie first and foremost with its employees. After all, without a workforce the company cannot exist. Keep in mind that responsible leaders will also include themselves in that remit—if the captain loses his head, then the ship is doomed to sink. The same applies to leaders and their companies, and there’s nothing wrong in looking out for yourself when brainstorming business plans.

In this instance, responsible leadership in a business is about ensuring that the needs of the workforce are adequately met so that they can make the most difference within the company.

This may include obvious things, such as their level of pay or the hours in which they work, to more esoteric things such as recognition of hard work during meetings or social activities.

A working example: Gravity

Dan Price, the CEO of Seattle-based credit management company Gravity, has made the news recently for his approach to leadership within business. Upon hearing his employees confide that they could scarcely afford to live within Seattle on their current salaries, with one claiming to be ripped off, Price looked into studies surrounding employee satisfaction and fiscal happiness.

Upon learning that the minimum necessary for someone to live a contented life was a salary of around $70-$75k a year, Price made the radical move of slashing his millionaire salary, mortgaging two of his homes, and cutting down his personal expenses so he could raise the starting salary for everyone in his company to $70k per annum.

Within several years, his employees are happier, more productive, more loyal to their company, and have improved mental and physical health. Many have become homeowners, paid off debts, and started raising families—luxuries they previously could never have afforded. The money that the company receives has more than doubled from $3.8bn to $10.2bn and the company has expanded from 50 to 150 employees, with a new expansion into Boise, ID.

Responsible leadership in business doesn’t necessarily have to be this major, but it does highlight effective leadership in the business and how making challenging decisions and sacrifices can pay off. It also shows how crucial it is for leaders in business to take an interest in the welfare and happiness of their staff.

Look after your workforce and they will look after you.

Responsible business and the environment

A business also has a social responsibility to the wider world. As companies grow in size and reach, the impact they will have on people’s lives will expand in scope. Remember also that the notion of “the world” is highly subjective too. Even small businesses can have colossal impact on the families and neighborhoods it interacts with.

In recent years, greater and greater attention has been placed upon the impact companies across the planet have had on the Earth’s ecosystems. The Carbon Disclosure Project (CDP) has traced 71% of the Earth’s annual greenhouse gas emissions since 1998 to just 100 companies.

The desire to reduce humanity’s carbon footprint and try to reign in the catastrophic effects of manmade climate change have inspired many companies to adopt greener initiatives in their business plans.

Katie Schmidt of Passion Lilie believes that corporate social responsibility (CSR) can have numerous benefits. Even beyond the environmentalist messages, there’s a good deal of pragmatic self-interest to be had in approaching green policies. Namely that they help reduce costs, improve brand image, and improve innovation within the company.

“By building a positive image that you believe in, you can make a name for your company as being socially conscious.”

Business of any size will have a carbon footprint. Efforts that can be undertaken to reduce it will quickly pay dividends in terms of costs saved and custom attracted by a progressive and socially conscious philosophy.

Keep in mind this does not come about immediately. It will take investment of time, energy, and money before it pays off. Further, in the face of overwhelming numbers and statistics, it is easy to feel as though the efforts of one corporation mean nothing at all. But remember always that every little helps, and the conscientious actions of lots of little companies working in sync make for huge impact.

The role of leadership

As the 2020s roll onward and new challenges emerge, it is the role of leadership to provide clear, rational, and responsible answers to the questions facing businesses across the globe. The latest challenge as of the time of writing is the coronavirus pandemic, which has raised concerns about worker health and safety, compensation for unavoidable illness, the state of healthcare in the developed world, and the duty of companies to look after the welfare of their society.

As the crisis plays out, many ideas and solutions will be put forward, both by national governments and the heads of major companies. Leaders within the business world will need to formulate the ideas that will meet those issues head on, but they will also need to demonstrate moral fortitude as an example to their workforce.

Responsible leadership is not just in setting the course. It’s also in undertaking it alongside the rest of the company and making sure that the path is correctly followed.

It will require sacrifice, hard work, a willingness to break with convention, and a great deal of transparency. It’s not enough to simply pursue one-off interests and ventures—the company will have to commit to the responsibilities it takes up. The challenge is not just in working out what needs to be done, but also getting the rest of the business on side to see it through.

Communication and consistency provide more positive responses and dispel any notions that responsible undertakings are a cynical PR move.

Businesses do not exist in isolation. They are a part of the world around them. The more they engage positively with the world and use their substantial influence and resources to its betterment, the more the world will reward them in turn.

Looking to become a responsible leader in 2021? There’s a program to fit you at Hult.