02CH_Gonzalez_Business - 2 Social Responsibility and...

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2 Social Responsibility and Stakeholders . Jonathan Alcorn/ZUMA Press/Corbis Learning Outcomes After reading this chapter, you should be able to do the following: Examine strategic approaches to social responsibility. Analyze the value of corporate social responsibility. Evaluate the stakeholder’s role in business ethics and social responsibility and identify the steps required for stakeholder engagement.
Introduction Introduction Patagonia: The Responsible Company Specializing in outdoor clothing in a niche market, Patagonia, Inc. has long been considered a responsible company. Top executives make it a priority to convey the message that they care about their employees, their customers, and the environment. What does it mean to be a responsible company? The founder and owner of Patagonia, Yvon Chouinard, has admit- ted that he did not intend for Patagonia to be an industry leader in social and environmental responsibility when he started the company in 1972. Only after addressing a series of deci- sions in product design, supply, and marketing did Patagonia executives realize that every business has responsibilities beyond profit. Chouinard decided that he wanted to make a dif- ference in the world by offering quality products that had minimal environmental impact and providing employees with meaningful work. In 1988, staff at one of the Patagonia stores began to experience headaches due to a malfunc- tioning ventilation system that was recirculating formaldehyde into the air. The source of formaldehyde was linked to the finishing process of the cotton used in the company’s prod- ucts. By exploring the issue in detail, Patagonia discovered that formaldehyde in clothing could create adverse reactions for customers, including cancers and other illnesses. In response, the company investigated the environmental impact of the materials in their clothing. Based on their findings, they initiated a switch to organic cotton that was not readily available. Working with suppliers in the United States and later internationally, Patagonia was able to secure a greater supply of organic cotton that is free from the harmful chemicals that can affect cus- tomers and employees as well as the environment. These types of situations have shown that being a responsible company entails focusing on a broad range of stakeholders and provides for a viable and sustainable business. Patagonia has since become a leader in social responsibility. In their book, The Responsible Company (2012), Chouinard and Vincent Stanley, the company’s chief storyteller and editor of the Footprint Chronicles (the company’s website that provides transparency to the public by showing the social and environmental impact of Patagonia products), share five elements of business responsibility as a model for other companies. These are responsibilities to: 1. The health of the business, including the obligation of a company to stay financially viable.

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