Social & Environmental Responsibility and Legal Framework of Business
Social and Environmental Responsibility
Since the company has a decisive influence in society, it should have certain responsibilities.
Social costs are caused by the private activities of the company but are supported by society as a whole.
Corporate Social Responsibility (CSR) refers to all the legal and ethical commitments that the company takes to care for and improve the impacts of its activities on the social, occupational, and environmental aspects.
Areas of Social Responsibility
These are the areas in which society expresses its demands on companies:
- Commitment to society and the community: Companies should encourage the economic, social, and cultural development of the region where they are located. They are expected to create employment or at least maintain it, avoiding redundancies and outsourcing.
- Climate of trust with workers: It is a company’s responsibility to create a climate of confidence, motivation, and participation for its employees. A job must provide a match for their skills, establish decent wage conditions, take all legally prescribed security and health measures, and safeguard workers’ rights through unions.
- Credibility with customers and consumers: Companies must provide all information about the products they sell, be responsible for possible harm caused by product use (proof of purchase), and offer after-sales guarantees and attention to complaints.
- Respect and environmental improvement: This requires companies to use effective techniques for treating emissions and waste, recycling, saving energy, using more durable and easily repairable ecological packaging, etc.
Today, it is necessary to balance the goals of short-term profitability with the satisfaction of consumer and worker demands and consideration of the public interest of society.
Environmental Responsibility
Not all effects of the company are desired (e.g., energy consumption, waste generation). Current social concern for these unwanted effects translates into pressure for companies to adopt a more respectful attitude toward the natural environment and commit to sustainable development. This translates into changes in the business environment: environmentally responsible consumers, stronger environmental legislation, and increased public awareness.
Environment and Competitive Strategy
Given these changes, the company should take a positive attitude and make environmental responsibility a strategic opportunity to gain a competitive advantage (e.g., ecological product attributes, a responsible corporate image). For this strategy to work, it must be credible, with genuine efforts in environmental protection.
The Legal Framework of Business
Establishing the legal framework that regulates economic activity is one of the responsibilities of the Administration, to regulate the activity of economic agents and encourage their development. Good legislation promotes competition and encourages efficiency and equity while protecting consumer rights and the environment.
Commercial law applies to employers and their actions (Commercial Code and supplementary laws). Businesspeople are all persons performing a physical activity professionally, regularly, and on their own behalf, and all corporations in their different legal forms.
Basic Legal Principles
Given their importance, some are included in the Constitution:
- Freedom of enterprise: Freedom to create and manage undertakings, in accordance with the needs and general interests of society.
- Right to property: Ability to use and dispose of things for their owners, within the limits of the rights of others.
- Freedom of contract: Basic to the system, it acts as a conflict resolution system.
Other Aspects of the Legal Framework of Business
- Exclusive rights: The law provides for the exclusive use for a time of inventions or innovations applicable to the business (patents), as well as trade names and brands. This is known as industrial property.
- Antitrust: Laws that promote competition to guarantee the rights of businesses and consumers. The Act regulates the Defense of Competition, and the National Commission for the Defense of Competition is responsible for surveillance, inspection, and research into practices that violate the law.
- Accounting, tax, and employment policies: A wide range of obligations that affect the company in different fields.