2.4 Responsibilities to Stakeholders
- How do businesses meet their social responsibilities to various stakeholders?
What makes a company be admired or perceived as socially responsible? Such a company meets its obligations to its stakeholders. Stakeholders are the individuals or groups to whom a business has a responsibility. The stakeholders of a business are its employees, its customers, the general public, and its investors.
Responsibility to Employees
An organization’s first responsibility is to provide a job to employees. Keeping people employed and letting them have time to enjoy the fruits of their labor is the finest thing business can do for society. Beyond this fundamental responsibility, employers must provide a clean, safe working environment that is free from all forms of discrimination. Companies should also strive to provide job security whenever possible.
Enlightened firms are also empowering employees to make decisions on their own and suggest solutions to company problems. Empowerment contributes to an employee’s self-worth, which, in turn, increases productivity and reduces absenteeism.
Each year, in collaboration with Great Place to Work®, Fortune conducts an extensive employee survey of the best places to work in the United States. For 2025, the top companies included Hilton, Synchrony, Cisco, American Express, Wegmans Food Markets, and Marriott International. Some companies offer unusual benefits to their employees. For example, Cisco offers all employees four company-wide paid "Day for Me" mental-health/wellbeing days per year when the whole company pauses work. Additionally, Cisco subsidizes the first four hours of back up child/elder care through a partnership with Care.com.9
Responsibility to Customers
To be successful in today’s business environment, a company must satisfy its customers. A firm must deliver what it promises, as well as be honest and forthright in everyday interactions with customers, suppliers, and others. Recent research suggests that many consumers, particularly millennials, prefer to do business with companies and brands that communicate socially responsible messages, utilize sustainable manufacturing processes, and practice ethical business standards.10
Responsibility to Society
A business must also be responsible to society. A business provides a community with jobs, goods, and services. It also pays taxes that go to support schools, hospitals, and better roads. Some companies have taken an additional step to demonstrate their commitment to stakeholders and society as a whole by becoming Certified Benefit Corporations, or B Corps for short. Verified by B Lab, a global nonprofit organization, B Corps meet the highest standards of social and environmental performance, public transparency, and legal accountability and strive to use the power of business to solve social and environmental problems via an impact assessment that rates each company on a possible score of 200 points. To become certified as a Benefit Corporation, companies need to reach a score of at least 80 and must be recertified every two years. There are more than 9,000 companies worldwide that have been certified as B Corps, including The Body Shop, Kickstarter, Ben & Jerry's, Warby Parker, Toms, Patagonia, Coursera, and Moodle.11
Environmental Protection
Business is also responsible for protecting and improving the world’s fragile environment. Deforestation is a worldwide issue to be addressed. Estimates indicate that 10 million hectares of the world's forests are cut down annually. There are nearly 10,000 critically endangered species. A continent-size hole is opening up in the earth's protective ozone shield. Each year, nearly 3,000 pounds of trash per person is discarded, much going into the already nearly full landfills.
To slow the erosion of the world’s natural resources, many companies have become more environmentally responsible. For example, Toyota now uses renewable energy sources such as solar, wind, geothermal, and water power for electricity to run its facilities. Toyota's Port of Long Beach facility was converted using state-of-the-art sustainable technology to emit nearly no pollutants. The vehicle-processing plant is entirely powered with renewable energy that is created on site, helping the auto giant move closer to its goal of eliminating carbon emissions in all of its operations.12
Ethics in Practice
This Fish Story Has a Tasting Ending
Duncan Berry, co-founder of Fishpeople Corp., has always been an environmentalist at heart. Brought up on the Oregon coast, he was a sea captain at an early age, spending nearly two decades on the ocean before going on to become a successful entrepreneur in the organic cotton industry. After selling the textile business at the age of 50, he retired back to the Oregon coast to work on a state initiative to preserve marine habitats.
He quickly discovered that the state’s commercial fishing industry had gone into major disrepair since his seafaring adventure years earlier. Berry learned the majority of seafood consumed in the United States was being imported from other countries and more than 90 percent of U.S. seafood was being exported. In addition, great harm was being done to the ocean because it was being overfished.
Although several groups were already working to improve the commercial fishing industry, he observed that one key group was not part of the discussion: consumers. Berry decided a key component of change had to be involving consumers in the process. He spent more than a year meeting with everyone involved in the Oregon fishing industry—from fishermen to processors, distributors, truck drivers, chefs, and consumers—to gain perspective on why the industry was failing. His “aha” moment occurred when he realized the majority of fish is consumed in restaurants because consumers think preparing fish at home is too difficult and time-consuming. That’s when he co-founded Fishpeople Seafood.
Started in 2012, Fishpeople has a mission of changing the way people think about seafood by being transparent about where the seafood comes from, how it is processed, and how it is handled. Berry believes the company’s transparency helps consumers understand how the process translates into sustainable food that tastes good and is good for you. The company sells fresh and frozen seafood offerings. Fishpeople built its brand on package codes that let consumers trace catch area, vessel, and even the people doing the catching via the website through its "Trace your Fish" feature. Consumers can discover everything about the seafood’s origin, down to the fisherman who caught it. Fishpeople also operates a processing plant in Toledo, Oregon, where workers are paid a livable wage and receive health insurance—benefits typically unheard of in the fishing industry.
Fishpeople built national retail distribution in the late 2010s (including Whole Foods) and today focuses on traceable fresh and frozen seafood through regional retail and its coastal seafood market in Garibaldi, Oregon. In 2017, Fishpeople merged with Ilwaco Landing Fishermen—operators of landings in Ilwaco, Washington, and Garibaldi, Oregon—to integrate supply, expand species, and strengthen traceability and job stability for local fleets.
- How does Fishpeople’s transparency contribute to the company’s success?
- What responsibility, if any, does Fishpeople have to the local fishing industry?
Sources: Company website, https://fishpeopleseafood.com, accessed June 27, 2017; J. David Santen, Jr., “Adding Value to Oregon Seafood,” Built Oregon, https://builtoregon.com, accessed June 27, 2017; Elizabeth Crawford, “Fishpeople Wants to Fix the ‘Fundamentally Broken’ Seafood Industry with Increased Transparency,” Food Navigator, https://www.foodnavigator-usa.com, May 25, 2017; Fishpeople Seafood Announces Merger with Ilwaco Landing Fishermen,” Tillamook County Pioneer, https://www.tillamookcountypioneer.net, May 22, 2017; Leigh Buchanan, “Why This Entrepreneur Ditched Fashion for the ‘Hunting and Gathering’ Business,” Inc., https://www.inc.com, April 2017 issue; Kate Harrison, “This Former Green Textile Maven Is Making Microwaved Seafood Sustainable,” Forbes, https://www.forbes.com, August 25, 2015; “FishPeople Seafood,” https://fishchoice.com, accessed January 23, 2026.
Corporate Philanthropy
Companies also display their social responsibility through corporate philanthropy. Corporate philanthropy includes cash contributions, donations of equipment and products, and support for the volunteer efforts of company employees. Statistics suggest U.S. corporate philanthropy exceeds more than $44 billion annually.13 American Express is a major supporter of the American Red Cross. The organization relies almost entirely on charitable gifts to carry out its programs and services, which include disaster relief, armed-forces emergency relief, blood and tissue services, and health and safety services. The funds provided by American Express have enabled the Red Cross to deliver humanitarian relief to victims of numerous disasters around the world.14 When Hurricane Katrina hit the Gulf Coast, Bayer sent 45,000 diabetes blood glucose monitors to the relief effort. Within weeks of the disaster, Abbott, Alcoa, Dell, Disney, Intel, UPS, Walgreens, Walmart, and others contributed more than $550 million for disaster relief.15
Responsibilities to Investors
Companies’ relationships with investors also entail social responsibility. Although a company’s economic responsibility to make a profit might seem to be its main obligation to its shareholders, some investors increasingly are putting more emphasis on other aspects of social responsibility.
Some investors are limiting their investments to securities (e.g., stocks and bonds) that coincide with their beliefs about ethical and social responsibility. This is called social investing. For example, a social investment fund might eliminate from consideration the securities of all companies that make tobacco products or liquor, manufacture weapons, or have a history of being environmentally irresponsible. Not all social investment strategies are alike. Some ethical mutual funds will not invest in government securities because they help to fund the military; others freely buy government securities, with managers noting that federal funds also support the arts and pay for AIDS research. In 2022, assets invested using socially responsible strategies total more than $8 trillion.16
Perhaps partly as the result of the Great Recession in the early 2000s, over the last several years companies have tried to meet responsibilities to their investors as well as to their other stakeholders. Recent research suggests that now more than ever, CEOs are being held to higher standards by boards of directors, investors, governments, media, and even employees when it comes to corporate accountability and ethical behavior. Increasingly, CEOs are being forced out due to issues beyond company financial troubles, such as ethical lapses in their organizations or personal behavior controversies. Strategies to promote ethical behavior in leadership and at all levels throughout the organization include establishing a culture of integrity with clear ethical guidelines, holding employees accountable for ethical behavior, providing ethical training regularly, aligning decisions with company core values, and addressing ethical issues promptly and directly.17
- How do businesses carry out their social responsibilities to consumers?
- What is corporate philanthropy?
- Is a company’s only responsibility to its investors to make a profit? Why or why not?