Responsible business definitions
The responsible business wheel below shows the components of responsible business and their relationships to each other, with Trialogue’s definitions of the various concepts and terms. There are overlaps and businesses use the terms in different ways.
Knowing these concepts can help companies map interventions and identify touchpoints to incorporate responsible business practices into business strategy and operations. When the core business exists or orientates itself towards society’s needs, it can achieve significant change.
The term ‘responsible business’ is in the centre, because all the other components are part of this overarching concept. For example, shared value is part of responsible business, as are environmental responsibility, social responsibility and governance (ESG).
Select a term on the image to see its definition.
Ethics and values
The business is run on principles such as integrity, fairness, honesty, and transparency, with the aim of improving its moral value in society. This includes ethical leadership, ethical conduct and training, compliance with laws and regulations, transparency and accountability, whistleblower reporting mechanisms and protection, and anti-corruption policies and measures.
Ownership and control
Shareholders own the company and managerial responsibilities are held by boards of directors who control the company. Boards have oversight of ethics, compliance, and business culture as well as integrated thinking and strategy, performance, and reporting. Black share ownership and board diversity are part of South Africa’s BBBEE legislation.
Risk management
Identifying, assessing, mitigating or treating threats to the business in accordance with the organisation’s risk appetite. This includes having a strategy for enterprise risk management and scenario planning for climate and biodiversity crises.
Capital allocation
Fair and appropriate pay across the company. This includes fair compensation and benefits, incentive structures that are aligned to the company’s ESG performance, ensuring employees earn a living wage, and reducing wage gaps.
Remuneration
Following the relevant tax laws and obligations of the country in which the business operates. This includes tax compliance, transparency and disclosure, and having a sustainable tax strategy.
Tax
Environmentally responsible practices used throughout operations. This includes responsible water, land and waste management, as well as ensuring energy and fuel efficiency, reducing greenhouse gas emissions, protecting air quality, and protecting and conserving the biodiversity of the areas in which the business operates.
Products and services
Ensuring all products have as low an environmental impact as possible. This includes sustainable product design, ensuring products are renewable, recyclable and biodegradable as far as possible, using environmentally friendly packaging, and making sure the distribution footprint does not cause harm to the environment.
Supply chain
Ensuring environmentally friendly activities throughout the supply chain, including environmental stewardship – or taking active responsibility for conservation and responsible use of the environment. It also includes sustainable sourcing and green logistics – reducing the environmental impact and carbon footprint of logistics activities.
Corporate social investment (CSI)
Investments by a company of money, time, products and/or services in projects external to the company and with a primarily developmental intent. It includes socioeconomic development as defined in South Africa’s BBBEE legislation, as well as volunteering and support of human welfare and environmental initiatives.
Enterprise development (ED)
Initiatives to help to develop small- or medium-sized companies (part of South Africa’s BBBEE Scorecard).
Employees
Responsible and ethical human resource practices include ensuring occupational health, safety and wellbeing, and fair labour practices and relations. They also include ensuring diversity, equity, and inclusion (DEI) in the workplace for people of different ages, races, ethnicities, abilities, disabilities, genders, religions, cultures and sexual orientations (black people in the workforce is part of South Africa’s BBBEE Scorecard). Skills development refers to training initiatives for employees, as well as bursaries, and apprenticeships (part of South Africa’s BBBEE Scorecard).
Supply chain
A responsible business ensures human rights and labour standards are upheld throughout its supply chain. It also ensures that procurement is done ethically and where possible, locally, and that where relevant, suppliers are supported to improve their performance through supplier development initiatives (part of South Africa’s BBBEE Scorecard).
Customers
A responsible business ensures that its products and services have a positive impact on customers and consumers. This includes ethical marketing and advertising and ethical distribution. It also considers product access and affordability, product quality and safety, ethical product disclosure and labelling, data security and customer privacy, and customer welfare.
Operations
Environmentally responsible practices used throughout operations. This includes responsible water, land and waste management, as well as ensuring energy and fuel efficiency, reducing greenhouse gas emissions, protecting air quality, and protecting and conserving the biodiversity of the areas in which the business operates
Corporate social responsibility (CSR)
Activities and investments aimed at enhancing the social impact of the business, including its impact on employees, customers, suppliers, communities and societies more broadly.
Governace
All structures and processes that ensure the business works within relevant regulations and policies, is transparent and accountable, that decisions are made in the best interests of all stakeholders, and ultimately that the business is sustainable.
Environmental responsibility
Activities and investments aimed at preventing and mitigating environmental damage and enhancing the environmental impact of the business.
Responsible business
A business that benefits society and addresses negative impacts it might have on society, people and the environment.
Integrated thinking
A holistic approach to business management and decision-making that aligns purpose, values, strategy, sustainability and communication in order to create value over the short, medium, and long term.
Shared value
A management strategy focused on creating measurable business value by identifying and addressing social problems that intersect with the business. CSI and SED can contribute to shared value if they create business value as well as social value.
Socioeconomic development (SED)
Monetary and non-monetary investments by the company for individuals, which are implemented with the objective of facilitating income-generating activities and economic inclusion for black South African beneficiaries (as defined in South Africa’s BBBEE legislation). While similar to CSI, for the purposes of BBBEE, at least 75% of the beneficiaries must be black.
ESG
Environmental, social and governance (ESG) refers to the robustness of a company’s governance mechanisms and its ability to effectively manage its environmental and social impacts.
