From words to action

Diving into two (2) interesting books I learned even more about what makes business responsible and resource-wise. But not only that, I learned about something I have never heard of before: the concept of compliance as a way to force companies and organisations to do business in a responsible way or "face the consequences" as an alternative.

Let's start with by what rules a society, consumers and governments are expecting the businesses to operate in order to "do it right". Do it right by whom? I would say, by you, by me, by us and by them. Tarja Ketola (2005) divides corporate responsibility in three categories in her book Vastuullinen liiketoiminta - sanoista teoiksi (Corporate responsibility - from words to action):

1. Economical responsibility which first brought to mind the owners of the company or the stock holders. Ketola, however, reminds that even though it's a necessity for the business to keep the owners and financiers happy, corporate economical responsibility goes also towards the workers, suppliers, contractors and partners. Also paying taxes is considered a way to be economically responsible.

2. Social responsibility. For me this concept was harder to grasp but luckily Ketola is here to 

guide me! I wasn't able to see the bigger picture but Tarja Ketola describes corporate social responsibility covering for example taking care of the well-being and safety of the people (workers, consumers...) and honoring the basic human rights. I guess this was hard for me to realize because things are so good in Finland. It's hard to see and analyze something you take for granted but obviously things aren't the same all over the world. Child labour, insufficient pay and dangerous working conditions all fall under social responsibility.

3. Ecological responsibility was the most familiar category. This, for me, feels so obvious it wouldn't even need to be mentioned separately but at the same time it's so important I'm not sure it can be emphasized enough. Businesses need to consider the ecological side in every move they make: the smaller the ecological foot print, the better it is for the environment, and for us. Using less packaging, producing goods that work longer and can be fixed, using recycled materials, saving energy and resources for example through joining forces with other businesses.

So bear in mind those three categories of corporate responsibility as I briefly tell what I found 

out about compliance when I read Niina Ratsula's (2016) book explaining the concept. The term compliance refers to compliance with laws, rules and regulations. Today, however, it is no longer enough to follow just these, but organizations are supposed to comply with the moral and ethical requirements of society. Corporations are therefore expected to act responsibly in all their activities. A violation of compliance therefore occurs when an organization violates the requirements imposed on it. This is all explained in Compliance - eettinen ja vastuullinen liiketoiminta (Compliance - ethical and responsible business) with much more detail. 

In one of my previous posts, I briefly considered ways in which companies could be encouraged or compelled to act responsibly and resource-wisely. The compliance program, described by Ratsula, is an in-build activity and it's often juxtaposed with ethics. Compliance in it's smallest and at the same time biggest form is the way each staff member acts. 

A company builds a compliance program which defines the obligatory laws and regulations the company must follow as well as the values and the ethics of the company itself. With the help of the program, companies are then able to bring more emphasis on their will to act responsible, assess possible compliance risks and promote ethical and responsible practices. More over, they can act as an example to others.

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Hmm... now that I read what I wrote, I perceive that I totally misunderstood the whole idea of the compliance at first. I thought it was a tool for punishment but I see now that it is actually a helpful tool for the organizations to manage their operations responsibly and ethically. Even though Ratsula points out many ramifications that might follow a compliance violation, I still feel that the compliance program is meant to work as tool to help avoid those violations rather than coming up different ways to punish companies for any wrongdoings. 

Ketola, T. 2005. Vastuullinen liiketoiminta - Sanoista teoiksi. Helsinki: Edita.

Ratsula, N. 2016. Compliance - Eettinen ja vastuullinen liiketoiminta. Helsinki: Talentum.