In a connected and digital world, consumers aren’t interested in just the products they’re buying – they want to know the faces behind them.
Entrepreneurs today have corporate social responsibility. Profit results from motivated employees, loyal customers and new investors wanting to be involved with a business that is mindful of its surrounding community and environment. To be successful, entrepreneurs need an eye for sustainability.
What does social responsibility look like? What falls under the umbrella of environmental sustainability? This article will explore ethical entrepreneurship and what it means to run a business and understand consumer behavior.
Broadly defined, ethics is the theoretical study of “right” versus “wrong” – it provides a lens into morality and judgment.
- Applied ethics assesses what a person should (or shouldn’t) do in a given situation. Many fields — from engineering to science, public service to business — incorporate applied ethics.
- Business ethics pertains explicitly to the trust built between consumers and business owners. The discipline rose in prominence in the 20th century as society became consumer-based and held corporations accountable for their influence on the environment and social causes.
- Clarity and transparency about core values are key to cultivating this public trust.
Being an ethical entrepreneur
When starting a new business, entrepreneurs today must focus on well-defined goals. They consider their personal aspirations, tolerance of risk, the strength of their strategy and their potential to execute said strategy. Forward-thinking is critical: What impact will their businesses have, what values will they endorse, and how will they be consistent in doing so?
Communicating corporate values to employees ensures business representatives act with the customer in mind rather than themselves. Entrepreneurs can develop an ethics statement and make it public. A strong foundation allows leaders to highlight scenarios that show ethics in practice and clarify what to do when those values are broken. Allocating the time to define and communicate core values encourages workplace integrity, attracting stakeholders.
Why transparency matters
By 2025, millennials will comprise an estimated 75% of the American workforce. This generation wants to be led by business leaders who are driven and accomplished, act as willing mentors, and don’t shy from transparency in their personal and professional lives.
Similarly, millennials, as consumers, expect businesses to be transparent on social media. They want brands and CEOs to share their values and be reassured that these individuals are fair, respectable, and considerate – and worth their money.
While millennials have a strong presence on Instagram, Gen Z leads consumer behavior on TikTok. In fact, out of all the age demographics, Gen Z has the biggest influence on consumer trends. They have an estimated buying power of over 400 billion dollars in the United States alone.
As digital natives, Gen Zers expect businesses to be authentic and relevant on social media. They want to buy – and accept brand deals – from businesses spearheading social change and prioritizing fair labor, diversity, inclusivity, and sustainability.
Across the board, 70% of consumers feel a stronger connection to brands with CEOs with active social media accounts. They like brands that positively contribute to society and help people in need. Overall, 81% of people think brands are responsible for being transparent on social media. Entrepreneurs are expected to:
- State company values.
- Welcome discussion.
- Clarify how and when customer data is used.
- Explain all facets of billing and fees.
Above all, entrepreneurs should stand by their word and keep their social and environmental stewardship promises.
Having a core ethics statement and being transparent about it is necessary for ethical entrepreneurship — but what activities do business leaders actually participate in? How do they engage their social responsibility?
Entrepreneurs can take part in philanthropic work, whether donating money, products, or services, volunteering with nonprofits, or partnering with charities and local community groups. Business leaders might also encourage their employees to volunteer. According to a 2017 Deloitte Volunteerism Survey, 74% of working Americans thought corporate volunteerism provided an improved sense of purpose. In addition, 89% believed companies that sponsored volunteer activities boasted a better work environment overall. Social impact is a significant motivator, as well. Of the millennials surveyed, 75% felt they would volunteer more often if they had a better understanding of the impact of their work.
Ethical entrepreneurship ensures fair wages, treatment, and working conditions, and it promotes community engagement in matters that truly resonate with the business. This authenticity radiates to all stakeholders: investors, employees, suppliers, and customers.
Business owners also have a responsibility to the environment. Sustainability (defined by the UN World Commission on Environment and Development) is the balance between meeting the needs of the present without compromising the future. It operates under the assumption that resources are finite.
As suppliers of a service or product, entrepreneurs are part of a cycle that requires giving back and doing their part to ensure the longevity of resources. Business owners can adopt green habits, such as reducing paper waste, incorporating reusable products into their practice, lowering emissions, and improving energy efficiency by using LED bulbs, for instance.
Consumers look for companies with a dedicated mission to environmental sustainability and are willing to pay more for sustainable products. While millennials and boomers think about the materials a company uses, Gen Z is starting to focus on the manufacturing process itself. A company focused on sustainability – from material sourcing to manufacturing, shipping, and selling – benefits not only from a strong reputation but also from the long-term cost savings of improved operational efficiencies.