Social Responsibility in the Finance Sector

SOCIAL RESPONSIBILITY 1
Social responsibility in the finance sector
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SOCIAL RESPONSIBILITY 2
Organizations exist in societies and they have the obligation to make sure they improve the
welfare of the surrounding society. As the organization strives to make more profit, the
organization should also strive to strike a balance between economic activities and
environmental sustainability. Social responsibility refers to ethical obligations that ensure a
business conducts its economic activities ethically and puts into considerations the culture, social
and environmental issues (SAguinis, and Glavas, 2012, p.945). Social responsibility ensures a
business is able to differentiate what is right from what is wrong so as to avoid hurting the
surrounding community. Social responsibility is divided into main groups which include
economic, legal, philanthropic and ethical. All organizations need to have social responsibility
initiatives even if the business does not pollute the environment. This essay is written to describe
social responsibility in the finance sector and highlight factors which hinder social responsibility
and measures which managers can take to address the challenges that hinder social responsibility
in the finance sector.
Economic social responsibility entails entity becoming profitable so that the society can also
benefit in various ways. For instance, financial institutions should offer financial advice to the
people of the society so that people can make better investment decisions that will help to
improve the welfare of the society (Kitzmueller, and Shimshack, 2012, p.65). The economic
aspect of the social responsibility entails providing employment opportunities to the people in
the surrounding environment so as to improve the living standards of people in the society.
Financial institutions can also construct structures that will ensure economic prosperity in the
society.
The legal aspect of social responsibility is concerned with ensuring that the business obeys all
the laws and regulations that govern businesses in the society. The financial institution should

SOCIAL RESPONSIBILITY 3
conform to all company acts which include providing financial statements to the public and the
financial statements should be prepared according to international accounting standards (Kim, et
al.2012, p.784). The firm should also pay taxes and rates as required by the government without
defaulting or engaging in tax evasion. The financial institutions are also supposed to pay the
imposed fines for breaking certain regulations. The firm is also supposed to obtain the relevant
licenses needed to conduct a certain type of business in the society. The firms should also renew
the operating licenses as required by the enacted laws in the society.
Ethical aspects of the social responsibilities of financial institutions involve recognizing and
following certain principles, moral and codes of conduct which have been established by the
society or the industry. Ethics help the business to make decisions that are right as the business
can judge what is right and wrong. Ethics ensures that the business provides equal opportunities
to all people in the society when employment opportunities arise without discrimination on basis
of gender or color (Wang, and Bansal, 2012, p.1145). All employees working the firm should
have equal benefits provided they hold the same position regardless of gender. Same positions in
the organization should also attract equal pay because that is morally right. The financial
institutions also should provide services without exploiting the target customers. The firm should
ensure that customers get value for their money. The services offered should be fairly priced.
The firm should also be in good relations with other stakeholders who help the financial
institutions to operate smoothly. This is done by ensuring timely payments to all the involved
stakeholders.
Philanthropic in social responsibility entails the firms in finance sector making donations to the
society so as to improve the welfare of the society. The donations can involve donating funds to
finance education for needy students in terms of scholarships and bursaries. The firm can also