Social Responsibility - Introduction To Business - ثاني ثانوي

5.3 Social Responsibility Link to digital lesson www.ien.edu.sa Learning Outcomes Once you have completed this lesson, you should be able to: 5.3.1 Discuss the factors that led to the consumer movement and list some of its outcomes. 5.3.2 Identify the steps a business must take to implement a program of social responsibility. Key Terms Consumer Movement Fraud Warranty Corporate Social Responsibility (CSR) Social Audit Focus on REAL LIFE "At the company, we take social responsibility seriously," Sara told an audience of business students. "As a business owner, I know that this is good for my business, my community, my employees, and for me on a personal level," she continued. Later in her speech, Sara said, "My company encourages employees to be active in community affairs and to volunteer with a variety of organizations and entities. In some cases, my company provides paid time off for volunteer commitments during business hours. Workers are likely to be more satisfied with their job if they believe their company actively contributes to community life." LO 5.3.1 THE CONSUMER MOVEMENT AND ITS OUTCOMES An examination of the history of business will show there has been plenty of opportunities for businesses to act unethically. As has been indicated earlier in this chapter, when there is no legal enforcement to protect consumers there is an opportunity for unethical behavior. FYI Early in Islamic society, an office of hisbah was set up to control markets and ensure that correct scales and weights were used. Dishonesty in weighing and cheating in business transactions are considered sins in Islam. While most businesses attempt to treat their customers fairly, some businesses and individuals take advantage of consumers. False claims are sometimes made about products. Prices can be too high. Some products are unsafe both to manufacture and to use. To fight against unfair business practices, consumers have united to demand fair treatment from businesses, giving rise to what is known as the consumer movement. The consumer movement came about due to consumers' increasing awareness of their rights. The Internet has also allowed consumers to compare prices and services globally. The consumer movement is an effort to promote consumer protection through organized social action. In 1985, the United Nations General Assembly endorsed eight consumer rights. 162 Chapter 5 | Social Responsibility of Business وزارة التعليم Ministry of Education 2024-1446 GE44.PATHWAYS.G02.ITB.SB.PP1.indb 162 08/05/2024 09:14

In some cases, countries have developed associated laws related to these consumer protection rights. Saudi Arabia is working on policies and laws that will align consumer rights in accordance with United Nations guidelines. The Saudi Ministry of Commerce has proposed a series of consumer protection laws as shown in Figure 5-4. Saudi Arabia has a Consumer Protection Association which aims to enhance and empower Saudi consumers. The Consumer Protection Association supports Saudi governmental entities in supporting consumer rights and interests such as receiving consumer complaints regarding fraud, cheating, counterfeits, manipulation, price exaggeration, and misleading advertisements. Fraud and Scams What are some of the benefits corporations gain when they treat consumers with care and fairness? Most products and services are described in advertisements, on labels, or by a salesperson. Consumers have a right to know what the product or service is and what it will do for them. Fraud is any act involving deceit to obtain a direct or indirect financial benefit by the perpetrator causing a loss to the deceived party. If someone knows a product is defective or sells under false pretenses, fraud has occurred. Saudi Arabia has implemented a new Anti-Financial Fraud and Deceit Law to combat financial crime. As in many countries, consumers in Saudi Arabia can sometimes be victims of online scams, a type of fraud. The Saudi Ministry of Commerce warns shoppers against online scams and recommends consumers should only deal with trusted stores and not to respond to social media that promotes unknown and unreliable foreign websites. Scams should be reported to the Ministry's official website. SAUDI ARABIA DRAFT LAW ON CONSUMERS BASIC RIGHTS 1. Access to essential products and services. 2. Protection from threats to health and safety. 3. Clear, accurate, and sufficient information necessary for consumers to make an informed decision regarding the product or service they choose (for example, all information must be presented in at least the Arabic language and prices must be expressed in Saudi Riyals inclusive of taxes, fees, and costs). 4. Awareness and education of the economic, social, and environmental impacts of consumer choices. 5. Preservation of consumer privacy and personal data (which is comprehensively addressed by a separate new legislation, the Personal Data Protection Law). 6. Access to dispute settlement means if consumer rights have been breached. 7. Fair compensation for damages resulting from a product or service. 8. Fair compensation for damages resulting from consumer associations. Source: The Saudi Ministry of Commerce FIGURE 5-4 Give examples of how your rights as a consumer are respected. وزارة التعليم Ministry of Education 2024-1446 5.3 Social Responsibility | 163

Warranties Consumers may also be granted protection through a warranty. A warranty is a promise by the manufacturer or dealer, usually in writing, that a product is of a certain quality. The Saudi Ministry of Commerce requires that all electrical appliances, vehicles, and electronics are to have at least a minimum of two years' warranty. As part of its global policy, Apple, Inc. states on its website that consumers are entitled to a free repair of defective goods and replacement of the goods if faulty. These rights expire two years from date of purchase. Right to Privacy and Data Protection Saudi Arabia is concerned about an individual's rights to privacy and private data protection. A series of data governance regulations are managed by the Saudi National Data Management Office. Basics of the regulations include the individual's right to be informed of the legal basis for the collection of personal data and how the data will be processed. Individuals also have the right to have access and review personal data and have inaccurate personal data corrected or updated. In addition, they have the right to have personal data destroyed when it is no longer required for purpose for which it was originally collected. the CHECKPOINT What are the eight Saudi Draft Laws on Consumers Basic Rights? LO 5.3.2 IMPLEMENTING A PROGRAM OF SOCIAL RESPONSIBILITY Social responsibility is the duty to contribute to the well-being of a community. Corporate Social Responsibility (CSR) is a management concept where companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. This requires balancing the needs, desires, and demands of a diverse group of stakeholders including investors, employees, customers, government regulators, competitors, communities, and social campaigners. In a CSR program, a business must weigh these issues, paying particular attention to social concerns such as protection of the environment, inclusion of women in the workplace, employment of physically challenged and older workers, and a healthy and safe work environment. To implement a successful CSR program, a business will need to address four key stages: plan, execution, audit and evaluation. Plan Saudi Arabia is one of the leading countries to establish CSR practices in the MENA region. Saudi Vision 2030 has outlined a number of social responsibility goals, to be accomplished through both the public and private sectors. Therefore, businesses in the private sector must plan accordingly if they are to meet the needs of the Saudi Vision 2030 objectives. The firm must develop a clear, structured, and achievable program to reach this goal. This can be supported by a phased implementation strategy, outlining a timetable for reaching certain targets by specific dates. A director should be appointed to oversee the process and take ownership of the program. Above all, however, the program must have the firm's total commitment, from the initial planning stage onwards, or it will soon falter and become ineffective. 164 Chapter 5 | Social Responsibility of Business Ministry of Education 2024-1446

Execute Once the program has been planned and a schedule agreed upon, the next step is its implementation. If adopting a phased approached, the launch of each phase provides an opportunity to review progress, ensure the original targets are still achievable FYI According to the GlobalCom PR Network, the in practice, and refine the plan in light of the experience so far. main CSR activities in Saudi Arabia are generating job opportunities for the unemployed (49%), supporting entrepreneurship (47%), and establishing anti-smoking campaigns (46%). As evidence of their commitment to social responsibility, top managers should develop a policy statement that outlines key areas of concern. This statement sets a tone of positive support and will now serve as a guide for other employees as they become involved in the program. Everyone involved in the implementation should have a clear incentive to ensure its success. Audit At specified intervals, company managers should prepare a social audit for the firm. A social audit is a comprehensive report of what an organization has done and is doing with regard to social issues that affect it. This document provides the information the firm needs to evaluate and revise its social responsibility program. Typical subject areas include human resources, community involvement, the quality and safety of products, business practices, and efforts to reduce pollution and improve the environment. Evaluation While a number of benefits exist, socially responsible actions also have various costs. Common benefits of socially responsible business activities include the following: ● Expanded justice for groups of a society Enhanced company image ● Improved quality of life in a community and around the world Increased awareness of social issues among workers and consumers However, there are additional costs involved when a business takes socially responsible actions. Money must be spent for new nonpolluting or safer equipment, for building repairs to remove risks, and for social projects sponsored by a company. It is an extra cost to maintain CSR, but it is a worthy investment as it builds the business's reputation. Examples of Social Responsibility Environmental Sustainability Private sector businesses can fulfill their Islamic, human, and moral duties by developing strategies to preserve the environment and natural resources. Businesses can protect the environment by increasing the efficiency of waste management, establishing comprehensive recycling projects, reducing all types of pollution, and reducing the use of water consumption by utilizing treated and renewable water. وزارة التعليم Ministry of Education 2024-1446 Why is solar energy a viable option for energy in Saudi Arabia? 5.3 Social Responsibility | 165

Providing Equal Opportunities Private sector businesses can provide opportunities for everyone in society-men and women, young and old-so they may contribute to the best of their abilities. Businesses can offer job preparation and training to those unable to find employment to help them join the workforce. Businesses can help Saudi Vision 2030 reach the goal of increasing women's participation in the workforce. A Renewable Energy Market Saudi Arabia has a strong natural potential for solar and wind power. Businesses can help Saudi Arabia achieve a competitive renewable energy sector to meet an expected three-fold energy consumption increase by 2030. Being Responsible in Business Saudi Vision 2030 aspires to have businesses that contribute to developing Saudi society and not just be focused on generating profits. Businesses should observe their social responsibilities and contribute to creating a sustainable economy. This includes creating opportunities for young men and women to help them build their professional careers. Being Responsible to Society Non-profit businesses play an important role in a society. Organizations such as the Red Crescent provide social aid and compassionate work. Saudi Arabia has a goal to increase the total number of non-profit foundations and associations. To achieve this goal, Saudi Arabia will develop regulations to empower non-profit organizations, encourage endowments to sustainably fund the non-profits, and to encourage corporations and trade families to establish non-profit organizations. To help reach the Saudi Vision 2030 goal of one million volunteers per year, private sector businesses can encourage their employees to volunteer to support social causes. CHECKPOINT What are the main benefits of social responsibility? 5.3 ASSESSMENT Key Concepts Determine the best answer. 1. An effort to promote consumer protection through organized social action is called a. business ethics b. consumer movement c. corporate social responsibility d. social competition 2. Which of the following is not a key stage in CSR program implementation? a. evaluating/auditing b. planning c. executing d. generalizing 3. True or False. There is a right to privacy and data protection in Saudi Arabia. ليم 166 Chapter 5 | Social Responsibility of Business Ministry of Education 2024-1446

Make Academic Connections 4. Technology Conduct research about the most common online scams in Saudi Arabia. 5. Communication Conduct a survey of people to obtain their opinions about the Saudi Draft Law on Consumers Basic Rights. Prepare a summary data table with your findings. 6. Critical Thinking Describe why socially responsible actions by businesses might have a positive influence on a business's image. وزارة التعليم Ministry of Education 2024-1446 5.3 Social Responsibility | 167