Ethics & Corporate Social Responsibility

1. Ethics & Corporate Social Responsibility

2. Corporate Social Responsibility (CSR) • An Obligation of an Organization to act in ways that serve both its own interests and the interests of its many clients, investors and the community at large. • E.g. environmentally friendly, diversity, charity, earning a profit.

3. Management Characteristics of CSR(What they focus on to be SR) People – belief that people must have a healthy work environment. Communities – Companies perform better in healthy communities. Natural Environment – treat the environment with respect. Long-term Commitment – Companies are here for the long haul. Reputation – Concern for their reputation

4. Benefits and Drawbacks of CSR Benefits of CSR • Can be used as a marketing tool • Dissuades governments from implementing regulations that could interfere with business • Helps companies attract and retain excellent employees Criticisms of CSR • Costs money, detracts from profits • Uses employees’ time and energy • Can distract customers from problems a company creates • A company may act ethically in one country, but not in another

5. CSR Strategies Proactive Strategy – Take a Leadership role in any SR initiative, meet all criteria at all times. Accommodative – Do the minimum ethically required, satisfy legal and economic requirements but that’s it. Defensive – Do the minimum legally required to satisfy legal and economic requirements after issues arise. . Obstructionist – Fight Social demands, meet economic requirements only.

6. Principles of CSR Charity Principle: The wealthy have a responsibility to the poor. Corporations should engage in social issues because they have money and influence. Stewardship Principle: When business executives think of themselves as trustees of society. Company must ensure that society benefits from their actions, rather than being hurt by them

7. Business Ethics The code of moral principles and values that govern the behaviors of a person or group with respect to what is right or wrong within a Business. A code of ethics communicates the purpose, values, and objectives of a business and outlines expected behaviour for employees.

8. Common Ethical Problems Faced by Managers 1) Discrimination 2) Sexual Harassment 3) Conflicts of Interest: bribes or kickbacks, or extraordinary gifts for a decision made, favouritism.4) Customer Confidence: manager has confidential information about a customer and shares it with others. 5) Organizational resources: uses company resources for personal use and gain.

9. Rationalization for Unethical Behaviour Convincing yourself it is not illegal Convincing yourself it is in everybody’s best interest. Convincing yourself nobody will ever find out Convincing yourself that the organization will protect you. Doing what you think will benefit you the most.

11. Global Ethics There are two methods of thinking about ethical issues in a global context: Ethical Imperialism A view of culture based on the idea that there are certain universal truths or values that are standard across all cultures; if something is wrong in one country, it is wrong in all countries. Cultural Relativism A view of culture based on the idea that a culture’s different values should be respected, as the ethics of one culture are not better than those of another.

12. Business Ethics Terms • Stakeholders: People who have a vested interest and are affected by the actions of a business. E.g. employees, shareholders, customers, etc. • Sustainable development—the ability to meet human consumption while maintaining the environment—is a critical issue for businesses • Sweatshops: Factories in underdeveloped and developing countries in which employees work in unsafe environments, are treated unfairly, and have no chance to address those conditions

13. Business Ethics Terms Cont.. Dumping:Selling products in a foreign country below the cost of production or below the price in the home country. Predatory Dumping: An anti-competitive business practice in which foreign companies price their products below market value to increase sales and force domestic competition out of business, then raise their prices. Whistleblower: A person who tells the public or someone in authority about alleged dishonest or illegal activities occurring in an organization or the government Greenwashing: The deceptive use of environmentally friendly PR in order to promote a misleading perception

14. Business Ethics Terms Cont… Fraud: Deception deliberately practiced in order to secure unfair or unlawful gain. Kickbacks: Form of negotiated bribery in which acommission is paid to the bribe-taker as an exchange of goods or services rendered. Conflict of Interest: A situation occurring when an individual or organization is involved in multiple actions, which could possibly corrupt their motivation

15. Business Ethics Terms Cont.. Non-governmental organizations (NGOs) Non-profit organizations with a service and development focus that are composed mostly of volunteers, and are predominantly funded through charitable contributions. NGOs may centre on trade, education, youth, improving the environment, human rights, or other issues.