Business Ethics & CSR

7/30/2019 Business Ethics & CSR

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BUSINESS ETHICS

&CORPORATE SOCIAL

RESPONSIBILITY


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Explain the concepts of

business ethics and socialresponsibility.

Describe the factors that

influence business ethics.

List the stages in thedevelopment of ethical

standards.

Identify common ethical

dilemmas in the workplace.

Discuss how organizationsshape ethical behavior.

Describe how businesses

social responsibility ismeasured.

Summarize theresponsibilities of business to

the general public,customers, and employees.

Explain why investorsare concerned withbusiness ethics andsocial responsibility.

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Business Ethics

The value of what should bedone and what should not bedone from the business point of

view


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Ethical issues for business

Product safety standards

Advertising contents

Working environment

Unauthorized payments

Employees privacy

Environmental issues


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Genesis (Origin) of Ethics

Ethics is a Greek word, it means Character ormanners.

Ethics is about sense of belongingness tosociety of business. Formed with a limitedvision for economic generation but shouldresolve conflict with society by servicing thecommunity.


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Ethical Consciousness

Stage 6 corporate citizenship

Stage 5Stake holder concept

Stage 4 Profit Maximization inthe long term

Stage 3 Profit MaximizationIn the short term.

Stage 2 Anything for Profit

Stage 1 Jungle Law

Ethical standardsVary between cultures

And countries.From /amongstEntrepreneurs/

Corporations.

Long term profitability andAttractiveness

Is key tocompetitive strategy

Both attractiveness & competitivePosition can be shaped

i.e. challenging and electrifying


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Inventory of Ethical Issues in Business

Employee-Employer Relations

Employer-Employee Relations

Company-Customer Relations

Company-Shareholder Relations

Company-Community/Public Interest


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Publics Opinion of Business Ethics

Gallup Poll finds that only 17 percent to 20percent of the public thought the businessethics of executives to be very high or high

To understand public sentiment towardsbusiness ethics, ask three questions

Has business ethics really worse?

Are the media reporting ethical problems morefrequently?

Are practices that once were socially acceptableno longer socially acceptable?


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Business Ethics: What Does It Really Mean?

Ethical Problem

Ethical

Problem

Societys

Expectations

of Business

Ethics

Actual

Business

Ethics

1950s Early 2000sTime

Business Ethics:Today vs. Earlier Period


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Business Ethics: What Does It

Really Mean?

Definitions

Ethics involves a discipline that examinesgood or bad practices within the context of a

moral duty

Moral conduct is behavior that is right orwrong

Business ethics include practices andbehaviors that are good or bad


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Business Ethics: What Does It

Really Mean?

Two Key Branches of Ethics

Descriptive ethics involves describing,

characterizing and studying morality What is

Normative(Norms) ethics involves supplying

and justifying moral systems What should be


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Sources of Ethical Norms

Fellow Workers

Family

Friends

The Law

Regions of

Country

Profession

Employer

Society at Large

Fellow Workers

Religious

Beliefs

The Individual

principles


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Ethics and the Law

Law often represents an ethical minimum

Ethics often represents a standard that exceeds

the legal minimum

Ethics Law

Frequent Overlap


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Making Ethical Judgments

Behavior or act

that has been

committed

Prevailing norms

of acceptability

Value judgments

and perceptions ofthe observer

compared with


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Four Important Ethical Questions

What is?

What ought(should) to be?

How to we get from what is to what ought tobe?

What is our motivation for acting ethically?


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Person going from one side of the canyon to the other

a lot of clouds like fog. The point is going from one

way of doing business to another is very tough. Theresa lot uncertainty. It takes a lot of skill, but we have to

lift ourselves beyond that, above the fog, and thats not

going to be a simple exercise. CSR is about seeing the

forest, the fog, and seeing how we can get on the other

side, and how we can be well-equipped for doing that.

So probably we need to develop additional skills,

knowledge, and understanding.


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The message is that whatever we do today will

have an impact on future generations. Its not

just my kids or your kids or somebody elses.Its future generations. We should not hope

that the walls we build to protect ourselves

will be tall enough to protect our children.Only with very conscious effort we can make

the world for them a better place to

liveeven if we address our most selfish

needs we have to address the needs of the

next generation. Thats what CSR is about.


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Definition of Corporate Social

Responsibility

CSR is about how companies manage the

business processes to produce an overall

positive impact on society.


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Definition

Achieving commercial success in ways that

honour ethical values and respect people,

communities, and the natural environment


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Definitions: Practice

WBCSD (World Business Council for

Sustainable Development)

The continuing commitment by business to

behave ethically and contribute to

sustainable economic development while

improving the quality of life of the workforce

and their families as well as of the local

community and society.


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Definitions: Concept

Philip Kotler & Nancy Lee (2005)

a commitment to improve communitywell-being through discretionary(flexible)

business practices and contributions of

corporate resources.


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Corporate Social Responsibility (CSR)

CSR in Equation Form Is the Sum of:

Economic Responsibilities (Make a profit)

Legal Responsibilities (Obey the law)Ethical Responsibilities (Be ethical)

Philanthropic Responsibilities (Good corporate

citizen)CSR


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Historical Perspective

From the 1950s to the present the concept of

CSR has gained considerable acceptance and

the meaning has been broadened to include

additional components


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Social Responsibility

Managements consideration of

profit, consumer satisfaction, andsocietal well-being of equal valuein evaluating the firms performance.

Contributions to the overall economy,

job opportunities, and charitablecontributions andservice.

Organizations measure throughsocial audits.


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Corporate Social Responsibility (CSR)

Evolving (growing) Viewpoints

CSR considers the impact of the companys

actions on society

CSR requires decision makers to take actions

that protect and improve the welfare of

society as a whole along with their own

interests


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Phases of Corporate Social

Responsibility

Frederick provides expanded framework for

understanding the evolution of CSR concept

Divided into 4 phases:

Corporate social stewardship or position,1950s1960s

Corporate social responsiveness, 1960s

1970s Corporate/business ethics, 1980s1990s

Corporate/global citizenship, 1990s2000s


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Drivers of CSR

The shrinking role of government

Demands for greaterdisclosure(innovation/discovery)

Growing investor pressure

Competitive markets


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Benefits of CSR

Strengthened brand positioning.

Enhanced corporate image.

Increased ability to attract, motivate, and retain

employees.

Increased sales and market share.

Increased appeal to investors and financial

analysts.


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Public Health Issues. What to do about inherentlydangerous products such as alcohol, tobacco etc.

Protecting the Environment. Using resources

efficiently, minimizing pollution.

Recycling.Reprocessing used materials for reuse.

Developing the Quality of the Workforce. Enhancingquality of the overall workforce through education and

diversity initiatives.

Corporate Philanthropy/Support. Cash contributions,donations of equipment and products, and supporting thevolunteer efforts of company employees.


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The Right to Be Safe. Safe operation ofproducts, avoiding product liability.

The Right to Be Informed.Avoiding false ormisleading advertising and providing effectivecustomer service.

The Right to Choose.Ability of consumers to

choose the products and services they want. The Right to Be Heard. Ability of consumers to

express legitimate complaints to the appropriateparties.


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Workplace Safety. Monitored by Occupational Safetyand Health Administration.

Quality-of-Life Issues. Balancing work and familythrough flexible work schedules, subsidized child care,

and regulation such as the Family and Medical Leave Actof 1993.

Ensuring Equal Opportunity on the Job. Providingequal opportunities to all employees withoutdiscrimination; many aspects regulated by law.

Age Discrimination.Age Discrimination in EmploymentAct of 1968 protects workers age 40 or older.

Sexual Harassment. Avoiding unwelcome actions of asexual nature; equal pay for equal work without regard

to gender.
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Obligation to make profits forshareholders.

Expectation of ethical and moral behavior.

Investors protected by regulation by theSecurities and Exchange Commission

and state regulations.
http://www.sec.gov/http://www.sec.gov/


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Corporate Social Responsibility in India

India may become the worlds first country to

make corporate social responsibility mandatory.

The statement advocates that those companies with net

worth above Rs. 500 crore, or an annual turnover of overRs. 1,000 crore, shall earmark 2 percent of average net

profits of three years towards CSR. In the draft

Companies Bill, 2009, the CSR clause was voluntary,

though it was mandatory for companies to disclose their

CSR spending to shareholders. It also suggested that

company boards should have at least one female member.


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Examples of Corporate

Social Responsibility inIndia


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Tata Group

Tata Group in India has a range of CSR

projects, most of which are communityimprovement programs. For example, it is a

leading provider of maternal and child health

services, family planning, and has provided 98

percent vaccination in Jamshedpur. The

company also endorses sports as a way of life.

It has established a football academy, archery

academy, and promotes sports amongemployees. It offers healthcare services all

over the country with programs like rural

health development.


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Infosys

Infosys is aggressively involved in a variety of

community growth programs. In 1996, thecompany created the Infosys Foundation as a

not-for-profit trust to which it contributes up

to 1 percent of profits after tax every year.Moreover, the Education and Research

Department at Infosys also works with

employee volunteers on community

development projects.


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Mahindra & Mahindra

At Mahindra & Mahindra, The K. C. Mahindra Education

Trust was established in 1953 with the purpose of

promoting education. Its vision is to renovate the lives ofpeople in India through education and financial assistance

across age groups and across income strata. The K. C.

Mahindra Education Trust undertakes a number of

education plans, which make a difference to the lives of

worthy students. The Trust has provided more than Rs. 7.5

crore in the form of grants, scholarships and loans. It

promotes education mostly by the way of scholarships. TheNanhi Kali (children) project has over 3,300 children under

it and the company aims to increase the number to 10,000

in the next two years by reaching out to the underprivileged

children, especially in rural areas.


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Listed below are a handful of initiatives that

will give a fair indication of the CSR

commitment of various organizations in the

country:


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Reliance Industries and two Tata Group firms

Tata Motors and Tata Steelare the

countrys most admired companies for theircorporate social responsibility initiatives in

the field of education, environment

conservation and public health, according to a

Nielsen survey.

Under its Corporate Service Corps (CSC)

programme, IBM joined hands with the Tribal

Development Department of Gujarat for a

development project aimed at upliftment of

tribals in the Sasan area of Gir forest.


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Towards curbing of carbon footprints at office, 2010

witnessed various initiatives including application of

renewable energy technologies, moving to paperless

operations, and recognition of environmentalstandards.

Financial organizationswhere paper usage is

comparatively higher than other sectorsincludingHSBC India, Max New York Life and Standard

Chartered Bank continued with the year-before

resolution of asking their customers to shift to e-

statements and e-receipts. Telecom operators including Airtel, Aircel, Vodafone

and Idea, too, pushed their efforts to shift as many

customers to e-bill and save paper.


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National Thermal Power Corporation (NTPC)

announced that it will set up a medical college

and an engineering college in Orissa as part ofits CSR activities.

In recognition of its commitment to energy

conservation and efficiency, Jindal Steel andPower Limiteds (JSPL) Raigarh

(Chhattisgarh)-based plant has been conferred

with the National Energy Conservation Award

(NECA) 2010.


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Companies in trouble

Dasani mineral water (part of Coca-Cola).

Cokes sale was banned as the result of tests, includingthose by the Indian government, which found highconcentrations of pesticides.

Communities in India , around Coca-Cola's bottlingoperations are facing severe shortages of water as a resultof the cola major sucking huge amounts of water from thecommon groundwater source


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Issues at NIKE

Nike Inc producer of footwear, clothing, equipment and accessoryproducts for the sports and athletic market.

Selling to approximately 19,000 retail accounts in the US, andapproximately 140 countries around the world.

Manufactures in China, Taiwan, Korea, Indonesia , Mexico as well asin the US and in Italy.

People working - 58% young adults between 20 and 24 years old,83% - women.

Few have work-related skills when they arrive at the factory.

Issue- unhealthy work environmentdebates heated arguments,verbal abuse , 7.8% of workers reported receiving unwelcome sexualcomments, and 3.3% reported being physically abused. In addition,sexual trade practices in recruitment and promotion were reported


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Private Sector Perspective

Corporate Social Responsibility is not a

cosmetic; it must be rooted in our values. It

must make a difference to the way we do our

business.

CSR A N P di (M d l)


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CSRA New Paradigm(Model)

To think comprehensively and systematically about

The role of business in development

The manner in which the business is conducted

Corporate Governance

Poverty alleviation

Corporate contribution to peace and war against terror

Business, government and civil society partnership- commonground and collective action


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Thank You!

Business Ethics & CSR

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