Ethics and Corporate Responsibility Quiz

Moral/Ethical Values

• Guide decisions about right and wrong
• Reflect personal beliefs and societal norms

Instrumental vs. Normative Ethics

• Instrumental Ethics: Focuses on actions achieving a goal, like profit
• Normative Ethics: Focuses on doing the right thing, regardless of outcomes

Ethical Theories

• Utilitarianism: Maximizes good for the most people
• Deontology: Follows moral rules and duties
• Virtue Ethics: Actions based on good character traits
• Ethics of Rights (Veil of Ignorance): Impartial decisions considering a lack of personal knowledge

Ethical Decision-Making Influences

• Individual Factors: Personal values, moral development, past experiences
• Situational Factors: Company culture, pressure from others, rewards

CSR vs. Corporate Governance

• Corporate Social Responsibility (CSR): Company responsibility beyond profit
• Economic: Be profitable
• Legal: Follow the law
• Ethical: Do what's right
• Philanthropic: Support social causes
• Corporate Governance: Rules & systems for ethical and transparent actions (includes accountability and control)

Stakeholder vs. Shareholder Theory

• Shareholder Theory: Companies focus on maximizing profits for shareholders
• Stakeholder Theory: Companies consider the needs of all stakeholders (employees, customers, communities)

Sustainability (Triple Bottom Line)

• Economic: Financial health
• Environmental: Protect the planet
• Social: Support communities

Sustainable Frameworks

• UN Sustainable Development Goals (SDGs): 17 global goals for sustainable progress
• Triple Bottom Line: Focus on profit, people, and the planet
• ESG Score: Measures company performance in Environment, Social, and Governance
• Doughnut Economics: Balance between ecological concerns & societal needs

Globalization and Ethical Considerations

• Cross-Cultural Ethics:
  • Cultural Relativism: Adherence to local customs
  • Universalism: Adherence to universal moral rules
  • Social & Political: Respect human rights and adapt to different political systems

Ruggie Principles (UN Guiding Principles on Business and Human Rights)

• Protect: Governments must protect human rights
• Respect: Businesses should respect human rights
• Remedy: Victims of right violations should be compensated

UN Global Compact

• A voluntary agreement where companies commit to sustainable and socially responsible policies in human rights, labour, environment, and anti-corruption

Ethical Corporate Culture & Leadership

• Core Ethical Values: Shared beliefs about right and wrong in a company
• Ethical Leadership: Leaders model ethical behavior and guide employees to do the same
• Ethics Program: Includes Compliance, Values-Based framework, Code of Ethics/Conduct, Mandated and Voluntary Boundaries

Ethical Theories: A Moral Compass

• Provide systematic and consistent answers in business contexts
• Ethical pluralism recognizes different moral convictions, backgrounds, and beliefs

Utilitarianism (Pros & Cons)

• Provides clear guidance for moral decision-making, impartial and universal
• Considers different values, adaptable, empirically grounded
• Can be difficult to predict/measure consequences, may conflict with moral convictions, ignores motives & character

Deontology (Pros & Cons)

• Respects intrinsic worth and dignity of individuals
• Considers duties and moral norms, places ethics within control
• Can be inflexible, challenging to resolve conflicting principles, might not align with moral intuitions

Virtue Ethics (Pros & Cons)

• Flexible, adaptable to situations, encourages genuine moral motivation
• Considers habits, attitudes, dispositions, may lack clear guidance in dilemmas, relies on individual interpretations

Ethics of Rights

• Human beings are entitled to rights (life, freedom, property)
• Rights imply a duty of others to respect

Individual Factors

• National/cultural characteristics
• Psychological factors
• Personal values

Situational Factors

• Moral intensity
• Moral framing
• Rewards
• Authority
• Bureaucracy
• Social consensus

CSR (Purpose & Moral Case)

• Meet the economic, legal, ethical, and philanthropic demands of society
• Externalities: Corporations have a moral responsibility to handle negative social/environmental impacts imposed on others

Stakeholder Theory (Critisisms)

• Negates fiduciary responsibility (law for shareholders)
• Weakens importance of stakeholder groups
• Potential weakness of the corporation
• Impacts the long-term nature of capitalism

Corporate Governance: Accountability

• Clear separation of duties between management & the Board of Directors
• Professional background/experience, duration of appointment procedures, & resources of governing board

Corporate Governance: Compensation

• Executive compensation serves as a monetary incentive to increase the firm's value
• Excessive risk-taking and unethical behavior can result from performance-based payments
• Distributive justice: fairness in rewards; procedural fairness: fairness in the connection between executive salaries & performance

Different Models of Governance

• Steward ownership: Separates economic and voting rights
• Purpose-driven profit allocation: Prevents value extraction for personal gain by shareholders
• Single foundation: A foundation owns both voting and dividend rights of the company
• Employee ownership trust: Employee ownership trust holds shares, with employees controlling the company

Sustainability (Dimensions & Frameworks)

• Economic, social, and environmental factors (interconnected)
• Tripple bottom line
• UN Sustainable development goals

Environmental Sustainability (externalities)

• Overuse can lead to negative externalities (effects beyond the parties involved)
• Externalities often arise from poorly defined property rights

Environmental Sustainability (ethics)

• Anthropocentrism: Preservation of nature for its use by humans
• Ecocentrism: Intrinsic value of nature and preservation
• Recognising different ways of viewing the world (intrinsic vs. instrumental)

Globalization Trends

• Long-term trends – stabilization, not collapse
• Exports & foreign investments fluctuate
• Developments like onshoring and energy transition create interdependencies

Ethical Considerations in Globalized World

• Cross-cultural differences influence ethical values and principles (e.g., women's equality, bribes, environmental standards)
• Business needs to develop ethical frameworks respecting diverse cultural norms and values
• Issues of ethical relativism and universalism arise

Ethics of Rights:

• Human rights: inherent, fundamental entitlements (Universal Declaration of Human Rights)
• Cultural relativism & Universalism (dignity, global protection)
• Importance of shared moral values

Compliance Management

• More systematic approach to ethics management
• Stakeholder awareness & varied cultural factors drive changes
• Laws & regulations influence business ethics & compliance
• Compliance programs address legal & ethical requirements

Compliance Management (Example)

• Case example: Alstom's criminal proceedings (bribery) demonstrating possible compliance failures

Elements of Effective Ethics & Compliance Management

• Mission/value statements, codes of conduct, reporting/advice channels
• Risk analysis, organizational measures, education/training
• Stakeholder dialogue, auditing/accountability, communication

Codes of Conduct

• Formal statements describing organizational expectations; general guidelines or principles
• Reason why Codes of Conduct fail: lack of promotion, accessibility, legalistic language, insufficient direction.

The Three Lines Model

• First line: Operating management (product, service, & risk management)
• Second line: Risk & compliance functions
• Third line: Internal audits (objective assurance)
• Reporting, advice, monitoring of ethical & compliance issues
• Ensuring ethical environments at all levels
• Mandatory, private, and voluntary rules & regulations (external/internal/industry)

Compliance Management (Costs & Role of Government)

• Costs of noncompliance: Monetary fines, criminal/civil liability risks, trust erosion, loss of competitive advantage.
• Government represents citizens' interests, in a mutual relationship with business & society.