Corporate Social Responsibility (CSR) & Business Ethics PDF

Corporate Social Responsibility (CSR) & Business Ethics Introduction Corporate Social Responsibility (CSR) refers to the ethical and moral obligations of businesses towards society. It ensures that companies operate in a way that benefits not only shareholders but also employees, customers, communit...

Corporate Social Responsibility (CSR) & Business Ethics Introduction Corporate Social Responsibility (CSR) refers to the ethical and moral obligations of businesses towards society. It ensures that companies operate in a way that benefits not only shareholders but also employees, customers, communities, and the environment. 1. Understanding Ethics in Business Ethics = Knowing the difference between right and wrong and choosing to do what is right. Moral Duty Continuum Businesses have a moral duty ranging from "Do No Harm" to "Promote Good". 1.​ Do No Harm – Companies should avoid harming employees, consumers, or the environment. 2.​ Prevent Harm – Actively work to stop harm, such as reducing pollution. 3.​ Remove Harm – Take corrective action to fix past mistakes. 4.​ Promote Good – Go beyond avoiding harm and contribute positively to society. 🔹 Example: A company dumping waste into a river fails its duty to “do no harm.” A company that donates money to clean up pollution promotes good. 2. Business, Power, and Responsibility Businesses hold power in different ways: ​ Economic Power – They generate money and influence economies. ​ Technological Power – They innovate and create new products. ​ Political Power – They influence governments through lobbying. ​ Cultural Power – They shape society through media and branding. ​ Social Power – They impact workers' lives and communities. 🔹 Example: Tech giants like Google and Apple hold economic, technological, and political power. They influence how we work, communicate, and even vote! 3. Corporate Responsibility: To Whom? There are two main perspectives on corporate responsibility: A. Shareholder View (Milton Friedman) "The only responsibility of a business is to maximise profits while following laws and ethical customs." ​ Companies should only focus on making money for shareholders. ​ Involvement in social issues is unnecessary and increases costs. 🔹 Example: A fast-food chain focuses only on profit and ignores the health impact of its food. B. Stakeholder View (Broader CSR Approach) "Businesses should balance profit with social and environmental concerns." ​ Companies should consider their impact on employees, customers, communities, and the planet. 🔹 Example: A company that reduces carbon emissions and treats employees fairly while still making a profit follows this approach. 4. CSR in Action: Different Approaches CSR can take different forms: 1. Reactionary CSR 🔹 ​ Done only to avoid trouble (e.g., lawsuits, scandals). ​ Companies act only when forced to. Example: A factory installs safety measures only after an accident happens. 2. Reputational CSR 🔹 Example: A fashion brand claims to be ​ Done to improve brand image. ​ May be just for show ("greenwashing"). eco-friendly but still exploits workers. 3. Responsible CSR  🔹 ​ CSR is integrated into business strategy. ​ Seeks long-term benefits. Example: Tesla focuses on clean energy while making profits. 4. Collaborative CSR 🔹 ​ Works with stakeholders to solve social problems. ​ Actively engages with communities. Example: A bank partners with NGOs to improve financial literacy in low-income areas. 5. Carroll’s Pyramid of CSR A model showing different levels of responsibility: 1.​ Economic Responsibility – Make a profit. 2.​ Legal Responsibility – Follow laws and regulations. 3.​ Ethical Responsibility – Do what is right beyond the law. 4.​ Philanthropic Responsibility – Give back to society. 🔹 Example: Microsoft donates to education programs while still making profits and following laws. 6. Measuring CSR: ESG & Triple Bottom Line Triple Bottom Line (TBL) ​ Measures success in three areas: 1.​ People (Social Impact) – Employee welfare, fair wages, community benefits. 2.​ Planet (Environmental Impact) – Sustainability, pollution control. 3.​ Profit (Economic Impact) – Financial performance. 🔹 Example: A clothing brand that pays fair wages, uses eco-friendly materials, and still earns a profit follows the TBL approach. Environmental, Social, and Governance (ESG) ​ Used by investors to evaluate companies based on their CSR efforts: 1.​ Environmental: Carbon footprint, waste management. 2.​ Social: Diversity, employee well-being. 3.​ Governance: Ethical leadership, transparency. 🔹 Example: Companies with strong ESG scores attract ethical investors. 7. CSR and Small Businesses 🔹 ​ Challenges: Less money and resources for CSR. ​ Advantages: Can have a direct, personal impact on communities. Example: A local café sources coffee from fair-trade farmers and donates food to homeless shelters. 8. Risks of Not Practising CSR ​ Legal issues – Fines and lawsuits. 🔹 ​ Reputation damage – Loss of customer trust. ​ Loss of investors – Ethical investors avoid irresponsible businesses. Example: A major oil spill scandal can lead to lawsuits, protests, and loss of customers. Glossary CSR (Corporate Social A company’s duty to contribute positively to society. Responsibility) Ethical Responsibility Doing what is right beyond what the law requires. Shareholder View The belief that businesses should focus only on profit. Stakeholder View The belief that businesses should consider all groups affected by their actions.  Greenwashing Pretending to be socially responsible without real action. Triple Bottom Line (TBL) A measure of business success based on people, planet, and profit. ESG (Environmental, Social, A framework for evaluating CSR performance. Governance) Sustainability Meeting present needs without harming future generations. Final Thoughts CSR is not just about “doing good” – it’s about long-term business success while making a positive impact. Companies that ignore CSR risk financial loss, legal trouble, and reputation damage, while ethical companies thrive in the modern economy. 💡 Key Takeaway: CSR is not just an expense—it’s an investment in the future!