Management Tools - Session 26 - Chapter 4 - CSR.pdf

Ethical Behavior Ethics Principles and standards of moral behavior (accepted by society as right versus wrong) governing the conduct of a person or group. Ethics is not about obeying the law It is beyond legal compliance What is Ethical Behavior? Practicing good business ethics involves, at a mini...

Ethical Behavior Ethics Principles and standards of moral behavior (accepted by society as right versus wrong) governing the conduct of a person or group. Ethics is not about obeying the law It is beyond legal compliance What is Ethical Behavior? Practicing good business ethics involves, at a minimum: Competing fairly and honestly (following the rules) Communicating truthfully (tell the truth) (always?) Being transparent (always?) Not causing harm to others (stakeholders) (Insider Trading) Transparency The degree to which affected parties can observe relevant aspects of transactions or decisions Ethical Behavior Insider Trading (Unethical Behavior) Use of unpublicized information that an individual gains from the course of his or her job, to benefit from fluctuations in the stock market Factors Influencing Ethical Behavior Cultural Differences Globalization What is ethical where? Knowledge (if it is correct or not) Active search of ethical issues is key. Not knowing does not exempt us Organizational Behavior Creating a culture of Ethics (that rewards good behavior) Code of Ethics (Defines values and principles) Whistle Blowing (We should facilitate it within the organization) Detailed in next slide Organizational Behavior Code of Ethics A written statement that sets forth the principles that guide an organization s decisions Whistle-Blowing (Internal or External) Disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization Ethics in Decision Making Ethical lapse A situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical Example: Deciding not to pay taxes or not declaring a faulty product Ethical dilemma A situation in which more than one side of an issue can be supported with valid arguments, or when all solutions are unpleasant Examples: Deciding to offshore operations Factory in Cantabria spilling in river Corporate Social Responsibility Corporate Social Responsibility (CSR) The notion that business has obligations to society beyond the pursuit of profits (and compliance with the law) Philanthropy vs. Strategic CSR Philanthropy (How everything Started) The donation of money, time, goods, or services to charitable, humanitarian, or educational institutions Warren Buffet donated 37 billion to the Gates Foundation Strategic CSR (Next Step in the Evolution) Social contributions that are directly aligned with a company s overall business strategy Philanthropy vs. Strategic CSR Strategic CSR makes more sense than general philanthropy for several reasons: First, because business and society are mutually dependent, choices that weaken one or the other will ultimately weaken both. Second, investments that benefit the company are more likely to be sustained over time. Third, making sizable investments in a few strategically focused areas will yield greater benefits to society than spreading smaller amounts of money around through generic philanthropy. Exhibit 4.4 Perspectives on Corporate Social Responsibility Friedman Prespective Unethical!! Pasive Copyright © 2017 Pearson Education, Ltd. 4-30 Perspectives on CSR Nongovernmental organizations (NGOs) Nonprofit groups that provide charitable services or promote social and environmental causes. They pressure corporations which they feel act unethically Example: Greenpeace Greenwashing Publicity efforts that present companies as being environmentally friendly when their actions speak otherwise Milton Friedman The Relationship between Business and Society Consumers enjoy and expect products and services to be safe to use Profit-seeking companies generate wealth for a nation s economy Society s standard of living are created by profitseeking companies Companies can operate profitably in a stable, functioning society Efforts to Preserve Resources and Reduce Pollution Cap and Trade (Emission Trading Market) Environmental policy that gives companies some freedom in addressing the environmental impact of specified pollutants, by either reducing emissions to meet a designated cap or buying allowances to offset excess emissions The Trend Towards Sustainability Sustainable development (aka: Sustainability) Operating business in a manner that meets the needs of the present without compromising the ability of future generations to meet their own needs (Definition from the UN) Sustainability is about long-term thinking: Economically Socially Environmentally (These are the three pillars of sustainability) CSR: Consumers Consumerism A movement that pressures businesses to consider consumer needs and interests (positive connotation) It is about being customer oriented in our actions Not to be mistaken with Materialism (negative) Consumerism includes: The right to buy safe products and to buy them safely The right to be informed The right to choose which products to buy The right to be heard CSR: Employees Discrimination In a social and economic sense, denial of opportunities to individuals on the basis of some characteristic that has no bearing on their ability to perform in a job CSR: Employees Affirmative action (aka: Positive Discrimination) Recruit and promote members of groups whose economic progress has been hindered through either legal barriers or established practices; not only race related (women, disabilities, age, religion...) Example: a certain percentage of discriminated groups as part of the organization, leads to tax advantages