Student Lec 3_BE CSR_2425 PDF

Lecture 3 Business Ethics & Corporate Social Responsibility  Lecture Objectives List the different stakeholders and their respective interests and relationship with business Define business ethics and identify ethical issues /dilemma in business Describe ways to enhance ethical standards...

Lecture 3 Business Ethics & Corporate Social Responsibility  Lecture Objectives List the different stakeholders and their respective interests and relationship with business Define business ethics and identify ethical issues /dilemma in business Describe ways to enhance ethical standards in business Define corporate social responsibility and dimensions of social responsibilities State the arguments for and against fulfilling social responsibilities Concern for Ethical and Social Issues An organization that wants to prosper over the long term is well advised to consider business ethics and social issues in the work environment. Businesses must find the delicate balance between doing what is “right” and doing what is profitable.  Concept of Stakeholders persons or groups and institutions who are affected in one way or another by the organization’s decisions and performance. Johnson & Johnson’s Credo  Stakeholder Relationships: Shareholders Primarily concerned with profit or ROI Financial community at large Proper accounting procedures Protecting owner’s rights and investments  Stakeholder Relationships: Employees Provide a safe workplace Adequate compensation Listen to grievances Fair treatment and free from discrimination Respect employee privacy  Stakeholder Relationships: Consumers Consumerism Activities that independent individuals, groups and organizations undertake to protect their rights as consumers. Critical issue is business’s responsibility to customers to provide satisfying, safe products and to protect their  Kennedy’s Consumer Bill of Rights The right to safety The right to be informed The right to choose The right to be heard  Stakeholders Relationships: Other stakeholders: Business partners, e.g. suppliers Competitors Creditors Government ……  Stakeholder Relationships: The Environment & Sustainability Issues Sustainability means conducting activities with the long-term well-being of the natural environment in mind. Pollution: land, water & air Waste disposal Future of energy e.g. Alternative energy  The Trend of Sustainability Sustainable Development – Operating business in a manner that minimizes pollution and resource depletion, ensuring that future generations will have vital resources.  Specific responses: ESG denotes the reduction of carbon and other Environment greenhouse emission or generally protecting the environment look into how entities manage the Social relationship between and among stakeholders practising fairness and transparency in Governance the management as well as actively disclosing information to the relevant stakeholders  Business Ethics It is the principles and standards that determine acceptable conduct in business organizations.  Ethical Issue/Dilemma A situation in which more than one side of an issue can be supported with valid arguments An identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical.  In-class Activity Recall one or two of the recent ethical/ unethical business practices from the media and report the incidents to the class. Recognizing Ethical Issues in Business Growing concerns about legal and ethical issues in business Many business issues may seem straightforward and easy to resolve on the surface, but are really very complex. Common behaviors include:  Ethical Issues 1. Fairness and honesty – Businesspeople are expected to refrain from knowingly deceiving, misrepresenting, or intimidating others. 2. Organizational relationships – A businessperson should put the welfare of others & that of the organization above his or her own personal welfare. 3. Conflict of interest – Issues arise when a businessperson takes advantage of a situation for personal gain rather than for the employer’s interest. 4. Communications – Business communications that are false, misleading, or deceptive are both illegal  In-class Activity A case of shady business ethics: The Octopus affair 1. What is ethical behavior? To what extent did Octopus violate ethical behavior? 2. How could the stakeholders, namely, consumers, investors, employees and society, be affected? 3. Give Octopus advice on how to enhance high ethical standard  In-class Activity A case of shady business ethics: The Octopus affair Suggested answer:  Corporate Social Responsibility Business’s obligation is to maximize its positive impact and minimize its negative impact on society  The idea that business has obligations to society beyond the pursuit of profits. AIA Hong Kong and Macau Wins ‘The First Outstanding CSR Award’ Taking Up Social Responsibility to Contribute to Hong Kong and the Motherland  Corporate Social Responsibility Consideration of impact on society in business decision making: – Social responsibility costs money but is also good business. – How socially responsible a firm acts may affect the decisions Does a company’s of customers to do orsocial continue toresponsibility do business affect withyour thedecision firm. to do business with them?  Comparing Business Ethics and Social Responsibility Business Ethics: Social Responsibility: relates to an a broader individual’s or concept that a work concerns the group’s impact of the decisions that entire business society activities on evaluates as society. right or wrong. Two Views of Social Responsibility Economic model Society will benefit most when business is left alone to produce and market profitable products that society needs. Company’s primary responsibility is to make a profit for its shareholders. Problem of government, environmental groups, and Two Views of Social Responsibility Socioeconomic model Business should be concerned with the impact of its decisions on society. It is in the best interest of firms to take the initiative in social responsibility matters. Four Dimensions to Social Responsibility Dimension to Social Responsibility – A Case of Starbucks  Philanthropy – create Starbucks Level 4 -- Voluntary foundation and support charity and communities Level 3 -- Ethical  Offer benefits to part-timers & support coffee growers by offering them fair prices Level 2 -- Legal  Specify code of ethics & set lawful guidelines  Financial viability: offer Level 1 – Economic investors a healthy return on investment, e.g. dividends  Corporate Citizenship The extent to which businesses meet the economic, legal, ethical and voluntary responsibilities placed on them by their stakeholders.  In-class Activity -- Class Debate Discuss the arguments for and against fulfilling social responsibilities. Arguments for fulfilling Social Responsibility Arguments against fulfilling Social Responsibility