BSM 600 Ethics, CSR & Sustainabilty

CSR (Corporate social responsibility)

A company’s responsibility to operate ethically and contribute to society beyond profit (includes environmental, social, and ethical practices)

Business ethics

Moral principles that guide business behavior and decisions (right vs wrong)

Sustainability

Meeting present needs without harming future generations, thinking long term

Triple Bottom Line

Measuring success with profit (economic), people (social), and planet (environmental)

Stakeholders

Inviduals and groups affected by a company (ex. employees, customers, suppliers, community, environment)

Shareholders

Owners and investors focused on financial returns

Stakeholder Approach

Business considers interests of all stakeholders

Shareholder Approach

Business prioritizes maximizing profit for owners

Short-Termism

Focus on immediate profits instead of long term success (often leads to poor decisions)

Long-Term Value Creation

Focus on sustainale growth and long term profitability, driven by innovation, customer satisfaction, efficiency

Drivers of Value Creation

Factors that actually create long term success:

• Innovation

• Customer satisfaction

• Operational efficiency

• Product development

Stock Market Value vs real Value

Managers cannot control stock prices directly, they control performance (profits and strategy)

Misinterpretation of Shareholder Value

Companies focus too much on short-term earnings instead of long-term profit

Triple bottom Line Strategy

No conflict between proft, social good, or environmental responsibility, they can support each other

Values Misalignment

Company values may not match society’s values

Founder Values Risk

Strong internal values may become outdated over time

Societal Values Challenge

Hard to define what society wants because its diverse and always changing

Ethical Decision

fair, honest, transparent, responsible

Unethical decision

Harmful, deceptive, explotative, irresponsible

Legal vs ethical

Legal is allowed by law, ethical is morally right

Short term profit pressure

leads to cutting r&d, manipulating financial data, ignoring sustainability

Financial misrepresentation

Manipulating data for perosnal gain, result of short term focus

Economic (profit)

Revnue, profitability, efficiency

social (people)

employee welfare, community impact, fairness

Environmental (planet)

Sustainability, emissions, resource use

No trade off principle

long term value + stakeholder satisfaction can align

Susatinable Strategy

Avoid short term actions that harm soceity/ environment

Management focus

focuses on value drivers and no just profits or stock price

CSR Examples

Ethical sourcing, reducing emissions, fair wages

Bad CSR Examples

Greenwashing because its pretending to be sustainable

Greenwashing

Misleading claims about environmental practices