CH10 Business Ethics, Eviromental Sustainability, & Corporate Social Responsibility

Business Ethics

principles of conduct within organizations that guide decision making and behavior

Unethical business practices

1. Misleading advertising or labeling
2. Causing environmental harm
3. Producing unsafe products or services
4. Padding expense accounts
5. Insider trading

Social Responsibility

actions an organization takes beyond what is legally require to protect or enhance the well being of living things

Sustainability

the extent that an organization’s operations & actions protect, mend, & preserve rather than harm or destroy the natural enviroment

Seven Principles of Admirable Business Ethics

1. Be trustworthy

2. Be open minded

3. Honor all commitments & obligations

4. Avoid misrepresentation, exaggerating, or misleading

5. Use accounting practices to identify & eliminate questionable activities

6. Follow the Golden Rule: "Do unto others as you would
   have them do unto you."

Code of Business Ethics

to ensure that the code of ethics is read, understood, believed, and remembered, periodic ethics workshops are needed to sensitize people to workplace circumstances in which ethics issues may arise

Four Practices to Adapt a Firm’s Culture for Better Ethics

1. Identify and correct any inconsistencies between what’s preached and what’s practiced.
2. Identify environmental changes that warrant new behaviors and adjust strategies accordingly.
3. Create a supportive culture and internal whistleblower process.
4. Encourage, reinforce, and reward desired behaviors.

Whistle blowing

refers to employees reporting any unethical violations they discover or see in the firm

What did the Securities and Exchange Commission mandate?

that anyone that sees unethical behavior must report

Bribery

the offering, giving, receiving, or soliciting of any item of value to influence the actions of any official or other person in discharge of a public or legal duty

Bribery is a ______ in most countries of the world, including the US

crime

Workplace Romance can be detrimental to morale and productivity because:

1. favoritism complaints can arise

2. confidentiality of records can be breached

3. reduced quality and quantity of work could result

4. personal arguments can lead to work arguments

5. whispering secrets can lead to tensions

6. sexual harassment (or discrimination) charges may ensue

7. conflicts of interest could arise, especially when the well-being of the partner trumps the well-being of the company

Workplace Romance Guidelines & policies can…

1. enable the firm to better defend against & avoid sexual harassment or discrimination chargers

2. specify reasons why workplace romance may not be a good idea

3. specify resultant penalties for romancing partners if problems arise

4. promote a professional & fair work atmosphere

5. help assure compliance with federal, state, and local laws, as well as recent court cases

6. lack of any guidelines sends a lackadaisical message throughout the firm

Employees, consumers, governments, and society are especially resentful of firms that…

harm rather than protect the natural enviroment

People today are appreciative of firms that…

conduct operations in a way the mends, conserves, and preserve the natural enviroment

Sustainability report reveals…

how a firm’s operations impact the natural enviroment

What does sustainability report disclose to shareholders?

information about the firm’s labor practices, product sourcing, energy efficiency, environmental impact, and business ethics practices

Possible environmental strategies

1. Developing or acquiring green businesses

2. Divesting or altering environment-damaging businesses

3. Becoming a low-cost producer through waste minimization and energy conservation

4. Pursuing a differentiation strategy through green product features

5. Including an environmental or sustainability representative on their board of directors

6. Conducting regular environmental audits

7. Implementing bonuses for favorable environmental or conservation-related results

8. Becoming involved in environmental issues and programs

9. Incorporating environmental values in mission statements

10. Establishing environmentally oriented objectives

11. Acquiring "green" skills

12. Providing environmental training programs for company employees and managers

ISO 14000 family of standards concerns the extent to…

which a firm minimizes harmful effects on the environment caused by it’s activities and continually monitors and improves its own environmental performance

ISO 14001

a set of standards adopted by thousands of firms worldwide to certify to their constituencies that they are conducting business in an environmentally friendly manne

ISO 14000/14001 results in…

an Environmental Management System (EMS)

Reasons Why Preserving the ENviroment Should be a Permanent Part of Doing Business

• Consumer demand for environmentally safe products and packages is high.

• Public opinion demanding that firms conduct business in ways that preserve the natural environment is strong.

• Environmental advocacy groups now have more than 20 million Americans as members.

• Federal and state environmental regulations are changing rapidly and becoming more complex.

• Many lenders are examining the environmental liabilities of businesses seeking loans.

• Many consumers, suppliers, distributors, and investors shun doing business with environmentally weak firms.

• Liability suits and fines against firms having environmental problems are on the rise.

What does Ralph Nader proclaim?

that organizations have tremendous social obligations

Milton Friedman asserts that…

organizations have no obligation to do any more society than is legally required

Research reveals a ______ relationship between Corporate Social Responsibility and corporate financial performance

U shape

Firms with the highest CSR are generally also the firms with…

the highest financial performance

Firms with lowest CSR tend to have…

higher performance than those with moderate social responsibility

Consomers view on Food Suppliers & Livestock Welfare

Consumers expect human treatment of animals

Consumers are flocking to organic products

Consumers globally are becoming increasing intolerant of…

any business or nation that directly or indirectly destroys wildlife - especially endangered wildlife (tigers, elephants, whales, coral reefs)

How to Gain & Sustain Competitive Advantages