BLAW 400 (CH1-4) terms only

sustainability

potential for the long-term well-being of the natural environment (all biological entities mutually beneficial interactions among nature & individuals, organizations, & business strategies

ISO 37301

a global compliance management standard that addresses risks, legal requirements, ethical obligations & stakeholder needs

ethics

behavior or decisions made within a group’s values or morals

business ethics

comprises organizational principles, values, & norms that may originate from individuals, organizational statements, or from the legal system that guides individual & group behavior in business

stakeholders

customers, employees, investors, suppliers, government agencies, communities, & many others who have a “stake” or claim in some aspect of a company’s products, operations, markets, industry, & outcomes

primary stakeholders

critical to a firm’s survival ( employees, customers, & shareholders, governments, & communities)

secondary stakeholders

who do not typically engage directly in transactions with a company, not essential to survival (media. Trade associations & special interest groups)

shareholders

a specific subset of primary stakeholders who hold legal ownership (equity shares) in a company & primarily seek financial returns on their investment

social responsibility

a broader organizational obligation to maximize positive societal impact & minimize negative impact (CSR pyramid)

Milton Friedman’s philosophy

primary mission of business is profit maximization for shareholders within the boundaries of the law. He argued that addressing societal demands beyond profit vernation acts as an improper tax on owners & inefficiently uses corporate resources.

duty of care

(cannot be reckless): legal obligation of an individual or organization to make informed & prudent decisions & avoid behavior that could cause harm to others

duty of loyalty

obligation of individuals to make decisions that are in the best interests of corporation & stakeholders

Sarbanes-Oxley Act (SOX)

Federal law passed in 2002 to protect investors from financial fraud.  It established the PCAOB to oversee auditors, mandated CEO/CFO certification of financial statements, strictly enforced internal controls, criminalized financial fraud, & required codes of ethics for senior financial officers.

shareholder model of Corporate Governance

the formal system of oversight, accountability, & control for organizational decisions & resources. (goal of maximizing wealth for investors & owners)

stakeholder perspective

considering the needs & claims of all parties affected by corporate actions

greenwashing

deceiving consumers or stakeholders into believing a product, service, or practice is environmentally friendly when it is not

corporate social responsibility (CSR)

Broad organizational obligation covering economic, legal, ethical, & philanthropic dimensions (including, but not limited to, environmental issues)

Clean Water Act (1977)

  Federal statute granting the EPA authority to set industrial effluent discharge limits, establish water quality standards, & make discharging pollutants into navigable waters illegal without a permit

environmental protection agency (EPA)

regulatory agency that deals with environmental issues and enforces environmental legislation in the US

toxic substances control act (1976)

Empower EPA with the ability to track industrial chemicals

Federal Sentencing Guidelines for Organizations (FSGO) (1991)

an incentive for organizations to develop & implement programs designed to foster ethical & legal compliance

Strategic Philanthropy

synergistic use of corporate core competencies & resources to address societal issues, yielding long-term benefits for both society & the business

Clean Air Act (1970)

Regulates air emissions from stationary & mobile sources

Pollution Prevention Act (1990)

focuses on source reduction – preventing pollution at the manufacturing stage through cost-effective changes rather than managing waste after creation

morals

individual’s personal philosophies about what is right wrong

principles

specific & pervasive boundaries for behavior that should not be violated (often becomes basis for rules- human rights, freedom of speech)

values

enduring beliefs & ideals that are socially enforced

Integrity

uncompromised adherence to a consistent ethical code & uncompromising alignment between stated values & actual actions

Invisible hand (Adam Smith’s Concept)

  Adam Smith’s economic theory stating that individuals pursuing their own self-interest in a free market unintentionally promote societal economic well-being, provided market exchanges are restrained by moral sentiments, justice, & fair competition

Environmental, Social, & Governance (ESG)

a metric framework used by investors & firms to evaluate sustainability & risk profile

E (Environmental)

(ESG) Climate impact, waste, resource usage

S (Social)

(ESG) labor standards, diversity, human rights, community relations

G (Governance)

(ESG) §  Board diversity, executive pay transparency, ethics policies shareholder rights

Normative approach

  Examines ethical decisions based on what ought to be done according to moral philosophies, values, & duties

Compliance Program

formal system designed to enforce legal standards detect lawbreaking, & implement internal ethical codes across an organization

Ordinary Decisions

  Routine operational choices governed by accepted rules, business logic, or standard operating procedures

Ethical decisions

Choices requiring individuals or groups to weigh moral values, legal parameters, & competing stakeholder rights when standard rules are absent, ambiguous, or in conflict

corporate citizenship

extent to which businesses strategically meet the economic, legal, ethical, & philanthropic responsibilities placed on them by various stakeholders

Interlocking Directorate

concept of board members being linked to more than one company

Institutional Shareholder Services (ISS)

encourages both boards & shareholders to reject directors who serve on more than four boards

Kyoto Protocal (1977)

an international treaty meant to curb global greenhouse gas emissions by having countries voluntarily reduce national outputs

Objectives of Leadership in Energy & Environmental Design (LEED)

o   Reduce contribution to global climate change

o   Enhance induvial human health

o   Protect & restore water resources

o   Protect &  enhance biodiversity & ecosystem services

o   Promote sustainable & regenerative material cycles

o   Enhance community quality of life

Strategic Implementation of Environmental responsibility

adopting sustainable practices lead to good financial performance

ISO 14000

comprehensive set of environmental standards that encourage a cleaner. Safer, & healthier world developed by the International Organization for Standardization

mandated boundaries

externally imposed descriptions of conduct, such as laws, rules, regulations, & other requirements

Core practices

methods & strategies that are well documented & widely accepted & applied

Norms

Behavioral expectations that are not legally required but can have consequences if violated

Dodd-Frank Act

seeks to improve financial regulation, increase overnight of the industry, & prevent the types of risk taking, deceptive practices.

Children’s Online Privacy Protection Act (COPPA)

requires parental consent before soliciting information from children under 13 years

Public Company Accounting Oversight Board (PCAOB)

·       monitors accounting firms auditing public corporations & establishes standards & rules for auditors in accounting firms

o   Gave board investigatory & disciplinary power over auditors

Financial Stability Oversight Council (FSOC)

·responsible for maintaining the stability of the financial system, promoting market discipline among the public, and responding to major risks that threaten stability