BUSINESS ETHICS

The Concept of Corporate Social Responsibility

Corporate Social Responsibility (CSR) means businesses making a promise to do good things for people and the planet, not just focusing on making money. It's about them choosing to act in ways that benefit society, the environment, and the economy. This commitment goes beyond profit maximization and emphasizes a proactive approach to societal and environmental well-being.

Importance: It extends beyond profit-making, emphasizing companies' broader responsibility towards society's well-being. It fosters positive impacts beyond financial gains, builds trust, enhances reputation, and creates sustainable relationships between businesses and communities through shared responsibility.

3 key components of Corporate Social Responsibility

1. Ethical Business Conduct

• Infuse CSR initiatives with a strong ethical framework, ensuring that ethical considerations are integral to decision-making processes. Upholding integrity and honesty in all business operations.

• Cultivating a corporate culture that values ethical decision-making at every level.

• Implementing transparent and accountable practices that align with ethical standards.

2. Economic Development Contribution

• Actively contributing to economic growth at local and global levels.

• Investing in sustainable business practices that stimulate economic development.

• Fostering innovation and job creation for long-term economic impact.

3. Improvement of stakeholder quality of life

• Prioritizing the well-being of diverse stakeholders, including employees, customers, and communities.

• Engaging in initiatives that enhance the quality of life for stakeholders.

• Addressing social, environmental, and economic factors to create a positive and lasting impact.

CSR vs. Business Ethics

CORPORATE SOCIAL RESPONSIBILITY

• Directs attention to a company's broader impact on society. This includes considerations such as environmental sustainability, community engagement, and philanthropy. In essence, CSR is about businesses actively contributing to the well-being of the communities and environments in which they operate.

BUSINESS ETHICS

• Involves the application of moral principles within the context of business decisions and practices. It zooms in on the day-to-day actions within the organization, emphasizing principles like honesty, integrity, and fairness in all business dealings. Business Ethics sets the ethical tone for individual behavior and decision-making within the company

In simple terms, CSR is more about the specific actions a company takes to be socially responsible, while business ethics is about the overall behavior and values of the company.

Proactive Initiatives vs. Moral Aspects

Example: Patagonia is an outdoor clothing brand, has implemented various initiatives to reduce its carbon footprint. They use recycled materials in their products and invest in renewable energy sources for their manufacturing processes. By doing so, they demonstrate their commitment to protecting the environment while still running a successful business.

CSR BUSINESS CASE EXPLANATION

1. Engaging in CSR initiatives can enhance a company's reputation and brand image. Consumers today are increasingly conscious of the impact their purchases have on society and the environment. By demonstrating a commitment to CSR, companies can attract loyal customers who align with their values.

2. CSR can lead to increased employee satisfaction and productivity. Studies have shown that employees are more engaged when they work for socially responsible organizations. They feel proud to be associated with a company that contributes positively to society, which ultimately leads to higher levels of motivation and productivity.

3. Furthermore, embracing CSR can also result in cost savings for businesses. For instance, implementing energy-efficient practices can reduce utility bills over time while minimizing environmental harm.

Social Responsibility as Good Business Sense

Companies who commit to social responsibility believes that the benefits they give society will eventually lead to business growth and success.

• Businesses have obligations to their internal and external stakeholders. 

  • Stakeholders directly and indirectly affect business operations

Giving Back to Society

What businesses take: human, technological, and cultural resources

What businesses should give back: Socioeconomic development

What businesses receive in return: customer and collaborator relationships, product positioning, employee engagement

1. Corporate Philanthropy also called "business giving"

• the voluntary giving of money and other resources by businesses to their communities

• private initiatives supporting the quality of life and public welfare

• Examples: funding causes, development organizations, and community development

generally welcomed by the community as long as it does not contradict community values and cultures

2. Corporate Citizenship how businesses fulfill their ethical, legal, and economic obligations

• from bare minimum to going beyond

balances the needs of the shareholders and those of the community to which the enterprise belongs

Corporate Citizenship stages

1. Elementary stage - following all laws and regulations 

   • having not enough time and assets to advance their social involvement

2. Engagement stage - going beyond primary obligations (e.g., improving employees’ conditions and welfare)

3. Innovative stage - extending beyond the internal stakeholders

   • maintaining profitability

4. Integrated stage - blends social activities fluidly into the business's operations

5. Transforming stage - When economic and social involvement is a normal part of a company's daily operations in this stage

3. Corporate Social Responsibility

   • the business's extensive and overall obligations to society

   • comprehensive framework to contribute meaningfully to socioeconomic development

   • promoting economic development and social progress

   • practice of self-regulation, fairness, accountability, and stewardship

Impact of CSR on Business

regardless of each enterprise's motivation for doing CSR programs, the positive impact of CSR is encouraging

1. Shareholder’s Orientation - from being shareholders of the company to becoming shareholders of the broader community

2. Employee’s Motivation - attracts the top talents of the generation fosters pride, loyalty, and devotion to the companies

3. Brand Recognition and Reputation - boost brand awareness and recognition

   generates support from people with same values

4. Relationship with the government - boost brand awareness and recognition generates support from people with same values

5. Social Value - regarded by society as highly significant institutions consumers perceive the overall value of products/services beyond what they consume

Responsibilities and Accountabilities of Entrepreneurs

Entrepreneurship - identifying changes in the marketplace

• arranging the resources required to pursue these opportunities

• devoting the resources to achieve sustainability

Responsibility Toward Employees

Employees are one of the major stakeholders of business; entrepreneurs should be responsible for their economic and social well-being

A good and robust employer-employee relationship benefits the enterprise, its workforce, and society.

1. Salary and Benefits

   to ensure that employees receive just compensation

   • following the law

   • commensurate to their contributions

2. Health and Social Security

   • to ensure that the workplace is safe for their employees

   • that their employees will not be exposed to natural and manufactured calamities

   • to provide employees with benefits, health insurance, and social security

     • SSS, GSIS, Pag-IBIG, etc.

3. Rights

   • Employers have the legal obligation to recognize and uphold the rights of employees.

   • extensions of the Constitutionally-guaranteed rights of citizens

   Particular laws: Labor Code, Data Privacy Act, etc.

   Rights of Employees

   1. to organize and bargain collectively

   2. to blow the whistle and free speech

   3. to due process on the job

   4. to privacy

4. Inclusion and Diversity

   Employers must create a safe space for their employees

   • zero-tolerance policy for any acts that involve discrimination

   • to nurture a community of respect and cultivate a culture of diversity and inclusion

5. Growth Opportunities

   • Trainings to improve skills

   • Scholarships for further studies

   • Incentives for good performance

6. Employee Engagement

   • Keeping employees updated

   • Including them in internal communication

   • Providing opportunities to expand their interests
     

   
   
   

Just and Fair Business Policies

RECRUITMENT - levelling the playing field for all their applicants

• giving fair chance to everybody without bias or discrimination

• creating an objective selection criteria, which are all job-related

1. Age

2. Religion

3. Background and disability

4. Ethnicity and race

5. Gender and other sexual orientation

PROMOTION - to support the internal mobility 

• to help motivate employees 

RETENTION - to prevent valuable employees from leaving their jobs

• by offering competitive salary and benefits package

MARKETING AND ADVERTISING - advertisements should not contain deceptive statements or omit necessary details

• should not also overstep the rights and choices of their consumers

INTELLECTURAL PROPERTY RIGHTS - to respect intellectual property and uphold honesty at all times

1. Copyrights to original creative works

2. Trade secrets oa a proprietary nature

3. Trademarks of brands, symbols, etc.

4. Patents covering inventions and innovations

Sources and Use of Funds - to keep their cash flow healthy by implementing sound cash management policies

• Directly affects the payment of salaries, wages, supplies, and other short term obligations

• entrepreneurs should not participate in any form of bribery or corruption

  
  

  
  

The Concept of Social Enterprise

Social Enterprise - new types of businesses that desire the creation of social value over personal profit

• unique, socially responsible, and environmentally friendly

• typically work with people from marginalized and disadvantaged sectors

  • providing solutions and livelihood opportunities

• Profit-making is oriented towards expanding social activities

• Reinvestments: to do more and help more

Social Entrepreneurs - innovative individuals who prioritize their business activities' impact on social, cultural, and environmental problems

• observant of societal needs and demands

Characteristics of Social Enterprises

1. Clear Social Goals

   • prioritizes social mission over profit

   • focuses on benefits to people and communities

   • profit ensures financial sustainability

2. Reinvestments

   • most profits are returned to the organization to support the social goal

3. Monitoring and Learning

   • measures success based on social impact, not based on profits

   • programs that worked well are repeated and expanded

4. Adaptable Roadmap

   • flexible based on cultural and political developments that impact people and markets

Challenge of Sustainability

1. Difficulty in Growth

   • does not simply cut costs if the solution will harm the environment or its employees

   • more balanced development of financial, natural, and human resources

2. Requires Focus

   • Diversifying products can make an enterprise lose its focus.

   • Consumers equate focus with being genuine to social aims.

3. Maintaining the Business Aspect

   • must efficiently and effectively create, communicate, and deliver customer value

   • must improve, reinvent, reposition

Contribution to Philippine Development

17% of the total registered businesses in the Philippines are social enterprises

70% of social enterprises are micro, small, and medium enterprises (MSMEs)

Philippine social enterprises focus on the following sectors:

• Agriculture: 19%

• Education 9%

• Business Development: 9%

Philippine social enterprises benefits the following groups:

• Local communities: 72%

• Specific Organizations: 52%

• Women: 54%