Corporate responsibility and ethics Flashcards
(23 cards)
Business Ethics
The accepted principles of right or wrong governing the conduct of business people (Charles Hill)
Good ethical behavior has impact on
a company’s reputation; markets and public opinion
Most common ethical issues when managing in a global context
Employment practices
Environmental Pollution
Human rights
Corruption
Moral obligations
Corporate Responsibility
companies integrate social and environmental concerns in their business operations and in the interaction with their stakeholders, on a voluntary basis
Triple bottom Line
- People (social)
- Planet (environmental)
- Profit (economic)
Stakeholders
- shareholders
- employees
- investors
- consumers, customers, suppliers
- public authorities and regulators
- NGOs
CR targets start where
compliance with enforced sustainable practices end
CR
Corporate Responsibility
CSR
Corporate Social Responsibility; Corporate Stakeholder Responsibility
Sustainability
Corporate Sustainability
Foundations of Ethics and Social Responsibility - Organizational
Ethics is subjective and ambiguous; MNE needs code of conduct to align with expectation
- CEO Responsibility
- Reporting
Failure occurs when ethical principals are not clear
Foundations of Ethics and Social Responsibility - Cultural
SR is subjective and ambiguous; MNE must make choices and commit to a framework of standards and report progress with transparency
- Relativism - adaptation
- Normativism - Universal values
Failure occurs when SR commitments are not clear
Foundations of Ethics and Social Responsibility - Legal
Law embodies local, cultural and political economic routes; MNE must respect local law, but being legal does not mean being ethical
- being illegal brings fines but being unethical damages reputation
- regulation is slow to develop
Failure occurs when ethical principals and SR commitments are not clear
Practices and mechanisms of internal regulation
- Code of Conduct
- Recruitment (hire people with similar values/principles)
- Corporate certification and reporting
- Individual behaviour in a given situation
- Whistle blower policy
- Ethics Commission
Ethical MNE
adopts the right business conduct, with positive impact on reputation
Socially responsible MNE
integrates social and environmental concerns in business operations => win-win situation for the company and the stakeholders
Philanthropic MNE
Promotes wellness of others with no direct link with business operations (e.g. donations for humanitarian causes)
Risk management approach
=> avoid bad reputation; Perception of unethical behaviour can “kill” corporate reputation and/or a brand
- The power of Media & Social Media
- Combat Fake News
Sustainability approach
=> build a source of competitive advantage; Environment friendly and socially responsible businesses can make consumers opt for the Brand
- Align with Global Initiatives that improve standards and mitigate price impact
Environmental standards
assess how companies relate and care for nature and the sustainability of the planet.
Social standards
evaluate how the companies engage with their stakeholders, namely the communities where they operate, employees, customers, suppliers, NGOs, Governments.
Governance standards
deal with shareholder rights, Boards, leadership, executive pay, internal controls, risk assessment, and audit
Reasons for adopting ESG
- Associate company branding with sustainability
- Attract new customers driven by sustainability
- Attract positive media / PR coverage
- Attract interest from socially responsible investors
- Improve employee motivation / retention (“work with purpose”) and overall committment with the company’s mission and performance
- Create new business development opportunities through increased stakeholder trust and positive public opinion (eg. dealings with governments)
