Social Responsibility and Business Ethics

1SocialResponsibilityandBusinessEthics2SocialResponsibilitySocialResponsibilityistheawarenessthatbusinessactivitieshaveanimpactonsocietyandtheconsiderationoftheimpactbyfirmsindecisionmaking.Sociallyresponsiblefirmscanbeprofitablewhilevoluntarilyengaginginactivitiesbeneficialtosociety.3PyramidofSocialResponsibility(Carroll1991)4SocialResponsibilitySocialResponsibilityisacosttoallfirms.Societyincreasinglyexpectsbusinessestodomorethanjustmakeprofits.Socialresponsibilityisanecessarypartofdoingbusinesstoday.5StrategyFormulationThemissionofafirmdefinesitsreasonforexistence:itasksthequestion“Whyareweinbusiness?”Thisvisiondescribeswheretheorganisationisheadedandwhatitintendstobe:itisastatementofthefuturethatwouldnothappenbyitself.6StrategyFormulationValuesorguidingprinciplesguidethejourneytothatvisionbydefiningattitudesandpoliciesforallemployees,whicharereinforcedthroughconsciousandsubconsciousbehaviouratalllevelsoftheorganisation.7SocialResponsibilityCompaniesmustweightheimpactoftheirdecisionson:ConsumersEmployeesInvestorsEnvironment8ResponsibilitytoConsumersSuccessfulbusinessesprovideproductsthatsatisfytheircustomers’needs.Increasinglyhowever,customersareturningacriticaleyeonthefirms’policiesandactionsandexertingpressureinthemarketplace.9ConsumerismConsumerismincludestheactivitiesofindividuals,groupsandorganisationsaimedatprotectingconsumerrights.Consumergroupstestandreportonsafetyandperformanceofproducts,andactasconsumeradvocatesbeforelawmakingbodies.10AmericanLabelsOnanAmericanAirlinespacketofnuts:Instructions–openpacket,eatnuts.OnNytolNighttimeSleepAid:Warning:Maycausedrowsiness.WarningonaConairProStyle1600hairdryer:Donotuseinshower.Neverusewhilesleeping11AmericanLabelsBatmanHalloweencostumebox–Parent:Pleaseexercisecaution–maskandchestplatearenotprotectiveandcapedoesnotenablewearertofly.DogShampoo–Thecontentsofthisbottleshouldnotbefedtofish.PaintRemovalGun–Donottouchnozzleuntiltoolascooled,Donotuseashairdryer,Toolsandpaintscrapingsbecomehot12MassageChairWarning:Donotusemassagechairwithoutclothing…andneverforceanybodypartintothebackrestareawhiletherollersaremoving.13BoycottsDoBoycottswork?ExxonValdezBoycottsofFrenchproductsApartheidWorldTradeOrganisationProtests14ResponsibilitytoEmployeesSafeworkingconditionsEqualopportunitiesFaircompensationAdequatebenefitsManagersthatareresponsivetotheproblems15ResponsibilitytotheEnvironmentWaterpollutionAirpollutionLandpollutionChemicalpollutionNoisepollutionDisposalofwasteLandManagementErosion16BHOPAL–Thebeginningofawareness17CorporateDisaster18Ecologicaldisaster19Humandisaster20EcologicalfootprintTheEcologicalFootprintistheglobalmeasureofenvironmentalsustainabilityThefootprintisthelandandwaterarea(inhectares)neededtosupplytheresourcesonepersonconsumesandtoabsorbthewasteTheareaavailableforeverypersonis1.8hectares21EcologicalfootprintIn2004,onaverage,eachpersonwasusing2.2hectaresTheburningoffossilfuels,thegrowthandproductionoffoodandincreasedairtravelhasthegreatestimpactontheecologicalfootprintAtpresent,theaverageAustralianuses7.7hectares.Australiahasthe4thlargestfootprintglobally22EcologicalfootprintChina,theworld’slargestpopulation,hasafootprintof1.5hectares.Thisisduetoacombinationof:-diet(greenvegetables,riceandlowmeatintake),lifestyle(lowlevelsincarownership,energyusageandairplanetravel).Ourdemandfornaturalresourcesisexceedingsupply.Ifalloftheworld’speopleconsumedresourcesandproducedwasteatthisrate,wewouldrequire4.3Earthstomaintainourcurrentlifestyle.23ResponsibilitytoInvestorsTheSocialresponsibilityofbusinessistoincreaseprofits.‘MiltonFriedman’Businesseshavearesponsibilitytomanagefundssoastoreturnafairprofittoinvestors.Lossofinvestorconfidencerestrictsafirm’sabilitytomeetfuturecapitalneeds.24Enron2001collapsethatcausedthelargestthelargestChapter11bankruptcy(untilWorldcomandLehmanBrothers).Causedbyinstitutionalized,systematic,andcreativelyplannedaccountingfraudThescandalalsobroughtintoquestiontheaccountingpracticesofmanycorporationsthroughouttheUnitedStates,resultedinthecreationoftheSarbanes-OxleyActof2002.25Ponzischeme-MadoffBernardMadoff,thatformerNASDAQchairman,operatedwhathasbeencalledthelargestinvestorfraudevercommittedbyanindividual.Prosecutorsestimatedthesizeofthefraudtobe$64.8billion.Ponziescheme-fraudulentinvestmentoperationthatpaysreturnstoinvestorsfromtheirownmoneyormoneypaidbysubsequentinvestorsratherthanfromanyactualprofitearnedOnJune29,2009,hewassentencedto150yearsinprisonwithrestitutionof$170billion.26WallStreet“GreedisGood”“Ifyouwantafriendgetadog”WallStreet–198520thCenturyFox27AdvancingCorporateSocialResponsibilityManycompaniespracticesocialresponsibilitythroughprogramsof:1.Communitysupport2.SelfRegulation3.SocialAudits4.Bestpractice5.Benchmarking6.Consultants28Syriana-2005=iS3GFnSGOfkDiscussesGlobalizationCorruptionGreedReligionCultureunethicalbehavioursocialresponsibilityofnationsandindividuals29BusinessEth