1. Ethics, Corporate Responsibility, and Sustainability
Chapter Five
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2. Learning Objectives
LO1 Describe how different ethical perspectives guide decision making LO2 Explain how companies influence their ethics environment LO3 Outline a process for making ethical decisions LO4 Summarize the important issues surrounding corporate social responsibility LO5 Discuss reasons for businesses’ growing interest in the natural environment LO6 Identify actions managers can take to manage with the environment in mind

3. Ethics
Ethics
The system of rules that governs the ordering of values

4. Telling the Truth and Lying: Possible Outcomes
Table 5.1

5. It’s a Personal Issue
Most of us think we are good decision makers, ethical, and unbiased.
But most people have unconscious biases that favor themselves and their own group.

6. It’s a Personal Issue Managers often: Hire people who are like them
Think they are immune to conflicts of interest
Take more credit than they deserve
Blame others when they deserve some blame themselves

7. It’s a Personal Issue
If the employer pays for the computer and the time you spend sitting in front of it, is it ethical for you to use the computer to do tasks unrelated to your work?

8. Ethics Ethical issue Business ethics
Situation, problem, or opportunity in which an individual must choose among several actions that must be evaluated as morally right or wrong
Business ethics
The moral principles and standards that guide behavior in the world of business.

9. Ethical Systems Moral philosophy Universalism
Principles, rules, and values people use in deciding what is right or wrong
Universalism
The ethical system stating that all people should uphold certain values that society needs to function.

10. Caux Principles Caux Principles
Ethical principles established by international executives based in Caux, Switzerland, in collaboration with business leaders from Japan, Europe, and the United States.

11. Caux Principles Kyosei Human dignity
living and working together for the common good, allowing cooperation and mutual prosperity to coexist with healthy and fair competition
Human dignity
concerns the value of each person as an end, not a means to the fulfillment of others’ purposes

12. Question
Which ethical system bases ethical behavior on the opinions and behaviors of relevant other people?
Egoism
Utilitarianism
Relativism
Virtue ethics
The correct answer is c – relativism. See slide 5-14

13. Ethical Systems Egoism
An ethical system defining acceptable behavior as that which maximizes consequences for the individual

14. Ethical Systems Utilitarianism
An ethical system stating that the greatest good for the greatest number should be the overriding concern of decision makers.

15. Ethical Systems Relativism Virtue ethics
Philosophy that bases ethical behavior on the opinions and behaviors of relevant other people
Virtue ethics
Classification of people based on their level of moral judgment.

16. Ethical Systems Kohlberg’s model of cognitive moral development
Perspective that what is moral comes from what a mature person with “good” moral character would deem right.

17. Current Ethical Issues in Business
Table 5.2

18. Question
What act passed into law by Congress in 2002 established strict accounting and reporting rules?
Wagner Act
Sarbanes-Oxley Act
Chapin Act
GAAP Act
The correct answer is b – Sarbanes-Oxley. See next slide

19. The Ethics Environment
Sarbanes-Oxley Act
An act passed into law by Congress in 2002 to establish strict accounting and reporting rules in order to make senior managers more accountable and to improve and maintain investor confidence

20. Business Ethics Ethical climate
In an organization, the processes by which decisions are evaluated and made on the basis of right and wrong

21. Danger Signs
Excessive emphasis on short-term revenues over longer-term considerations.
Failure to establish a written code of ethics.
A desire for simple, “quick fix” solutions to ethical problems.
An unwillingness to take an ethical stand that may impose financial costs.

22. Danger Signs (cont.)
Consideration of ethics solely as a legal issue or a public relations tool
Lack of clear procedures for handling ethical problems.
Responding to the demands of shareholders at the expense of other constituencies

23. Danger Signs Ethical leader
One who is both a moral person and a moral manager influencing others to behave ethically.

24. Ethics Programs Compliance-based ethics programs
Company mechanisms typically designed by corporate counsel to prevent, detect, and punish legal violations.

25. Ethics Programs Integrity-based ethics programs
Company mechanisms designed to instill in people a personal responsibility for ethical behavior

26. A Process for Ethical Decision Making
Figure 5.1

27. Ethical Decision Making
Making ethical decisions takes:
Moral awareness
realizing the issue has ethical implications
Moral judgment
knowing what actions are morally defensible
Moral character
the strength and persistence to act in accordance with your ethics despite the challenges

28. Courage
Behaving ethically requires not just moral awareness and moral judgment but also moral character, including the courage to take actions consistent with your ethical decisions

29. Corporate Social Responsibility
Corporate social responsibility (CSR)
Obligation toward society assumed by business.
Triple bottom line

30. Corporate Social Responsibility
Economic responsibilities
To produce goods and services that society wants at a price that perpetuates the business and satisfies its obligations to investors.
Legal responsibilities
To obey local, state, federal, and relevant international laws

31. Corporate Social Responsibility
Ethical responsibilities
Meeting other social expectations, not written as law.

32. Corporate Social Responsibility
Philanthropic responsibilities
Additional behaviors and activities that society finds desirable and that the values of the business support.

33. Pyramid of Global Corporate Social Responsibility and Performance
Figure 5.2

34. Corporate Social Responsibility
Transcendent education
An education with five higher goals that balance self-interest with responsibility to others
Empathy, generativity, mutuality, civil aspiration, intolerance of ineffective humanity

35. Contrasting Views
First - holds that managers act as agents for shareholders and, as such, are obligated to maximize the present value of the firm Second - managers should be motivated by principled moral reasoning

36. Reconciliation
Profit maximization and corporate social responsibility used to be regarded as antagonistic, leading to opposing policies. But the two views can converge
Recent attention has also been centered on the possible competitive advantage of socially responsible actions

37. Ecocentric Management
Goal is the creation of sustainable economic development and improvement of quality of life worldwide for all organizational stakeholders.

38. Ecocentric Management
Sustainable growth
Economic growth and development that meet present needs without harming the needs of future generations

39. Ecocentric Management
Life-cycle analysis (LCA)
A process of analyzing all inputs and outputs, though the entire “cradle-to-grave” life of a product, to determine total environmental impact

40. Video: Cell Phones for Soldiers
Why is it important for Rob and Brittany Bergquist to be socially responsible?