ETHICS & CORPORATE SOCIAL RESPONSIBILITY(CSR) What is Ethics? And law Importance? CSR definition Importance Advantages & Disadvantages

Ethics are about what is right and what is wrong.

Ethics: moral guidelines which govern good behavior.

Ethical principles and standards in business: Business ethics reflect the philosophy of a business, in line with its objectives and moral standing of the community. Ethical principles and standards in business: Define acceptable conduct in business Should underpin how management make decisions

ETHICS AND LAW An important distinction to remember is that behaving ethically is not quite the same thing as behaving lawfully:

ETHICAL ISSUES AND CSR WHAT ARE SOME OF THE ETHICAL ISSUES BUSINESSES FACE? HOW IS BUSINESS ETHICS RELATED TO CSR? HOW IS CSR DIFFERENT FROM ETHICS?

HOW DO FIRMS ENSURE ITS DIRECTORS AND EMPLOYEES ACT ETHICALLY? A common approach is to implement a code of practice. Ethical codes are increasingly popular – particularly with larger businesses.

Importance: Stop business malpractices Creates good image Survival of business Safeguarding consumers' rights Protecting employees and shareholders

Corporate Social Responsibility (CSR) What is it? Importance For and against

CSR DEFINITION Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce & their families as well as of the local community and society at large.

Quick Definition: “CSR is about how companies manage the business processes to produce an overall positive impact on society.”

CSR is about the Stakeholders not Stockholders alone.

Stakeholder: A person, group or organization that has interest or concern in an organization. For example: creditors, employees, government, owners (shareholders), customers & the community.

Importance: For the business: An easy way for building its brand, reputation and public profile. Attracts and retains employees and customers. Helps to cut business costs e.g recycling & conserving energy.

Importance: For the Community: Basic needs are met e.g food, water, healthcare. The environment is conserved. Economic empowerment.

How CSR is performed by firms Environmental CSR: focuses on eco-issues such as climate change. Community based CSR: businesses work with other organizations to improve the quality of life of the people in the local community. HR based CSR: projects that improve the wellbeing of the staff. Philanthropy: businesses donate money to a good cause, usually through a charity partner. give money or time or in kind to charity Integrative philanthropy—select beneficiaries aligned with company interests e.g. The Football Association endowing local youth clubs with funds However, Philanthropy will not enhance corporate reputation if a company fails to live up to its philanthropic image or Has consumers who perceive philanthropy to be manipulative

Arguments for & against CSR

For: SATISFIED EMPLOYEES SATISFIED CUSTOMERS RELEVANT RESEARCH POSITIVE PR COSTS REDUCTIONS MORE BUSINESS OPPORTUNITIES

Against: ROLE OF PROFIT: will a business engage in activities that have no regard to financial gain? COMPETITIVE DISADVANTAGE: if invest my resources to CSR and my competitors do not I will fall behind in the competition LOSS OF FOCUS LASTING IMPACT

Class Discussion