Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability

Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability
National Differences Source: © Ozdel/Anadolu Agency/Getty Images Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability

Learning Objectives LO 5-1 Understand the ethical issues faced by international businesses. LO 5-2 Recognize an ethical dilemma. LO 5-3 Identify the causes of unethical behavior by managers. LO 5-4 Describe the different philosophical approaches to ethics. LO 5-5 Explain how managers can incorporate ethical considerations into their decision making.

Introduction Ethics - accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization Business ethics - accepted principles of right or wrong governing the conduct of business people Ethical strategy - a strategy, or course of action, that does not violate these accepted principles Ethics, corporate social responsibility, and sustainability are intertwined issues facing countries, companies, and societies. These "social" issues arise frequently in international business, often because business practices and regulations differ from nation to nation.

Ethics and International Business
The most common ethical issues in business involve Employment practices Human rights Environmental pollution Corruption Gardner: Also, transparency (accurate information to public and stockholders), product pricing, recognition of intellectual property, etc. LO 5-1 Understand the ethical issues faced by international businesses.

Employment Practices What practices should be used when work conditions are inferior in the host nation? Human Rights What is the responsibility of a foreign multinational when operating in a country where basic human rights are not respected? South Africa and apartheid The Sullivan principles adopted by GM Management Focus: Making Apple’s iPOD Summary This feature explores Apple’s experiences with employment practices at the Chinese factory that produces its iPOD. In 2006, two Chinese journalists reported that the working conditions at Hongfujin Precision Industries where Apple’s iPODs are produced, were substandard. According to the report, not only were workers at the plant poorly paid, but they were also forced to work overtime. Apple immediately responded to the allegations and audited the factory in question. However, managers at the factory filed a defamation lawsuit against the two journalists. Despite the fact that Apple’s audit did indeed show substandard working conditions at the factory, Hongfujin did not withdraw the lawsuit. Eventually the Reporters Without Borders group took up the case for the two reporters and the lawsuit was dropped. Suggested Discussion Questions 1. Should Apple be responsible for ensuring that its suppliers are safeguarding the basic rights and dignity of their employees? How can Apple be sure that its suppliers do not employ sweatshop labor? Discussion Points: Many students will probably agree that Apple should be responsible at least to some degree for ensuring that the factories where it sources its products are safe. Some students may suggest that to knowingly buy products from a company with substandard working conditions is a violation of basic human ethics. Other students however, may argue that Nike cannot force suppliers to adopt specific practices and policies toward labor. Students taking this perspective might further suggest that pushing American practices on Chinese companies is ethnocentric, and that for many Chinese the prospect of having a job, even in poor working conditions, is better than having no job at all. Many students may be surprised that Apple did not already have an audit policy in place prior to the accusations by the Chinese reporters, but will probably agree that the company handled the situation appropriately. 2. The allegations against Hongfujin Precision Industries were made by two Chinese reporters. Discuss the implications of this for other Chinese companies. Discussion Points: Most students will probably agree that the fact that the allegations against Hongfujin Precision Industries were made by Chinese reporters who work for China Business News, a state run newspaper, could have interesting implications for other companies. Some students will probably suggest that it should serve as a signal to other companies that poor working conditions are unacceptable, and that while in the past, it may have been possible to hide them, it is no longer the case. Other students may suggest that the allegations may force companies to rethink their production and look for new ways to increase productivity. Some students may note that the very fact that the report was published is startling in some regards, and that companies should anticipate further scrutiny. Lecture Note: Apple maintains that it requires its suppliers to practice responsible manufacturing. To learn more about Apple’s policies go to { Lecture Note: To extend this case, consider exploring Apple’s recent troubles with allegations of sweatshop conditions in supplier factories that have prompted worker suicide. Go to { and { for more details. Lecture Note: To explore Apple’s recent issues with suppliers, consider {

Leon Sullivan ( ) was a Baptist pastor And civil rights leader who was appointed to the Board of Directors of General Motors in 1971 – the first African-America n to serve on the board of a major U.S. corporation. In 1977, he developed a code of conduct for companies operating in South Africa to oppose apartheid without complete disinvestment. Non-segregation of the races in all eating, comfort, and work facilities. Equal and fair employment practices for all employees. Equal pay for equal work. Training programs to prepare blacks and other nonwhites for supervisory, administrative, clerical, and technical jobs. Increase the number of blacks and other nonwhites in management and supervisory positions. Improve the quality of life for blacks and other nonwhites in such areas as housing, transportation, school, recreation, and health facilities. Work to eliminate laws and customs that impede social, economic, and political justice. (added in 1984) Management Focus: Making Apple’s iPOD Summary This feature explores Apple’s experiences with employment practices at the Chinese factory that produces its iPOD. In 2006, two Chinese journalists reported that the working conditions at Hongfujin Precision Industries where Apple’s iPODs are produced, were substandard. According to the report, not only were workers at the plant poorly paid, but they were also forced to work overtime. Apple immediately responded to the allegations and audited the factory in question. However, managers at the factory filed a defamation lawsuit against the two journalists. Despite the fact that Apple’s audit did indeed show substandard working conditions at the factory, Hongfujin did not withdraw the lawsuit. Eventually the Reporters Without Borders group took up the case for the two reporters and the lawsuit was dropped. Suggested Discussion Questions 1. Should Apple be responsible for ensuring that its suppliers are safeguarding the basic rights and dignity of their employees? How can Apple be sure that its suppliers do not employ sweatshop labor? Discussion Points: Many students will probably agree that Apple should be responsible at least to some degree for ensuring that the factories where it sources its products are safe. Some students may suggest that to knowingly buy products from a company with substandard working conditions is a violation of basic human ethics. Other students however, may argue that Nike cannot force suppliers to adopt specific practices and policies toward labor. Students taking this perspective might further suggest that pushing American practices on Chinese companies is ethnocentric, and that for many Chinese the prospect of having a job, even in poor working conditions, is better than having no job at all. Many students may be surprised that Apple did not already have an audit policy in place prior to the accusations by the Chinese reporters, but will probably agree that the company handled the situation appropriately. 2. The allegations against Hongfujin Precision Industries were made by two Chinese reporters. Discuss the implications of this for other Chinese companies. Discussion Points: Most students will probably agree that the fact that the allegations against Hongfujin Precision Industries were made by Chinese reporters who work for China Business News, a state run newspaper, could have interesting implications for other companies. Some students will probably suggest that it should serve as a signal to other companies that poor working conditions are unacceptable, and that while in the past, it may have been possible to hide them, it is no longer the case. Other students may suggest that the allegations may force companies to rethink their production and look for new ways to increase productivity. Some students may note that the very fact that the report was published is startling in some regards, and that companies should anticipate further scrutiny. Lecture Note: Apple maintains that it requires its suppliers to practice responsible manufacturing. To learn more about Apple’s policies go to { Lecture Note: To extend this case, consider exploring Apple’s recent troubles with allegations of sweatshop conditions in supplier factories that have prompted worker suicide. Go to { and { for more details. Lecture Note: To explore Apple’s recent issues with suppliers, consider {

In 1999, six years after the end of apartheid, the Rev. Leon Sullivan and U.N. Secretary General Kofi Annan unveiled the new "Global Sullivan Principles“ Support for universal human rights. Equal opportunity for our employees at all levels of the company. Respect employees’ voluntary freedom of association. Compensate employees to enable them to meet their basic needs and improve their skill and capability to raise their social and economic opportunities. Provide a safe and healthy workplace and promote sustainable development. Promote fair competition including respect for intellectual and other property rights, and not offer, pay or accept bribes. Work with governments and communities to improve the quality of life in those communities. Promote the application of these principles with business partners. Management Focus: Making Apple’s iPOD Summary This feature explores Apple’s experiences with employment practices at the Chinese factory that produces its iPOD. In 2006, two Chinese journalists reported that the working conditions at Hongfujin Precision Industries where Apple’s iPODs are produced, were substandard. According to the report, not only were workers at the plant poorly paid, but they were also forced to work overtime. Apple immediately responded to the allegations and audited the factory in question. However, managers at the factory filed a defamation lawsuit against the two journalists. Despite the fact that Apple’s audit did indeed show substandard working conditions at the factory, Hongfujin did not withdraw the lawsuit. Eventually the Reporters Without Borders group took up the case for the two reporters and the lawsuit was dropped. Suggested Discussion Questions 1. Should Apple be responsible for ensuring that its suppliers are safeguarding the basic rights and dignity of their employees? How can Apple be sure that its suppliers do not employ sweatshop labor? Discussion Points: Many students will probably agree that Apple should be responsible at least to some degree for ensuring that the factories where it sources its products are safe. Some students may suggest that to knowingly buy products from a company with substandard working conditions is a violation of basic human ethics. Other students however, may argue that Nike cannot force suppliers to adopt specific practices and policies toward labor. Students taking this perspective might further suggest that pushing American practices on Chinese companies is ethnocentric, and that for many Chinese the prospect of having a job, even in poor working conditions, is better than having no job at all. Many students may be surprised that Apple did not already have an audit policy in place prior to the accusations by the Chinese reporters, but will probably agree that the company handled the situation appropriately. 2. The allegations against Hongfujin Precision Industries were made by two Chinese reporters. Discuss the implications of this for other Chinese companies. Discussion Points: Most students will probably agree that the fact that the allegations against Hongfujin Precision Industries were made by Chinese reporters who work for China Business News, a state run newspaper, could have interesting implications for other companies. Some students will probably suggest that it should serve as a signal to other companies that poor working conditions are unacceptable, and that while in the past, it may have been possible to hide them, it is no longer the case. Other students may suggest that the allegations may force companies to rethink their production and look for new ways to increase productivity. Some students may note that the very fact that the report was published is startling in some regards, and that companies should anticipate further scrutiny. Lecture Note: Apple maintains that it requires its suppliers to practice responsible manufacturing. To learn more about Apple’s policies go to { Lecture Note: To extend this case, consider exploring Apple’s recent troubles with allegations of sweatshop conditions in supplier factories that have prompted worker suicide. Go to { and { for more details. Lecture Note: To explore Apple’s recent issues with suppliers, consider {

Environmental Pollution Should a multinational feel free to pollute in a developing nation if doing so does not violate laws? Tragedy of the commons Corruption Is it ethical to make payments to government officials to secure business? Foreign Corrupt Practices Act Convention on Combating Bribery of Foreign Public Officials in International Business Transactions Facilitating payments/speed money excluded The atmosphere and oceans can be viewed as a global commons from which everyone benefits but for which no one is specifically responsible. In such cases, a phenomenon known as the tragedy of the commons becomes applicable. The tragedy of the commons occurs when a resource held in common by all but owned by no one is overused by individuals, resulting in its degradation. Corporations can contribute to the global tragedy of the commons by moving production to locations where they are free to pump pollutants into the atmosphere or dump them in oceans or rivers, thereby harming these valuable global commons. The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act (FCPA) in the United States, discussed in Chapter 2. The act outlawed the paying of bribes to foreign government officials to gain business. In 1997, the trade and finance ministers from the member states of the Organisation for Economic Co-operation and Development (OECD) followed the U.S. lead and adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.11 The convention, which went into force in 1999, obliges member states and other signatories to make the bribery of foreign public officials a criminal offense. The convention excludes facilitating payments made to expedite routine government action from the convention.

Foreign Corrupt Practices Act (Gardner) Signed into law by President Jimmy Carter in 1977 after the SEC found that over 400 U.S. companies had made illegal payments in excess of $300 million to foreign government officials. Makes it unlawful for a U.S. person to make a payment to a foreign official for the purpose of obtaining or retaining business. Violations are punishable with imprisonment. Accounting provisions require publically-traded companies to maintain and adhere to internal policies that manage risk and ensure that accurate financial records are maintained. In a July 2017 settlement, Halliburton agreed pay a $29.2 million fine for circumventing its own internal accounting controls in an effort to gain business in Angola. No illegal payment to a foreign official was ever proved. Speculation in the press suggests that Paul Manafort, President Trump’s former campaign chief, may be charged under the FCPA. The atmosphere and oceans can be viewed as a global commons from which everyone benefits but for which no one is specifically responsible. In such cases, a phenomenon known as the tragedy of the commons becomes applicable. The tragedy of the commons occurs when a resource held in common by all but owned by no one is overused by individuals, resulting in its degradation. Corporations can contribute to the global tragedy of the commons by moving production to locations where they are free to pump pollutants into the atmosphere or dump them in oceans or rivers, thereby harming these valuable global commons. The Lockheed case was the impetus for the 1977 passage of the Foreign Corrupt Practices Act (FCPA) in the United States, discussed in Chapter 2. The act outlawed the paying of bribes to foreign government officials to gain business. In 1997, the trade and finance ministers from the member states of the Organisation for Economic Co-operation and Development (OECD) followed the U.S. lead and adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.11 The convention, which went into force in 1999, obliges member states and other signatories to make the bribery of foreign public officials a criminal offense. The convention excludes facilitating payments made to expedite routine government action from the convention.

Corruption continued Some argue that paying bribes might be the price of doing a greater good Where preexisting political structures distort or limit the workings of the market mechanism, corruption -marketeering, smuggling, and side payments to government bureaucrats to “speed up” approval for business investments - may actually enhance welfare Others argue that corruption reduces the returns on business investment and leads to low economic growth

Management Focus: Making Apple’s iPOD
Summary This feature explores Apple’s experiences with employment practices at the Chinese factory that produces its iPOD. In 2006, two Chinese journalists reported that the working conditions at Hongfujin Precision Industries where Apple’s iPODs are produced, were substandard. According to the report, not only were workers at the plant poorly paid, but they were also forced to work overtime. Apple immediately responded to the allegations and audited the factory in question. However, managers at the factory filed a defamation lawsuit against the two journalists. Despite the fact that Apple’s audit did indeed show substandard working conditions at the factory, Hongfujin did not withdraw the lawsuit. Eventually the Reporters Without Borders group took up the case for the two reporters and the lawsuit was dropped. Suggested Discussion Questions 1. Should Apple be responsible for ensuring that its suppliers are safeguarding the basic rights and dignity of their employees? How can Apple be sure that its suppliers do not employ sweatshop labor? Discussion Points: Many students will probably agree that Apple should be responsible at least to some degree for ensuring that the factories where it sources its products are safe. Some students may suggest that to knowingly buy products from a company with substandard working conditions is a violation of basic human ethics. Other students however, may argue that Nike cannot force suppliers to adopt specific practices and policies toward labor. Students taking this perspective might further suggest that pushing American practices on Chinese companies is ethnocentric, and that for many Chinese the prospect of having a job, even in poor working conditions, is better than having no job at all. Many students may be surprised that Apple did not already have an audit policy in place prior to the accusations by the Chinese reporters, but will probably agree that the company handled the situation appropriately. 2. The allegations against Hongfujin Precision Industries were made by two Chinese reporters. Discuss the implications of this for other Chinese companies. Discussion Points: Most students will probably agree that the fact that the allegations against Hongfujin Precision Industries were made by Chinese reporters who work for China Business News, a state run newspaper, could have interesting implications for other companies. Some students will probably suggest that it should serve as a signal to other companies that poor working conditions are unacceptable, and that while in the past, it may have been possible to hide them, it is no longer the case. Other students may suggest that the allegations may force companies to rethink their production and look for new ways to increase productivity. Some students may note that the very fact that the report was published is startling in some regards, and that companies should anticipate further scrutiny. Lecture Note: Apple maintains that it requires its suppliers to practice responsible manufacturing. To learn more about Apple’s policies go to { Lecture Note: To extend this case, consider exploring Apple’s recent troubles with allegations of sweatshop conditions in supplier factories that have prompted worker suicide. Go to { and { for more details. Lecture Note: To explore Apple’s recent issues with suppliers, consider {

Ethical Dilemmas Managers often face situations where the appropriate course of action is not clear Ethical dilemmas - situations in which none of the available alternatives seems ethically acceptable Exist because real world decisions are complex, difficult to frame, and involve various consequences that are difficult to quantify LO 5-2 Recognize an ethical dilemma.

Figure 5.1 Determinants of Ethical Behavior

The Roots of Unethical Behavior 2 of 4
Personal Ethics Business ethics reflect personal ethics Expatriates may face pressure to violate their personal ethics They are away from their ordinary social context and supporting culture They are psychologically and geographically distant from the parent company Decision-Making Processes Business people may behave unethically because they fail to ask the relevant questions Decisions made based on economic logic Personal ethics refer to the generally accepted principles of right and wrong governing the conduct of individuals.

Organizational Culture Unethical behavior may exist in firms with an organizational culture that does not emphasize business ethics Values and norms shape the culture of a firm, and that culture influences decision making Unrealistic Performance Goals Pressure from parent company to meet goals that are unrealistic and can only be attained by acting in an unethical manner

Leadership Employees often take cues from business leaders Actions speak louder than words Societal Culture Ethical policies differ by country MNEs located in countries where individualism and uncertainty avoidance are strong are more likely to emphasize ethical behavior MNEs located in countries with high masculinity and high power distance are less likely to promote ethical behavior

Philosophical Approaches to Ethics 2 of 7
Straw Men Friedman doctrine - the only social responsibility of business is to increase profits, so long as the company stays within the rules of law Companies should do only what is mandated by law and what is required to run a business efficiently Cultural relativism - ethics are culturally determined and firms should adopt the ethics of the cultures in which they operate “When in Rome, do as the Romans do” Straw men approaches are raised by business ethics scholars primarily for the purpose of demonstrating that they offer inappropriate guidelines for ethical decision making in a multinational enterprise. Critics charge that Friedman’s arguments break down under examination. This is particularly true in international business, where the “rules of the game” are not well established and differ from country to county.

Straw Men continued Righteous Moralist – an MNE’s home country standards of ethics are the appropriate ones for companies to follow in foreign countries Approach is common among managers from developed countries Naïve Immoralist - if a manager of an MNE sees that firms from other nations are not following ethical norms in a host nation, that manager should not either Actions are ethically justified if everyone else is doing the same thing Ignores the fact that MNCs sometimes have the capacity to change employment practices and other behaviors in host countries.

Utilitarian and Kantian Ethics Utilitarian approach - the moral worth of actions or practices is determined by their consequences Actions have multiple consequences, some good, some not Actions are desirable if they lead to the best possible balance of good consequences over bad consequences Kantian ethics – Immanuel Kant argued that people should be treated as ends and never purely as means to the end of others People have dignity and need to be respected, they are not machines Gardner – Kant also said that virtuous/immoral acts are often an end in themselves; not merely a means to some other end. Murder, for example, is immoral in itself, even if the murder would somehow contribute to the “greater good” The utilitarian philosophy does have some serious drawbacks as an approach to business ethics. One problem is measuring the benefits, costs, and risks of a course of action. The second problem with utilitarianism is that the philosophy omits the consideration of justice. Although contemporary moral philosophers tend to view Kant’s ethical philosophy as incomplete—for example, his system has no place for moral emotions or sentiments such as sympathy or caring—the notion that people should be respected and treated with dignity resonates in the modern world.

Rights theories Human beings have fundamental rights and privileges that transcend national boundaries and culture Form the basis for the moral compass that managers should navigate by when making decisions that have an ethical component The idea that some fundamental rights transcend national borders and cultures was the underlying motivation for the UN’s Universal Declaration of Human Rights The UN’s Universal Declaration of Human Rights specifies the basic principles that should always be adhered to irrespective of the culture in which one is doing business. It is important to note that along with rights come obligations. Because we have the right to free speech, we are also obligated to make sure that we respect the free speech of others

Justice theories Focus on the attainment of a just distribution (one that is considered fair and equitable) of economic goods and services John Rawls - all economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage Impartiality is guaranteed by the veil of ignorance - everyone is imagined to be ignorant of all his or her particular characteristics

Bob Baird (Baylor Philosophy) in Waco Trib, 8/31/2017 Given the role of luck in life, what would a just society look like? That is what Rawls attempted to describe in his theory of justice by introducing two key ideas: the original position and the veil of ignorance. Imagine we are in an original position, assigned the task of deciding on the basic structure of society, of deciding on the rules that govern us. Society, he believes, would be just if we decided on its structure from behind a veil of ignorance, not knowing the place we ourselves would occupy in that society. We should choose as if we did not know if we were black, white, Asian or of such a mix nobody could tell. We should choose as if we did not know if we were male or female, straight or gay, healthy or sick. We should choose as if we did not know if we were Christian, Jew, Muslim, agnostic or atheist; choose as if we did not know whether we were wealthy or impoverished, naturally optimistic or prone to depression.

Justice theories continued Under Raul’s veil of ignorance would be a system where people would agree that each person is permitted the maximum of basic liberty compatible with similar liberty for others Once equal liberty is assured, inequality in basic social goods are to be allowed only if they benefit everyone The difference principle suggests that inequalities are justified if they benefit the position of the least advantaged person The first principle is that each person be permitted the maximum amount of basic liberty compatible with a similar liberty for others. Rawls takes these to be political liberty (e.g., the right to vote), freedom of speech and assembly, liberty of conscience and freedom of thought, the freedom and right to hold personal property, and freedom from arbitrary arrest and seizure. The second principle is that once equal basic liberty is ensured, inequality in basic social goods—such as income and wealth distribution, and opportunities—is to be allowed only if such inequalities benefit everyone. Rawls accepts that inequalities can be just if the system that produces inequalities is to the advantage of everyone.

Focus on Managerial Implications 2 of 8
Hiring and Promotion Businesses should strive to identify and hire people with a strong sense of personal ethics Prospective employees should find out as much as they can about the ethical climate in an organization Organizational Culture and Leadership Articulate values that emphasize ethical behavior, repeatedly emphasize their importance, provide incentives and rewards Code of ethics a code of ethics, which is a formal statement of the ethical priorities a business adheres to

Decision-Making Processes If a manager can answer “yes” to the following questions, the decision is probably ethically acceptable Does my decision fall within the accepted values of standards that typically apply in the organizational environment? Am I willing to see the decision communicated to all stakeholders affected by it? Would the people with whom I have significant personal relationships approve of the decision? A moral compass can help determine whether a decision is ethical.

Decision-Making Processes continued A five-step process can also help managers think through ethical issues How would a decision affect stakeholders? Internal stakeholders - people who work for or who own the business such as employees, the board of directors, and stockholders External stakeholders - the individuals or groups who have some claim on a firm such as customers, suppliers, and unions A moral compass can help determine whether a decision is ethical.

Decision-Making Processes continued Determine if a proposed decision violates the fundamental rights of any stakeholders Establish moral intent Engage in ethical behavior Audit decisions - reviewing them to make sure that they were consistent with ethical principles Moral intent refers to the business must resolve to place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated.

Ethics Officers To encourage ethical behavior in a business, a number of firms now have ethics officers Ethics officers ensure Employees are trained to be ethically aware Ethical considerations enter decision-making The company’s code of ethics is followed Moral courage Managers must be able to walk away from decisions that are profitable but unethical

Corporate social responsibility There should be a presumption in favor of decisions that have both good economic and good social consequences

Sustainability Sustainable strategies – strategies that not only help the MNC make good profits, but that also do so without harming the environment while simultaneously ensuring that the company operates in a socially responsible manner with regard to its stakeholders Sustainable strategies can be good for shareholders, the environment, local communities, employees, and customers Gardner – From Tech Crunch -- “Levi’s is … pushing the boundaries of environmental stewardship by sharing learnings with competitors. When Levi’s discovered a method to reduce the water used in garment finishing processes by 96%, saving over 1 billion gallons of water since 2011, the company not only open sourced their innovation but provided their entire staff with water conservation training.” Management Focus: Corporate Social Responsibility at Stora Enso Summary This feature explores Stora Enso’s sustainability strategy. Stora Enso, a Finnish pulp and paper manufacturer, has made sustainability a central focus for the organization. The company clearly outlines on its website and company reports its commitment to ensuring that it acts in a socially responsible, environmentally friendly way. All decisions at Stora Enso are guided by this commitment. 1. Why is a sustainable strategy so important to Stora Enso? What message does its publically stated commitment to sustainability send? Consider your response from the perspective of various stakeholders including investors and local communities. Discussion Points: Stora Enso has clearly and publically stated its policy toward sustainability and reinforces this commitment by defining how it measures success in achieving a sustainable strategy. Most students will probably suggest that by being so open about how decisions are made at the company, Stora Enso is not only demonstrating its true dedication to sustainability, it is also letting shareholders and communities know what to expect. Students may note for example, that investors should recognize that Stora Enso may not always choose the lowest cost approach to doing business because doing so could compromise its commitment to preserving the environment. Similarly, communities may be more welcoming to the company because its policies on how it will operate are clearly stated, and emphasize good corporate citizenship. 2. As an employee of Stora Enso, what does its commitment to a sustainable strategy mean to you? How does Stora Enso’s strategy affect its position in the global marketplace? Discussion Points: Many students will probably agree that Stora Enso’s commitment to a sustainable strategy indicates that the company will not knowingly pursue strategies that could negatively impact its employees. As such, it is likely to attract well-qualified employees and create a loyal workforce. Students will probably recognize that a strong workforce will be beneficial in the global marketplace, as will Stora Enso’s environmentally friendly approach to doing business. Some students may also point out that as more local governments signal their commitment to protecting the environment through policy decisions, companies like Stora Enso stand to benefit. Teaching Tip: To learn more about Stora Enso go to { Lecture Note: To extend this discussion, consider {

UNCTAD Sustainable Development Goals
United Nations Conference on Trade and Development established in 1964 Ensuring countries’ domestic policies and international actions are mutually supportive to sustainable development September 2015: many countries adopted 17 “sustainable development goals” An opportunity to bring together countries, companies, and societies of all levels in an effort to improve lives everywhere The 17 SDGs include: (1) no poverty, (2) zero hunger, (3) good health and well-being, (4) quality education, (5) gender equality, (6) clean water and sanitation, (7) affordable and clean energy, (8) decent work and economic growth, (9) industry, innovation and infrastructure, (10) reduced inequalities, (11) sustainable cities and communities, (12) responsible consumption and production, (13) climate action, (14) life below water, (15) life on land, (16) peace, justice and strong institutions, and (17) partnerships for the goals.

UNCTAD Sustainable Development Goals
The 17 SDGs include: (1) no poverty, (2) zero hunger, (3) good health and well-being, (4) quality education, (5) gender equality, (6) clean water and sanitation, (7) affordable and clean energy, (8) decent work and economic growth, (9) industry, innovation and infrastructure, (10) reduced inequalities, (11) sustainable cities and communities, (12) responsible consumption and production, (13) climate action, (14) life below water, (15) life on land, (16) peace, justice and strong institutions, and (17) partnerships for the goals. The 17 SDGs include: (1) no poverty, (2) zero hunger, (3) good health and well-being, (4) quality education, (5) gender equality, (6) clean water and sanitation, (7) affordable and clean energy, (8) decent work and economic growth, (9) industry, innovation and infrastructure, (10) reduced inequalities, (11) sustainable cities and communities, (12) responsible consumption and production, (13) climate action, (14) life below water, (15) life on land, (16) peace, justice and strong institutions, and (17) partnerships for the goals.

Summary In this chapter we have
Explored the ethical issues faced by international businesses. Recognized what is an ethical dilemma. Identified the causes of unethical behavior by managers. Described the different philosophical approaches to ethics. Explained how managers can incorporate ethical considerations into their decision making. Management Focus: Sustainability at Umicore Summary Umicore, a Belgian materials technology company, has been described as being the most sustainable multinational company on the planet. Umicore has achieved this distinction by clearly making sustainability a central focus across all areas of its business. 1. How can strategy at Umicore best be described – as a zero sum game or a positive-sum game? Support your answer. Discussion Points: Most students will probably suggest that Umicore is pursuing a strategy that can best be described as a positive-sum game. Umicore is committed to ensuring it is generating strong returns for its shareholders while at the same time protecting the environment and being a good corporate citizen. Umicore also emphasizes employee safety and employee development. 2. Reflect on strategy at Umicore. Consider why Umicore has chosen to pursue a sustainability strategy and why other companies in the industry may not share its passion for doing what’s good for the planet. In your opinion, should all companies be required to take an approach similar to the one that Umicore has chosen? What is the ethical responsibility of companies? Discussion Points: This question should generate considerable discussion among students. Students may wonder why, given that companies like Umicore have successfully found a way to pursue a sustainable strategy, other companies either have not been able to follow a similar model or have chosen not to. Some students may attribute the difference to leadership. Students taking this perspective may note for example that at Umicore, the commitment to a sustainable strategy clearly comes from the top and is then diffused throughout the organization. Other students may comment on pressure from investors that may push companies into decisions that generate greater profits, but may not be beneficial for the environment. Teaching Tip: To learn more about Umicore, go to {

Videos Anonymous, Inc: (first segment) Jeremy Grantham, interviewed by Charlie Rose Inside Job: Start at 12:12 on YouTube or 10:21 on DVD Management Focus: Sustainability at Umicore Summary Umicore, a Belgian materials technology company, has been described as being the most sustainable multinational company on the planet. Umicore has achieved this distinction by clearly making sustainability a central focus across all areas of its business. 1. How can strategy at Umicore best be described – as a zero sum game or a positive-sum game? Support your answer. Discussion Points: Most students will probably suggest that Umicore is pursuing a strategy that can best be described as a positive-sum game. Umicore is committed to ensuring it is generating strong returns for its shareholders while at the same time protecting the environment and being a good corporate citizen. Umicore also emphasizes employee safety and employee development. 2. Reflect on strategy at Umicore. Consider why Umicore has chosen to pursue a sustainability strategy and why other companies in the industry may not share its passion for doing what’s good for the planet. In your opinion, should all companies be required to take an approach similar to the one that Umicore has chosen? What is the ethical responsibility of companies? Discussion Points: This question should generate considerable discussion among students. Students may wonder why, given that companies like Umicore have successfully found a way to pursue a sustainable strategy, other companies either have not been able to follow a similar model or have chosen not to. Some students may attribute the difference to leadership. Students taking this perspective may note for example that at Umicore, the commitment to a sustainable strategy clearly comes from the top and is then diffused throughout the organization. Other students may comment on pressure from investors that may push companies into decisions that generate greater profits, but may not be beneficial for the environment. Teaching Tip: To learn more about Umicore, go to {

Chapter 5: Ethics, Corporate Social Responsibility, and Sustainability

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