1. Business Ethics and Corporate Social Responsibility
Chapter 4

2. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Learning Objectives
Discuss what it means to practice good business ethics and highlight three factors that influence ethical decision-making
Define Corporate Social Responsibility (CSR) and explain the difference between philanthropy and strategic CSR
Distinguish among the four perspectives on corporate social responsibility
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3. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Learning Objectives
Discuss the role of business in protecting the natural environment and define sustainable development
Identify four fundamental consumer rights and the responsibility of business to respect them
Explain the responsibilities businesses have toward their employees
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4. Public Perceptions of Business Ethics
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5. What is Ethical Behavior?
Ethics
The rules or standards governing the conduct of a person or group
Transparency
The degree to which affected parties can observe relevant aspects of transactions or decisions
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6. What is Ethical Behavior? (cont.)
Competing fairly and honestly
Communicating truthfully
Being transparent
Not causing harm to others
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7. Factors Influencing Ethical Behavior
Cultural differences
Knowledge
Organizational behavior
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8. Organizational Behavior
Code of Ethics
A written statement that sets forth the principles that guide an organization’s decisions
Whistle-Blowing
The disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization
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9. AT & T Code of Ethics (excerpts)
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10. Ethical Decision Making
Ethical Lapse
A situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical
Ethical Dilemma
A situation in which more than one side of an issue can be supported with valid arguments
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11. Finding the Right Answer When Faced with an Ethical Dilemma
Make sure you frame the situation accurately, taking into account all relevant issues and questions.
Identify all parties who might be affected by your decision
Be as objective as possible
• Make sure you frame the situation accurately, taking into account all relevant issues and
questions.
• Identify all parties who might be affected by your decision, and consider the rights of
everyone involved.
• Be as objective as possible. Make sure you’re not making a decision just to protect your own
emotions, and don’t automatically assume you’re viewing a situation fairly and objectively.
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12. Finding the Right Answer When Faced with an Ethical Dilemma (cont.)
Don’t assume that other people think the way you do
Watch out for conflicts of interest
Conflict of interest
A situation in which competing loyalties can lead to ethical lapses, such as when a business decision may be influenced by the potential for personal gain
• Don’t assume that other people think the way you do. The time-honored “Golden Rule”
of treating others the way you want to be treated can cause problems when others don’t
want to be treated the same way you do.
• Watch out for conflicts of interest, situations in which competing loyalties can lead to
ethical lapses. For instance, if you are in charge of selecting an advertising agency to
handle your company’s next campaign, you would have an obvious conflict of interest if
your husband or wife worked for one of the agencies under consideration.
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13. Approaches to Resolving Ethical Dilemmas
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14. Corporate Social Responsibility
Corporate Social Responsibility (CSR)
The idea that business has obligations to society beyond the pursuit of profits
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15. The Relationship between Business and Society
Consumers in contemporary societies enjoy and expect a wide range of benefits, from education and health care to credit and products that are safe to use
Profit-seeking companies are the economic engine that powers modern society; they generate the vast majority of the money in a nation’s economy
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16. The Relationship between Business and Society (cont.)
Much of what we consider when assessing a society’s standard of living involves goods and services created by profit-seeking companies
Companies cannot hope to operate profitably without the many benefits provided by a stable, functioning society
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17. Philanthropy vs. Strategic CSR
The donation of money, time, goods, or services to charitable, humanitarian, or educational institutions
Strategic CSR
Social contributions that are directly aligned with a company’s overall business strategy
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18. Perspectives on Corporate Social Responsibility
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19. CSR: The Natural Environment
First, the creation, delivery, use, and disposal of products that society values virtually always generate pollution and consume natural resources
Second, “environmental” causes are oft en as much about human health and safety as they are about forests, rivers, and wildlife.
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20. CSR: The Natural Environment (cont.)
Third, many of these issues often require tough trade-offs, occasional sacrifice, disruptive change, and decision making in the face of uncertainty.
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21. Green and Clean? Where Our Electricity Comes From
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22. Efforts to Conserve Resources and Reduce Pollution
Cap and Trade
A type of environmental policy that gives companies some freedom in addressing the environmental impact of specified pollutants, by either reducing emissions to meet a designated cap or buying allowances to offset excess emissions
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23. Major Federal Environmental Legislation
Clean Air Act (1963)
Solid Waste Disposal Act (1965)
Clean Water Act (1972)
Toxic Substances Control Act (1976)
Nuclear Waste Policy Act (1982)
Oil Pollution Act (1990)
Clean Air Act (1963) Assists states and localities in formulating control programs; sets federal standards for auto-exhaust
emissions; sets maximum permissible pollution levels; authorizes nationwide air-pollution standards
and limitations to pollutant discharge; requires scrubbers in new coal-fired power plants; directs EPA to
prevent deterioration of air quality in clean areas; sets schedule and standards for cutting smog, acid
rain, hazardous factory fumes, and ozone-depleting chemicals
Solid Waste Disposal Act (1965) Authorizes research and assistance to state and local control programs; regulates treatment, storage,
transportation, and disposal of hazardous waste
National Environmental Policy Act (1969) Establishes a structure for coordinating all federal environmental programs
Resource Recovery Act (1970) Subsidizes pilot recycling plants; authorizes nationwide control programs
Clean Water Act (1972) Authorizes grants to states for water-pollution control; gives federal government limited authority to
correct pollution problems; authorizes EPA to set and enforce water-quality standards
Noise Control Act (1972) Requires EPA to set standards for major sources of noise and to advise Federal Aviation Administration
on standards for airplane noise
Endangered Species Act (1973) Establishes protections for endangered and threatened plants and animals
Safe Drinking Water Act (1974) Sets standards of drinking-water quality; requires municipal water systems to report on contaminant
levels; establishes funding to upgrade water systems
Toxic Substances Control Act (1976) Requires chemicals testing; authorizes EPA to restrict the use of harmful substances
Resource Conservation and Recovery Act
(1976)
Gives the EPA authority to control hazardous waste
Comprehensive Environmental Response,
Compensation, and Liability Act (1980)
Establishes the “Superfund” program to oversee the identification and cleanup of uncontrolled or
abandoned hazardous waste sites
Nuclear Waste Policy Act (1982) Establishes procedures for creating geologic repositories of radioactive waste
Marine Protection, Research, and
Sanctuaries Act (1988)
Prohibits ocean dumping that could threaten human health or the marine environment
Oil Pollution Act (1990) Sets up liability trust fund; extends operations for preventing and containing oil pollution
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24. The Trend Towards Sustainability
Sustainable Development
Operating business in a manner that minimizes pollution and resource depletion, ensuring that future generations will have vital resources
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CSR: Consumers
Consumerism
A movement that pressures businesses to consider consumer needs and interests
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CSR: Consumers (cont.)
The right to buy safe products – and to buy them safely
The right to be informed
The right to choose which products to buy
The right to be heard
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CSR: Employees
Discrimination
In a social and economic sense, denial of opportunities to individuals on the basis of some characteristic that has no bearing on their ability to perform in a job
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CSR: Employees (cont.)
Affirmative Action
Activities undertaken by businesses to recruit and promote members of groups whose economic progress has been hindered through either legal barriers or established practices
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29. Fatal Occupational Injuries
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30. Applying What You’ve Learned
Discuss what it means to practice good business ethics and highlight three factors that influence ethical decision-making
Define corporate social responsibility (CSR) and explain the difference between philanthropy and strategic CSR
Distinguish among the four perspectives on corporate social responsibility
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

31. Applying What You’ve Learned (cont.)
Discuss the role of business in protecting the natural environment and define sustainable development
Identify four fundamental consumer rights and the responsibility of business to respect them
Explain the responsibilities businesses have toward their employees
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