Business Ethics and Corporate Social Responsibility Chapter 4

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Public Perceptions of Business Ethics Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

What is Ethical Behavior? (cont.) Competing fairly and honestly Communicating truthfully Being transparent Not causing harm to others Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Factors Influencing Ethical Behavior Cultural differences Knowledge Organizational behavior Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

AT & T Code of Ethics (excerpts) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Approaches to Resolving Ethical Dilemmas Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Corporate Social Responsibility Corporate Social Responsibility (CSR) The idea that business has obligations to society beyond the pursuit of profits Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Perspectives on Corporate Social Responsibility Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Green and Clean? Where Our Electricity Comes From Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall CSR: Consumers Consumerism A movement that pressures businesses to consider consumer needs and interests Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Fatal Occupational Injuries Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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

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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

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