1 Current Topics in Ethics and Social Responsibility OS 386 September 19, 2002 Fisher

2 Agenda Discuss current issues, using corporate examples –Be ready to discuss your example In-class writing

3 Reminder: Written Case Study Due September 24 Select Case Study 3.2 OR 4.2 from your text –Do not respond to both –Articles are available on textbook website Answer questions printed in textbook No more than three double-spaced pages

4 Definition of social responsibility Moral obligation toward others who are affected by the organization –Stakeholders –Members of the community –Employees

5 How do organizations demonstrate social responsibility? Protecting the environment Promoting and donating money to causes Paying taxes Providing investors with honest information Supporting the community Providing employees with benefits

6 Protecting the Environment: General Motors and CERES The Coalition for Environmentally Responsible Economies (CERES) is environmental organization dedicated to “a sustainable future” GM is an endorsing company –pledged in 1994 to make continuous environmental improvements

7 How is GM doing? Increasing sales of SUVs, large trucks that violate these principles –Truck sales increased 14.6% in first half of 2002 (1.9 million) –Car sales decreased 6.6% (1.4 million) SUVs and large trucks are most profitable

8 Promoting Social Causes: Ben and Jerry’s Ben and Jerry’s promotes numerous social causes –Against bovine growth hormone –“Pint for pint” with American Red Cross –One Sweet Whirled to fight global warming –Free cone on Earth Day How will this evolve now that they are owned by Unilever?

9 Paying Taxes: Midland Cogeneration Venture MCV is energy producer in Midland, MI Company is protesting city tax assessment Previous company documents show agreement with assessed value –Petition to increase rates –Filings with SEC and IRS If MCV wins, citizen tax bills will increase 35%

10 Paying Taxes: The Bermuda “Tax Triangle” Companies can avoid US taxes on income earned overseas by reincorporating in Bermuda –Accenture –Fruit of the Loom –Stanley Works Public uprising caused Stanley to back out of plans

11 Providing Investors with Honest Information: Enron Annual reports, other news releases and publications are intended to provide info necessary to make informed choices Enron padded revenues, buried investments in risky, off-the-books “partnerships” –Prevented investors (including employees) from making accurate judgments about stock value

12 Supporting the Community: Target Rated #2 on Fortune’s list of socially responsible companies Gives back more than $2 million a week to communities Programs include: –School fundraising –Direct employee volunteering –Washington monument restoration

13 Providing Employees with Benefits Trend of moving from “defined benefit” pensions to “defined contribution” 401Ks –Allows employees greater flexibility, control –Lower cost for employers –Typically results in lower retirement income Health insurance –16 million uninsured workers in the US –Many small firms or low wage firms do not offer health insurance

14 In-class writing In your opinion, how much responsibility do organizations have towards the community? In what areas should they be responsible? Why?

15 For next class Topic: Motivation Read Chapter 5 Written case analysis is due at the beginning of class