CHAPTER 22
CHAPTER 22
ETHICS AND SOCIAL RESPONSIBILITY IN BUSINESS
The syllabus states that students should know how socially responsible businesses behave at national and local level. It mentions code of ethics and the impact of business on the economy, on the community and on the local environment.
Social Responsibility.
Social Responsibility is the duty to take care of the people affected by a business’s activities.
Characteristics of a socially responsible business.
• Clear leadership
• Openness and transparency.
• Actively promotes ethical awareness (code of ethics).
• Information and training
• Good control.
• Social Audits.
• Environmental Audits
Social Audit.
This is an independent study of the social responsibility of a business to its stakeholders.
• Employees = pay, conditions, discrimination, bullying.
• Investors = honest dealings.
• Suppliers = pay on time, reasonable demands.
• Customers = price, quality, truthful advertising, handle complaints.
• Government = taxes paid, obey laws.
• Society = buy and employ locally. Don’t pollute.
If asked a question on the importance or advantages of behaving in a responsible fashion, you could refer to the stakeholders.
Ethics.
Definition: the moral rules that should guide people working in the business.
An ethical code is a written document setting out guidelines for employees to follow when making decisions.
Whistleblowing is encouraged and insisted on.
Businesses behave in an unethical way because:
• Greed.
• Fear of losing jobs and so cut costs.
• Apathy
• They are allowed get away with it in some places.
• Corporate culture
• Low ethical standards among individuals.
Environmental Responsibility.
Important environmental issues.
• Global warming.
• Ozone layer.
• Air, noise and water pollution.
• Diminishing resources.
• Waste disposal.
• Deforestation (which can result in desertification).
If asked a question about the importance or the advantages of being responsible to the environment, you could refer to the above and also mention Public Relations.
Environmental Audit.
This is an independent study of the effects of a business on the environment. It will ask the following questions:
• What is produced? Is it durable? Will it recycle? Can it be disposed of safely? Does it use natural and renewable materials?
• How is it produced? (Pollution, waste, suitable location).
• How is it marketed? (Packaging).
Be able to suggest what a company can do to minimise the damage from these 3 questions
Costs of a firm behaving responsibly.
• Set-up costs of audits, expertise, machinery etc.
• R and D costs
• Green Raw materials and packaging costly
• Training employees.
• May make it difficult to compete.
Benefits
• Customer loyalty
• Marketing opportunity
• Less waste
• Avoid carbon taxes
• Keep within law
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