1. Rotary Four-Way Test and Promoting
Social Justice through Good Business

2. Rotary Four-Way Test
• Of the things we think, say or do
• Is it the TRUTH?
• Is it FAIR to all concerned?
• Will it build GOODWILL and BETTER
FRIENDSHIPS?
• Will it be BENEFICIAL to all concerned?

3. TRUTH
There is something higher and more universal
than our own will or self-interest
Something we cannot change even if we want to
Implication: we are part of a large whole, our
lives are bound up in the lives of others

4. FAIR
There is imbalance and a disturbance if we take
out too much for ourselves or pay too much
attention to our own emotions and needs
Implication: reciprocity and equilibrium are
essential in life; extremism brings on negative
consequences

5. Goodwill/Better Friendships
What others think of us matters.
We can prosper more and be happier when we
have good relationships with people who like
and respect us.
Implication: Many assets are intangible

6. Beneficial to All
If we do live within a larger order, that which is
of benefit to more than ourselves improves
the order from which we derive our being and
our well-being
Implication: Providing Benefits to others
unselfishly elevates our sense of well-being
and goodness

7. GLOBAL CSR MOVEMENT
European Definition: “the responsibility of enterprises for their
impacts on society”
To fully meet their corporate social responsibility, enterprises should
have in place a process to integrate social, environmental, ethical,
human rights and consumer concerns into their business operations
and core strategy in close collaboration with their stakeholders, with
the aim of:
– maximising the creation of shared value for their
owners/shareholders and for their other stakeholders and society
at large;
– identifying, preventing and mitigating their possible adverse
impacts.

8. Care About Stakeholders
Four-Way Test can be implemented in business by
using it to take care of stakeholders
- Truth tells us that stakeholders are important
- Fairness includes interests of stakeholders
- Goodwill/better friendships is ethical guide to
good management of stakeholder relationships
- Beneficial to all – business practices are win/win,
not win/lose; shared value; avoid negative
externalities

9. Stakeholders
- Customers – moral compass for capitalism
- Employees – moral agents, not parts for a
machine
- Owners and Investors – fiduciary duties of loyalty
and due care
- Suppliers – friends, not foes
- Competitors – compete with quality and
innovation, not price
- Communities – enhance social capital to enhance
future profitability

10. Business
People
Politics,
Government, Law
and Regulation;
Sociology;
Psychology;
History;
Anthropology; Arts
and Literature;
Economics;
Sciences
Ethical Environment of Business

12. 12
What is the fair value of an investment
in business?
• Quality Income Stream
• High net present discounted value
• Good capitalization multiplier
Good Corporate Value
(Warren Buffet would buy it)

13. 13
Today where does most corporate value come
from?
Intangible Assets!

14. 14
S&P 500 Companies
80% of market value comes from:
Intangible Assets
Source: Monks/Lajoux, Corporate Valuation

15. 15
How do you manage risk?
-Each risk hides in a relationship
- customers
- investors
- government regulation
- employees
-Each relationship is an intangible asset of the
business (Assets can Appreciate or Depreciate).
-Lowering risk for each relationship enhances the
quality of intangible assets and increases business
valuation

16. 16
INPUTS
$;
sustainable
profits;
low beta;
maximum
value
Reputational
capital
Social capital
Finance
capital
Physical
capital
Human
capital
Conversion
processes
OUTPUT
Goods/services
Customers
Return on Capital
(preserve adequacy of capital inputs)
Theory of the Moral Firm
(self interest considered upon the whole)

17. 17
Capital Accounts
Capital Accounts are your defense against risk and your
resource base for competitive initiatives
Finance Capital
Physical Capital
Human Capital
Reputation Capital
Social Capital

18. 18
How Can you Measure
and, therefore, Manage
Stakeholder Relationships
And all a company’s
Capital Accounts?

19. 19
ASK QUESTIONS!
Assess the Quality of your
relationships

20. 20
Category 1.
Fundamental
Duties
2.
Customer
s
3.
Employee
s
4.
Owners
/
Investor
s
5.
Suppliers
/
Partners
6.
Competitors
7.
Communit
ies
1. Responsi-
bilities of
Business
Criterion
1.1
Criterion
1.2
Criterion
1.3
Criterion
1.4
Criterion
1.5
Criterion
1.6
Criterion
1.7
2. Economic
and Social
Impact of
Business
Criterion
2.1
Criterion
2.2
Criterion
2.3
Criterion
2.4
Criterion
2.5
Criterion
2.6
Criterion
2.7
3. Business
Behavior
Criterion
3.1
Criterion
3.2
Criterion
3.3
Criterion
3.4
Criterion
3.5
Criterion
3.6
Criterion
3.7
4. Respect for
Rules
Criterion
4.1
Criterion
4.2
Criterion
4.3
Criterion
4.4
Criterion
4.5
Criterion
4.6
Criterion
4.7
5. Support for
Multi- lateral
Trade
Criterion
5.1
Criterion
5.2
Criterion
5.3
Criterion
5.4
Criterion
5.5
Criterion
5.6
Criterion
5.7
6. Respect for
the
Environment
Criterion
6.1
Criterion
6.2
Criterion
6.3
Criterion
6.4
Criterion
6.5
Criterion
6.6
Criterion
6.7
7. Avoidance
of Illicit
Operations
Criterion
7.1
Criterion
7.2
Criterion
7.3
Criterion
7.4
Criterion
7.5
Criterion
7.6
Criterion
7.7
Arcturus Risk Assessment Instrument – Criteria
Matrix

21. 21
The Corporate Improvement Cycle
Performance Improvement
Performance
Feedback to
Management
Management Action
CRT Assessment