Corporate Ethics and Social Responsibility


Published on

Is the consensusally accepted standards of behavior for an occupation, trade, or profession

Is the precepts of personal behavior based on religious or philosophical grounds
- Formal codes that permit or forbid certain behavior
- May of may not enforce Ethics or morality

Code of Ethics:
Specifies how an organization expects its employees to behave while on the job

Published in: Business, Economy & Finance
No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Corporate Ethics and Social Responsibility

  1. 1. Ethics and Social Responsibility: Corporate Ethics Lecture by: Djadja.Sardjana@gmail.com1-Apr-11 IMT MM Corporate Ethic 1
  2. 2. Contents Introduction Sustainability Philosophy Sustainability Effort Sustainability Case Study1-Apr-11 IMT MM Corporate Ethic 2
  3. 3. Corporate Ethics: Introduction Lecture by: THE CORPORATION [4_23]-Friedman- Externality-2m101-Apr-11 IMT MM Corporate Ethic 3
  4. 4. Guidelines for Ethical BehaviorEthics Is the consensually accepted standards of behavior for an occupation, trade, or profession Vs.Morality Is the precepts of personal behavior based on religious or philosophical grounds Vs.Law Formal codes that permit or forbid certain behavior May of may not enforce Ethics or morality1-Apr-11 IMT MM Corporate Ethic 4
  5. 5. Encouraging Ethical Behavior Code of Ethics: Specifies how an organization expects its employees to behave while on the job Reasons for Unethical Behavior: Moral Relativism Morality is relative to some personal, social or cultural standard and that there is no method for deciding whether one decision is better1-Apr-11 IMT MM Corporate Ethic 5
  6. 6. Approaches to Ethical Behavior Utilitarian Actions and plans should be judged by consequences Individual Rights People have fundamental rights to be respected Justice Decision makes need to be equitable, fair, and impartial Therefore, ethical problems should be solved by asking 3 questions: Does it optimize the satisfaction of all stakeholders? Does it respect the rights of individuals involved? Is it consistent with the canons of justice?1-Apr-11 IMT MM Corporate Ethic 6
  7. 7. Strategy and Ethics•The purpose of business ethics – To provide the tools for dealing with moral complexity in strategic decisions•Shaping the organization’s ethical climate – Emphasizing the importance of strong ethical values by top management – Including the values in the organization’s mission statement A model of ethical decision making1-Apr-11 IMT MM Corporate Ethic 7
  8. 8. Social Responsibility Private corporation has responsibilities to society that extend beyond making a profit Friedman’s Traditional View “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits ”1-Apr-11 IMT MM Corporate Ethic 8
  9. 9. Carroll’s Four Responsibilities1-Apr-11 IMT MM Corporate Ethic 9
  10. 10. Potential Benefits of Social Responsibility Environmental concerns may enable the firm to charge premium prices and gain brand loyalty (Ben & Jerry’s) Trustworthiness may help generate enduring relationships with suppliers and distributors without spending time and money policing contracts (Maytag) Can attract outstanding employees who prefer working for a responsible firm (P&G) More likely to attract capital from investors who view reputable companies as desirable (Rubbermaid)1-Apr-11 IMT MM Corporate Ethic 10
  11. 11. Corporate Ethics: Sustainability Lecture by: Jutaan Ulat Bulu Serang Tujuh Desa-2m1-Apr-11 IMT MM Corporate Ethic 11
  12. 12. History of Sustainability 1962: Rachel Carson publishes “Silent Spring” 1970: First Earth Day celebration – April 22nd Nixon establishes EPA • Fueled by industrialization and overpopulation impacts 1972: First UN conference on the Human Environment in Stockholm, Sweden1-Apr-11 IMT MM Corporate Ethic 12
  13. 13. History of Sustainability 1983 – UN establishes World Commission on Environment and Development Purpose: examine world’s critical environment and development problems and formulate solutions 1987: Brundtland Commission Report 3 components of Sustainable Development: Environmental protection, Economic growth, and Social equity Defined Sustainable Development as… “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”1-Apr-11 IMT MM Corporate Ethic 13
  14. 14. History of Sustainability 1992: Rio Earth Summit Over 178 governments adopted… • Agenda 21: a global blueprint and plan of action for sustainable development in the 21st century • The Rio Declaration on Environment and Development – 27 principles that express the rights and responsibilities of nations as they pursue human development and well-being • The Forest Principles – A guide for the management, conservation, and sustainable development of all types of forests 2002: Third UN conference on Environment and Development, Johannesburg, South Africa1-Apr-11 IMT MM Corporate Ethic 14
  15. 15. The Triple Bottom Line People, planet, and profits Equity, environment, economy TBL coined by John Elkington of “SustainAbility” (UK) in 1995 Cannibals With Forks: The Triple Bottom Line of 21st Century Business (1997) The Chrysalis Economy: How Citizen CEOs and their Corporations Can Fuse Values and Value Creation (2001) www.sustainability.com1-Apr-11 IMT MM Corporate Ethic 15
  16. 16. Metafora Elkington (1) Salah satu konsep strategi lingkungan korporasi (corporate environmental strategy) yang menarik adalah gagasan John Elkington, pakar CD dan pendiri lembaga SustainAbility yang bermarkas di London dan New York. Elkington (2001, 2002) mengelompokkan korporasi berdasarkan kesamaan sifatnya dengan empat jenis serangga yang memiliki karakter berbeda-beda, yaitu ULAT (CATERPILLAR), BELALANG (LOCUST), KUPU-KUPU (BUTTERFLY), DAN LEBAH MADU (HONEYBEE).1-Apr-11 IMT MM Corporate Ethic 16
  17. 17. Metafora Elkington (2) Elkington mengajak Serangga secara para pelaku dunia khusus dipilih sebagai Ssudah eksis di Bumi usaha untuk belajar "role model" karena sejak 400 juta tahun dari kehidupan alam jenis makhluk hidup ini yang lalu (bandingkan yang telah telah menunjukkan dengan manusia yang membuktikan keberlanjutannya di "baru" sejuta tahun). keberlanjutannya (sustainability). Bumi,1-Apr-11 IMT MM Corporate Ethic 17
  18. 18. ULAT (CATERPILLAR) Elkington (2001, Seperti ulat,2002) menyatakan sistem ekonomi- bahwa ekonomi yang didominasi dunia adalah korporasi "ulat"- "ekonomi ulat" melahap kapital (caterpillar alam dan economy) sosial.1-Apr-11 IMT MM Corporate Ethic 18
  19. 19. BELALANG (LOCUST) Korporasi "belalang" (corporate locusts) dan korporasi "ulat" (corporate caterpillar) merupakan korporasi yang bersifat merusak (degeneratif). Melampaui daya Korporasi "belalang" dukung sistem umumnya memiliki ekologi, sosial, dan model bisnis yang ekonomi, serta secara tidak sustainable, kolektif menghasilkan berkecenderungan dampak regional dan untuk meruyak (to bahkan global. swarm)1-Apr-11 IMT MM Corporate Ethic 19
  20. 20. KUPU-KUPU (BUTTERFLY)Korporasi "kupu-kupu" Korporasi "kupu-kupu"(corporate butterflies) memiliki model bisnis dan korporasi "lebah sustainable tetapi madu“ merupakan berisiko menyimpangkorporasi yang bersifat seiring pertumbuhan menumbuhkan dan ekspansi. (regeneratif).1-Apr-11 IMT MM Corporate Ethic 20
  21. 21. Lebah Madu (Honey Bee) Korporasi jenis ini memiliki jaringan kerja sama (symbiotic) dan ramah secara sosial Mampu Saat ini korporasi menetralisasi "lebah madu" dampak yang masih amat ditimbulkan oleh langka. korporasi "ulat" dan "belalang Serta mendorong korporasi "kupu- kupu" untuk bertransformasi menjadi korporasi "lebah madu".1-Apr-11 IMT MM Corporate Ethic 21
  22. 22. MetaforaSerangga Pelaku Usaha Metafora serangga ini Keberlanjutan ekosistem merupakan panduan etis dunia hanya dapat bagi para pelaku usaha terwujud jika semua dalam membangun dan aktivitas ekonomi secara mengarahkan sadar diarahkan menuju engembangan korporasi sebuah "konser" ramah mereka. lingkungan. Destruksi kapital alam Korporasi yang dan sosial oleh operasi tidak segera berevolusi ke korporasi "belalang" dan arah korporasi "lebah korporasi "ulat" akan madu", atau setidaknya menimbulkan gangguan korporasi "kupu-kupu", terhadap keberlanjutan hanya akan menjadi ekosistem dan sekaligus beban bagi kosistem disharmoni sosial. danmasyarakat.1-Apr-11 IMT MM Corporate Ethic 22
  23. 23. Corporate Ethics: Sustainability Effort Lecture by: Rethink Sustainability 2m401-Apr-11 IMT MM Corporate Ethic 23
  24. 24. Models for Sustainability The Natural Step 4 system conditions McDonough Principles Cradle-to-cradle design Waste = Food Natural Capitalism Radically increase resource productivity Redesign industry on biological models with closed loops and zero waste Shift from products to services Reinvest in natural capital1-Apr-11 IMT MM Corporate Ethic 24
  25. 25. The Business Case Short-term cost reduction Energy efficiency and waste reduction Longer-term return on investment Investment in building improvements Value creation - Existing markets Value creation - New markets1-Apr-11 IMT MM Corporate Ethic 25
  26. 26. Sustainability Ladder 1. Products and services 2. Processes 3. Business model 4. Company focus 5. Brand identity of company 6. Supplier web and value chain 7. Industry leadership and advocacy role1-Apr-11 IMT MM Corporate Ethic 26
  27. 27. CERES Coalition for Environmentally Responsible Economies (1989) 10 principles for environmental management Endorsing companies • American Airlines, B of A, Ben & Jerrys, Coca-Cola, Fleet Boston Financial, Ford, GM, Interface, Nike, Polaroid, The Timberland Co., and others Launched Global Reporting Initiative (1997) www.ceres.org1-Apr-11 IMT MM Corporate Ethic 27
  28. 28. The CERES Principles1. Protection of the Biosphere2. Sustainable Use of Natural Resources3. Reduction and Disposal of Wastes4. Energy Conservation5. Risk Reduction6. Safe Products and Services7. Environmental Restoration8. Informing the Public9. Management Commitment10.Audits and Reports 1-Apr-11 IMT MM Corporate Ethic 28
  29. 29. GRI Global Reporting Initiative (1997) Voluntary globally applicable sustainability reporting guidelines 341 organizations in 31 countries Europe vs. US www.globalreporting.org1-Apr-11 IMT MM Corporate Ethic 29
  30. 30. Case Examples Dupont Interface BP Nike Shell Chaparral Steel Agilent Company HP Johnson & Johnson IdleAire Technology Corp. Lighting Components and Design Inc.1-Apr-11 IMT MM Corporate Ethic 30
  31. 31. DupontAn international corporation that manufactures healthcare products, electronics and other goods Developed a “sustainable growth” mission Reduced consumption of raw materials and energy Used scientific and technical knowledge to create more environmentally-friendly products Engaged stakeholders of the corporation Created a “Carpet Reclamation Program” where they have reclaimed and recycled 90 million pounds of carpet By combining the recycling and sorting process in one location, Dupont has vastly reduced both energy consumption and costsSource: The BSD Global website 1-Apr-11 IMT MM Corporate Ethic 31
  32. 32. HP Packaging Initiative Lighter paperboard sleeve for ink cartridges • Reduced packaging weight by 34%, reducing costs by more than $700,000 a year Reusable transit packaging for inkjet cartridges • Reduced waste by 2,400 tonnes in 2002, saving $1.5M Bulk packaging for desktop computers • Reduced waste by 86%, saving $1.1M in 2002 • Expected savings of $4M in 20031-Apr-11 IMT MM Corporate Ethic 32
  33. 33. Interface Corporation The largest commercial carpet manufacturer in the world Vision: To be the first company that, by its deeds, shows the entire industrial world what sustainability is in all its dimensions: People, process, product, place and profits — by 2020 — and in doing so we will become restorative through the power of 1-Apr-11 IMT MM Corporate Ethic 33
  34. 34. Interface CorporationThe Seven Steps1. Eliminate Waste — QUEST program2. Benign Emissions —Elimination of molecular waste3. Renewable Energy —Reducing overall usage; transitioning to renewables4. Closing the Loop — Creating cyclical material flows.5. Resource Efficient Transportation — Reducing movement of products/people in favor of data, e.g. plant location, video-conferencing, telecommuting6. Sensitivity Hookup — A community within and around Interface that understands natural systems and our impact on them.7. Redesign Commerce — Providing services rather than products1-Apr-11 IMT MM Corporate Ethic 34
  35. 35. Nike Created a “Transparency 101” Program, which ensures public awareness of Nike’s business practices Transparency 101 also monitors its factories in each country to make sure its practices follow Nike’s code of conduct Nike is phasing out the use of PVC and other harmful chemicals in its products through work with William McDonough Created the “Reuse a Shoe”, a program that recycles shoes Uses organic cotton in some of their clothing Has certified its Oregon buildings in an effort to decrease energy useSource: The BSD Global website. 1-Apr-11 IMT MM Corporate Ethic 35
  36. 36. Chaparral Steel CompanyProduces bar and structural steel products by recycling scrap steel Created Systems and Technology for Advanced Recycling (STAR) Collaborated with neighboring cement plant Business opportunities for this technology in emission credit trading Built advanced Automobile Shredder Residue (ASR) system Plastics can be used as a clean, efficient fuel source. Sale of clean plastics alone generates up to $500,000 a year. Looking to market ASR for mining and selling of clean plastics (waste) rather than sending them to landfillsSource: The BSD Global website IMT MM Corporate Ethic 36
  37. 37. Chaparral Recycling Facility1-Apr-11 IMT MM Corporate Ethic 37
  38. 38. Johnson & Johnson Has made a major effort to be more energy efficient by reviewing the usage of all aspects of its buildings (lights, fans, motors, etc.) Received 1995 Green Lights Partner of the Year Award for large corporations Received 1996 Sustained Excellence Award for completing and maintaining lighting upgrades for more than 94% of its workspace Involved in a variety of different programs, including “ClimateWise”, “Energy Star Buildings”, and “Energy Star Computers”Source: The BSD Global website 1-Apr-11 IMT MM Corporate Ethic 38
  39. 39. IdleAire Technology Corp. 1.3 million long-haul trucks in US waste 4.4B gals. of diesel annually when drivers leave engines idling when resting. Represents 2.6 % of all imported oil IdleAire created a technology that allows trucks to heat and cool their cabs without idling their engines, thereby reducing the amount of fuel used and emissions released IdleAire installs individual heat and air units above parking spaces at truck stops, charging $10 for 8 hours of service Truck owners also save as much as 40% on fuel costsSource: Green Gazelles website IMT MM Corporate Ethic 39
  40. 40. Lighting Components and Design Inc.Engineering company that manufactures miniature lighting components Created cross-functional team to create a template of energy efficiency improvements Improved insulation of its facilities Upgraded lighting to fluorescent lamps, including electronic ballasts Upgraded HVAC system to reduce energy Installed low-flow toilets and water-saving taps Upgraded over 24 pieces of motorized manufacturing equipment with energy-efficient motors Winner of the EnergyStar 2002 Small Business and Congregations Award Result? Prevented over 300,000 pounds of CO2 emissions and saved $10,300 on utility bills per yearSource: EnergyStar website ighting1-Apr-11 IMT MM Corporate Ethic 40
  41. 41. Corporate Ethics: Case Study of Grameen Telecom Corporate Sustainability Lecture by: GrameenBank Bagladesh Phone ladies 2m101-Apr-11 IMT MM Corporate Ethic 41
  42. 42. Peranan ICT terhadap Ekonomi Telematika mempunyai peranan yang sangat penting dan strategissebagai komponen infrastruktur untuk perkembangan ekonomi termasuk Usaha Kecil dan Menengah (Hitt, Ireland&Hoskisson ,2005).Pelayanan Telematika dapat menggantikan bentuk komunikasi lain danseringkali lebih efektif penggunaannya baik dari segi biaya, waktu dan rantai distribusinya (Hamel and Prahalad, 1995). Bukti lain Telematika yang andal akan memunculkan bentukkomunikasi baru yang lebih kuat, kompleks, dan produktif dari pola-pola komunikasi lain (Harris, 2001). Peningkatan produktifitas komunikasi ini pada akhirnya mendorong pertumbuhan ekonomi di tempat tersebut (Porter, 1985). 1-Apr-11 IMT MM Corporate Ethic 42
  43. 43. ICT as “BIG PART” of Economic Development Other communication inputs Communication Coordination Knowledge ICTs/ Tech enabling sync interaction/ Development Info seeking/publ’nCapital Tech Enabling/complementary conditions Other Wireless inputs 1-Apr-11 IMT MM Corporate Ethic 43
  44. 44. ICT :Tool to Overcome Poverty The experiences of Grameen Telecom and its partners have clearly demonstrated that ICT could be designed and developed to cater to the need of the poor. It could directly raise the income and social status of the poor in rural Bangladesh and help them overcome poverty.1-Apr-11 IMT MM Corporate Ethic 44
  45. 45. Microcredit and ICT Microcredit and ICT have a common capacity - capacity to empower the poor. They reinforce each other when it comes to addressing the issue of poverty. They lead to a path of self-employment as well as to social and economic emancipation. Grameen Telecom and Grameen Bank have designed a package together primarily to connect people in remote rural areas through mobile phones. Grameen Bank borrowers (Village Phone Operators) who buy a cell phone with a bank loan, can substantially earn bigger income. ICT and Micro Credit are complementing each other, to change the lives of the poor in Bangladesh.1-Apr-11 IMT MM Corporate Ethic 45
  46. 46. Grameen Telecom at a glance • Incorporated in 1995 • Not - for- profit company • Owns 38% share in GrameenPhone • Dedicated to Development ICT in Rural Bangladesh • Introduced Unique Village Phone System, Providing GSM Cellular Phone Services in Rural Bangladesh1-Apr-11 IMT MM Corporate Ethic 46
  47. 47. Village Phone The Basic Concept• Phone service for the rural population• Bridging the information gap between rural and urban areas• New weapon against poverty• Gateway for IT based services for rural areas• Empowering poor rural women, who are borrowers of Grameen Bank• A mobile community Phone/Public Call Office (PCO)1-Apr-11 IMT MM Corporate Ethic 47
  48. 48. Village Phone Objectives • Provide easy access to telephone services, all over rural Bangladesh. • A new technology based income generating option to fight rural poverty. • Bring the potential of information revolution to the doorsteps of villagers.1-Apr-11 IMT MM Corporate Ethic 48
  49. 49. Village Phone: The basic structure • Grameen Bank members obtain ownership of the phones under basic loan programme. • S/he provides services to the people in the adjoining rural area, for both outgoing and incoming calls • Phone bills along with other dues are collected by Grameen Bank field staff regularly • Grameen Telecom Unit Offices provide training and required technical services 1-Apr-11 IMT MM Corporate Ethic 49
  50. 50. Model Bisnis Grameen Telecom1-Apr-11 IMT MM Corporate Ethic 50
  51. 51. Temuan Utama Program Telematika Pedesaan Grameen • Program Village Phone solusi teknis terbaik yang tersedia untuk akses 1 telematika universal pedesaan sesuai dengan keadaan Regulasi Telematika dan kondisi ekonomi Bangladesh saat itu. 2 • Dari sudut pandang pendapatan dan laba “Village Phone” secara penuh dapat diakses oleh seluruh populasi desa demi keberlangsungan usaha. • Village Phone instrumen atau alat bantu yang tangguh untuk 3 mengurangi resiko dalam pengiriman uang dari para anggota keluarga para pekerja di Dhaka City dan yang bekerja di luar negeri. • Keluarga dan kolega sering melibatkan pertukaran informasi tentang harga 4 komoditi pasar, daftar biaya pengiriman barang-barang, tren pasar dan pertukaran informasi valuta. • Pelayanan telematika pedesaan di Bangladesh sangat menguntungkan 5 karena ketiadaan interkoneksi menjadi penghalang yang paling besar untuk mengimbangi permintaan jasa telematika. 6 • Teknologi telematika genggam GSM adalah suatu solusi yang mahal untuk akses universal di daerah pedesaan.1-Apr-11 IMT MM Corporate Ethic 51
  52. 52. See you on the next lecture HBR-Elkington Key Traits of Social Entrepreneurs 9m30