Fines & Reasons Source: Business Week , Nov. 4, 2002 Company Fine Reason Arthur Andersen $500,000 Obstruction of Justice Shredding Enron Documents Citigroup $5,000,000 Analyst Issued Misleading Information Merrill Lynch $100,000,000 Conflict of Interest Between Investment Bank & Research Dept. Credit Suisse First Boston $100,000,000 IPO Shares Unfairly Distributed
Crisis of Trust
Fair Amount 41%
Only A Little 35%
Not At All 13%
A Great Deal 10%
No Opinion 1%
A Lot 50%
Only Somewhat 39%
Not At All 8%
No Opinion 3%
Source: USA Today /CNN/Gallup Poll, Jan. 25-27, 2002
Ethics Check Questions:
Is It Legal?
Is It Balanced?
How Will It Make Me Feel About Myself?
Ethical Decision Resolved Through:
Codes of Ethics
Increasing control and penalizing wrongdoers
Define guiding values
Support ethical behaviour
Six Steps to Improve Ethics
Top management support
Expectations begin at the top
Ethics imbedded in training
Ethics office set up
External stakeholders informed
There must be enforcement
Ethics of MBA Students
Percent of MBA Students Who Would :
Buy Stock on Inside Information 52%
Reveal Corp. Secrets to Spouse/Family 50%
Let a Gift Sway Purchasing Decision 26%
Pay Off to Close a Business Deal 13%
Source: USA Today
Three Levels of Social Responsibility Societal Responsibility Stakeholder Responsibility Profit Responsibility Owners/Stockholders General Public Customers Employees Suppliers/Distributors Ecological Environment Public Interest Groups Source: Marketing , 5/E by Berkowitz, Kerin, Hartley, and Rudelius.
Triple Bottom Line
The triple bottom line (TBL) focuses corporations not just on the economic value they add, but also on the environmental and social value they add – and destroy.
Triple bottom line is used as a framework for measuring and reporting corporate performance against economic, social and environmental parameters.
Triple Bottom Line
At its broadest, the term is used to capture the whole set of values, issues and processes that companies must address in order to minimize any harm resulting from their activities and to create economic, social and environmental value. This involves being clear about the company’s purpose and taking into consideration the needs of all the company’s stakeholders – shareholders, customers, employees, business partners, governments, local communities and the public.
Interface Carpets A Sustainability Champion
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 influence.
Ray Anderson - believes that if Interface, a petro-intensive company, can get it right, it will never have to take another drop of oil from the earth.
Extinction of species
Nuclear proliferation and testing
The Resource Recovery Fund Board of Nova Scotia
50% waste diversion & 100% of Nova Scotians have curb-side recycling
Almost 79% return rate on beverage containers
Over 1.5 billion beverage containers recycled since April 1, 1996 & 403,000 litres of paint recycled since June 1, 2002
Over 912,000 tires are reused or recycled annually through the Used Tire Management Program. 5.5 million tires since the program began.
Total waste diverted from landfills annually: 350,000 tonnes & Composted more than 233,000 tonnes of organic material
Corporate Social Responsibility -the concern businesses have for the welfare of society
Corporate Philanthropy – charitable donations
Corporate Responsibility – acting responsibly within society
Corporate Policy – position on social and political issues
What is the Answer?
Japan has developed “green technologies” and is exporting this technology - using “green” as a competitive advantage
Some Canadian companies are exporting environmental technology
We have established IISD - the International Institute of Sustainable Development
Business continues to worry about the cost to institute “green” operating procedures
A Very Different Answer
American author, Paul Hawken, says that sustainable development is not enough
His proposals would make “green” products cheaper
Prices should reflect all costs including disposal and harm to the environment
redesign products to make them biodegradable
taxes on pollution and depletion instead of taxes on payroll
redesign products to make them recyclable
Are we ready for these kinds of changes? Do we have any choice ?
Reaction to the New Social Responsibility
Many companies have undertaken a Social Audit - a systematic evaluation of the company’s position and progress on social issues
Shareholders and other stakeholders have actively encouraged companies to become proactive on social issues
Why People Volunteer
Total is more than 100%- respondents could give more than one reason.
Percent of Respondents
Contributions to Charity (In Billions of Dollars)
New Philanthropy Source: Business Week , Dec. 2, 2002 Donor Estimated Total Given (in Millions Causes Bill Gates $25.6 Health & Education Gordon Moore $6.6 Conservation & Education James Stowers $1.5 Biomedical Research Eli Broad $1.045 Education & Arts Walton Family $.75 Education
Johnson & Johnson
Bank of America
Corporate Annual Giving Source: The Taft Group * In Millions
Where US Charitable Contributions Go (2001) In Billion $ Source: BusinessWeek . Dec. 2, 2002
International Ethics & Responsibility
Ethics Not Unique To U.S.- Leaders Accountable
Demand for Socially Responsible Behavior
Inter-American Convention Against Corruption
Conundrums of Doing Business Globally
What do you do when:
You are forbidden to trade – Cuba
Ethical norms of the host country violate the laws of the home country
Social responsibility has whole new meaning
Environmental practices differ from the home company