Ethics: Is the consensusally accepted standards of behavior for an occupation, trade, or profession Morality: Is the precepts of personal behavior based on religious or philosophical grounds . Law: - 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

1. Ethics and Social Responsibility:
Corporate Ethics
Lecture by:
Djadja.Sardjana@gmail.com
1-Apr-11 IMT MM Corporate Ethic 1

2. Contents
Introduction
Sustainability Philosophy
Sustainability Effort
Sustainability Case Study
1-Apr-11 IMT MM Corporate Ethic 2

3. Corporate Ethics:
Introduction
Lecture by:
Djadja.Sardjana@gmail.com
THE CORPORATION
[4_23]-Friedman-
Externality-2m10
1-Apr-11 IMT MM Corporate Ethic 3

4. Guidelines for Ethical Behavior
Ethics
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 morality
1-Apr-11 IMT MM Corporate Ethic 4

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 better
1-Apr-11 IMT MM Corporate Ethic 5

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. 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 making
1-Apr-11 IMT MM Corporate Ethic 7

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. Carroll’s Four Responsibilities
1-Apr-11 IMT MM Corporate Ethic 9

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. Corporate Ethics:
Sustainability
Lecture by:
Djadja.Sardjana@gmail.com
Jutaan Ulat
Bulu Serang
Tujuh Desa-2m
1-Apr-11 IMT MM Corporate Ethic 11

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, Sweden
1-Apr-11 IMT MM Corporate Ethic 12

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. 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 Africa
1-Apr-11 IMT MM Corporate Ethic 14

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.com
1-Apr-11 IMT MM Corporate Ethic 15

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. 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. 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. 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. KUPU-KUPU (BUTTERFLY)
Korporasi "kupu-kupu"
Korporasi "kupu-kupu"
(corporate butterflies)
memiliki model bisnis
dan korporasi "lebah
sustainable tetapi
madu“ merupakan
berisiko menyimpang
korporasi yang bersifat
seiring pertumbuhan
menumbuhkan
dan ekspansi.
(regeneratif).
1-Apr-11 IMT MM Corporate Ethic 20

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. 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. Corporate Ethics:
Sustainability Effort
Lecture by:
Djadja.Sardjana@gmail.com
Rethink
Sustainability
2m40
1-Apr-11 IMT MM Corporate Ethic 23

24. Models for Sustainability
The Natural Step www.naturalstep.org
4 system conditions
McDonough Principles www.mbdc.com
Cradle-to-cradle design
Waste = Food
Natural Capitalism www.natcap.org/
Radically increase resource productivity
Redesign industry on biological models with
closed loops and zero waste
Shift from products to services
Reinvest in natural capital
1-Apr-11 IMT MM Corporate Ethic 24

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 markets
1-Apr-11 IMT MM Corporate Ethic 25

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 role
1-Apr-11 IMT MM Corporate Ethic 26

27. CERES
Coalition for Environmentally Responsible
Economies (1989)
10 principles for environmental
management
Endorsing companies
• American Airlines, B of A, Ben & Jerry's,
Coca-Cola, Fleet Boston Financial, Ford,
GM, Interface, Nike, Polaroid, The
Timberland Co., and others
Launched Global Reporting Initiative (1997)
www.ceres.org
1-Apr-11 IMT MM Corporate Ethic 27

28. The CERES Principles
1. Protection of the Biosphere
2. Sustainable Use of Natural Resources
3. Reduction and Disposal of Wastes
4. Energy Conservation
5. Risk Reduction
6. Safe Products and Services
7. Environmental Restoration
8. Informing the Public
9. Management Commitment
10.Audits and Reports
1-Apr-11 IMT MM Corporate Ethic 28

29. GRI
Global Reporting Initiative (1997)
Voluntary globally applicable sustainability
reporting guidelines
341 organizations in 31 countries
Europe vs. US
www.globalreporting.org
1-Apr-11 IMT MM Corporate Ethic 29

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. Dupont
An 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 costs
Source: The BSD Global website
http://www.bsdglobal.com/viewcasestudy.asp?id=123
1-Apr-11 IMT MM Corporate Ethic 31

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 2003
1-Apr-11 IMT MM Corporate Ethic 32

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 influence.
www.interfaceinc.com
1-Apr-11 IMT MM Corporate Ethic 33

34. Interface Corporation
The Seven Steps
1. Eliminate Waste — QUEST program
2. Benign Emissions —Elimination of molecular waste
3. Renewable Energy —Reducing overall usage; transitioning
to renewables
4. 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, telecommuting
6. Sensitivity Hookup — A community within and around
Interface that understands natural systems and our
impact on them.
7. Redesign Commerce — Providing services rather than
products
1-Apr-11 IMT MM Corporate Ethic 34

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 use
Source: The BSD Global website.
http://www.bsdglobal.com/viewcasestudy.asp?id=81
1-Apr-11 IMT MM Corporate Ethic 35

36. Chaparral Steel Company
Produces 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 landfills
Source: The BSD Global website
http://www.bsdglobal.com/viewcasestudy.asp?id=51
1-Apr-11 IMT MM Corporate Ethic 36

37. Chaparral Recycling Facility
1-Apr-11 IMT MM Corporate Ethic 37

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
http://www.bsdglobal.com/viewcasestudy.asp?id=76
1-Apr-11 IMT MM Corporate Ethic 38

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
costs
Source: Green Gazelles website
http://www.geocities.com/greengazelles/new.html
1-Apr-11 IMT MM Corporate Ethic 39

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 year
Source: EnergyStar website
http://208.254.22.7/index.cfm?c=sb_success.sb_2002winners#l
ighting
1-Apr-11 IMT MM Corporate Ethic 40

41. Corporate Ethics:
Case Study of Grameen Telecom
Corporate Sustainability
Lecture by:
Djadja.Sardjana@gmail.com
GrameenBank
Bagladesh
Phone ladies
2m10
1-Apr-11 IMT MM Corporate Ethic 41

42. Peranan ICT terhadap Ekonomi
Telematika mempunyai peranan yang sangat penting dan strategis
sebagai komponen infrastruktur untuk perkembangan ekonomi termasuk
Usaha Kecil dan Menengah (Hitt, Ireland&Hoskisson ,2005).
Pelayanan Telematika dapat menggantikan bentuk komunikasi lain dan
seringkali lebih efektif penggunaannya baik dari segi biaya, waktu dan
rantai distribusinya (Hamel and Prahalad, 1995).
Bukti lain Telematika yang andal akan memunculkan bentuk
komunikasi 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. ICT as “BIG PART” of Economic Development
Other
communication
inputs Communication
Coordination
Knowledge
ICTs/
Tech enabling
sync interaction/
Development
Info seeking/publ’n
Capital Tech
Enabling/complementary
conditions
Other
Wireless
inputs
1-Apr-11
IMT MM Corporate Ethic 43

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. 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. 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 Bangladesh
1-Apr-11 IMT MM Corporate Ethic 46

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. 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. 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. Model Bisnis Grameen Telecom
1-Apr-11 IMT MM Corporate Ethic 50

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. See you on the next lecture
HBR-Elkington
Key Traits of Social
Entrepreneurs
9m30