Ethical Responsibilities

1. Ethical
Responsibilities
gclement@nhc.ac.uk

2. Learning Objectives
• Be able to describe some ethical
responsibilities a business has towards:
– Employees
– Environment
– Society
– And its owners

3. What Is the Meaning of Ethical Responsibility
• In business, ethical responsibility is concerned with the
actions that affect the world around us
• Businesses have a responsibility to behave in ways that don't
cause unjustified harm, suffering, waste or destruction.
• You can understand ethical responsibility in terms of who or
what the company's actions affect.

4. Responsibility to Employees
• Employees are, first and foremost, the people directly
responsible for a company's success. Without their labour, the
company could not function and would go nowhere.
• Similarly, a company is most directly responsible for an
employee's personal success.

5. Responsibility to Employees
• The money and other benefits that an employee earns for
their work provide their livelihood, without which they would
not be able to pay for food and shelter or afford any of life's
luxuries
• A company has an ethical responsibility to pay its employees
what their labour is worth, to provide a respectful workplace
free of harassment and dehumanization, and to operate a safe
facility or supply the appropriate safety equipment to deal
with hazards.

6. Responsibility to Employees
• Historically, unethical behaviour toward employees has been
responsible for political unrest, legal intervention and the rise
of labour unions

7. Responsibility to the Environment
• Pollution, resource depletion and land use are the inevitable
consequences of virtually any business activity. There is also
usually an impact on wildlife.
• Environmentally irresponsible business practices have
poisoned communities, squandered vital resources into
economic non-viability and driven entire species extinct
forever

8. Responsibility to the Environment
• Ethical responsibility to the environment, invites political
debate, because it necessarily places limits on business
• Such responsibility requires that a company seek to minimize
the harm it causes to people and wildlife and take reasonable
measures to conserve resources for subsequent generations

9. Responsibility to Society
• Economic activity is a boon to society. It creates wealth and
leads to the advance of technology, which allows people to
attain a better material quality of life and escape the
hardships of poverty
• But there are many ways that a company can behave
irresponsibly toward society, all of which entail plundering the
society for short-term gain.

10. Responsibility to Society
• Economic activity is a boon to society. It creates wealth and
leads to the advance of technology, which allows people to
attain a better material quality of life and escape the
hardships of poverty
• But there are many ways that a company can behave
irresponsibly toward society, all of which entail plundering the
society for short-term gain.

11. Responsibility to Society
• Social responsibility, then, requires a company to take an
interest in the long-term success and prosperity of the
community where it does business and in the welfare of the
national economy on which it ultimately depends.
• This means obeying the law and respecting society.
• It means striking a balance between developing short-term
profits, which may be vital to a company's success, and
forgoing those profits in favour of spreading the wealth into
the society whose laws, people and wider economy provide
the landscape for the company to succeed in the first place

12. Responsibility to Shareholders and the Company
• A company has an ethical responsibility to earn a profit for the
shareholders who invested in it.
• The company needs profit to continue to exist as a viable
business entity
• The investors deserve a profit because they took a risk with
their money by investing in the company

13. Responsibility to Shareholders and the Company
• Satisfied employees, a prosperous society and a healthy world
are a boon to the fundamentals of business.
• Unfortunately, many people inside business don't see it that
way and instead look to maximize shareholder value in the
short term at the expense of all other considerations
• Nevertheless a business should strive to be profitable for
those who own and finance it