CSR Business Ethics


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CSR Business Ethics

  1. 1. Business Ethics The influence of values and beliefs upon the conduct and operation of businesses.
  2. 2. Some characteristics of ethical businesses?      Produce products that are not harmful to people. Minimise negative environmental impacts. Not corrupt. Take care of their employees. Make efforts to contribute positively to society.
  3. 3. Ethical behaviour: A complex issue  Quite often businesses are faced with ethical dilemmas.    Is it right to pollute a river if it means that people’s jobs are made more secure? Should children be used in the workplace when the alternative may be starvation or sexual exploitation? Should pharmaceutical firms reduce the prices of drugs to help people with AIDS, when doing so means they have less money to invest in developing new drugs?
  4. 4. Benefits of ethical behaviour   More customers (and sales). More and more people take into account how a firm ‘behaves’ before deciding to buy products from them. An ethical approach may attract such customers. Bodyshop has benefited in this way. Improved recruitment and retention of staff . People are attracted to working for ‘good' businesses. In addition they are likely to stay longer, reducing costs of recruitment and training.
  5. 5. Benefits of ethical behaviour    Increased employee motivation. People gain more satisfaction from working for ‘good’ businesses. Reduced legal costs. Ethical businesses are less likely to be sued. Positive Public Relations boosts the firm’s corporate image and helps to promote it. A more negative image leads to increased costs (eg time and money spent on improving public relations).
  6. 6. Benefits of ethical behaviour   An ethical approach to business can help a firm differentiate itself from its competitors (develop its USP). An ethical firm may be able to charge premium prices for its products as some customers will have demand that is less price elastic. (eg fair trade coffee).
  7. 7. Benefits of ethical behaviour    Improved customer loyalty. Reduced opposition from pressure groups. Ethical firms may pre-empt new legislation. They bring out new products earlier, and gain an advantage over competitors as a result.
  8. 8. Benefits of ethical behaviour    Improved relationships with governments can help the firm obtain planning permission, or other assistance. Local communities may be more welcoming and less opposed to the company setting up a facility. Provides long term benefits for society and the environment
  9. 9. Benefits of ethical behaviour  Ultimately, Sales and profits will improve in the long-term!
  10. 10. Problems of ethical behaviour    Some costs will increase in the short term. E.g. installing filters at power stations. Profits may fall in the short term E.g. if the firm decides against buying cheap supplies from a supplier that uses child labour. Conflict between stakeholder groups. E.g. Shareholders seeking higher profits may object to the business donating money to charities
  11. 11. Problems of ethical behaviour   Cynicism from the Media and the General Public who may question the firm’s motives. It could be using an ethical approach to deflect attention from other parts of the business. Any competitive advantage gained through such a policy could be lost if competitors follow suit. If costs remain high the firm may suffer!
  12. 12. Problems of ethical behaviour  Firms presenting themselves as being ethical can come under greater scrutiny. This can highlight failings that could create bad publicity. So in the short-term, costs will probably increase.
  13. 13. The growth of Corporate Responsibility   More and more businesses are adopting a more ethical approach. It is difficult to know whether this is due to a genuine shift in firms’ values and beliefs, or whether they have found such an approach to be more profitable.