Ethics and Corporate Social Responsibility

Ethics and Corporate Social Responsibility

Ethics are the system of rules that govern the ordering of values. Business ethics refers to the moral principles and standards that guide behaviour in the world of business. Ethical issues are situations where individuals must choose among actions evaluated as morally right or wrong.

Ethical Systems

• Universalism — all people should uphold certain values that society needs to function
• Egoism — acceptable behaviour maximises consequences for the individual
• Utilitarianism — the greatest good for the greatest number should be the overriding concern
• Relativism — ethical behaviour is based on the opinions and behaviours of relevant others
• Virtue ethics — what is moral comes from what a mature person with good moral character would deem right

Kohlberg's model of cognitive moral development classifies people based on their level of moral judgment: Preconventional → Conventional → Principled.

The Ethics Environment

The Sarbanes-Oxley Act (2002) established strict accounting and reporting rules to make senior managers more accountable. An ethical climate refers to the processes by which decisions are evaluated and made on the basis of right and wrong. An ethical leader is both a moral person and a moral manager who influences others to behave ethically.

Danger signs of unethical behaviour include excessive short-term focus, lack of a written ethics code, and treating ethics solely as a legal or PR issue.

Making Ethical Decisions

Three components are required:

• Moral awareness — recognising the ethical implications of a situation
• Moral judgment — knowing what actions are morally defensible
• Moral character — strength and persistence to act on your ethics despite challenges

Corporate Social Responsibility (CSR)

CSR is the obligation toward society assumed by business. Carroll's pyramid identifies four levels:

1. Economic responsibilities — produce goods/services society wants at a price that sustains the business
2. Legal responsibilities — obey local, state, federal, and international laws
3. Ethical responsibilities — meet other social expectations not written as law
4. Philanthropic responsibilities — additional behaviours that society finds desirable

The triple bottom line measures economic, social, and environmental performance simultaneously.

Sustainability and the Environment

Sustainable growth means economic growth that meets present needs without harming future generations. Life-Cycle Analysis (LCA) evaluates a product's total environmental impact from cradle to grave. The circular economy minimises input, waste, emissions, and energy leakage through regenerative, collaborative systems.