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Business Ethics and Social Responsibility

The purpose of a code of ethics

Code - dictionary definition of the word code allows for the combination of principles (something with which we might comply) and rules (something with which we must comply)

1. Firstly, there will be principles, standards and expected modes of conduct that the organisation expects

2. Secondly, there may well be practical guidelines which could be as bold as a decision tree type approach – ‘if this happens, what do I do’ – or it could be a set of quite specific instructions.

KEY AREAS OF CODE OF ETHICS

1. Structural requirement - alignment or compliance with professional levels of conduct that are associated with our organisation, our sector, or our profession

2. Practical input - how the organisation, sector or profession expects people adhering to the code to behave

3. The personal section- specific examples illustrating how people are expected to behave, how they will be judged, and consequences of non-compliance

The pressures at the bottom, the combination of societal values and legal requirements will affect effectiveness of our code.

Corporate social responsibility as part of strategy

commitment to contribute to economic development from within an ethical framework, while seeking to improve the quality of life for its employees and their families, the local community and society at large.

In practice, this often means the ability of an organisation to link its decisionmaking to a set of ethical values, while complying with legal requirements

CSR, as an organisational concept, first appeared in the 1950s, initially in the US, with Howard Bowen raising the challenge of ‘what responsibilities to society may businessmen reasonably be expected to assume?’

Since the CA 2006, the directors of all UK limited companies are required, as a duty, to ensure that their decision-making encompasses this wider environment

Not only are directors required to behave with a wider stakeholder and CSR awareness, but they are required to explain and illustrate how they have done so

Carroll’s pyramid of CSR -

four distinct levels of responsibility that are required to ensure that CSR is part of, rather than apart from, the wider business objectives.

ECONOMIC = Society needs organisations that are profitable; within a democracy this then allows for the levying of taxation to generate funds to be used for the public good

Profits enable the direct reward of owners, but also allow reinvestment in the organisation to drive forward both the organisation and the stakeholder society that it is serving.

LEGAL = Any organisation needs to operate within the legal framework of the society where it exists

It is important for an organisation to produce products or services that meet at least the minimum legal standards required for the protection of consumers

ETHICAL = An organisation needs to develop its own ethics code – the way in which it expects its employees to behave

An organisation needs to encourage its employees to be ‘good corporate citizens’.

PHILANTHROPIC = This takes an organisation above the economic, legal and ethical and into a discretionary area where organisations may want to or may want to be seen to be ‘giving back’

The desire within an organisation, or within its leaders, to be seen to be going above and beyond for the greater good of others – there is a risk that this can both enhance and damage organisational reputation dependent on the views of others