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Business Ethics and Social Responsibility

Sustainability as part of strategy

- section 172 of the CA 2006 - to consider the long-term consequences of their decision-making

- this approach has been strengthened in recent years - expectation that the traditional concept of going-concern needs to be aligned more closely with an understanding and explanation by directors of the longer-term viability organisation

- viability and sustainability are intrinsically linked

- If we accept that a core principle of a CSR approach is the impact that an organisation is having upon the wider environment, then the stakeholder interest must be focused on the sustainability of such an approach

Adrian Henriques - three perspectives of sustainability

1. Economic sustainability: do the figures add up?

2. Social sustainability: who is impacted by our operational activities?

3. Environmental sustainability: are we adding to or reducing the overall long-term viability of the environment within which our organisation operates?

Difference between CSR and Sustainability

Responsibility = our accountability to and impact upon others.

Sustainability = our accountability to and impact upon ourselves and others.

Benefits of incorporating sustainability into strategy

Business protection: the reduction of risk of harm to the organisation and its direct and indirect stakeholders

Business operation: a wider awareness of direct and indirect costs across a longer strategic time period.

Business growth: widening of the breadth of strategic consideration will lead to the consideration of a greater range of opportunities.

Business reputation: being known for a sustainable CSR approach

Social business and creating shared value

- social businesses are often referred to as ‘non-profit’ organisations

- the objective is still to realise financial gains, however the utilisation of such financial gains is generally treated in a more equitable manner, based upon the originating constitution of the organisation.

- Such businesses can have a variety of social impacts, from the use of all profits to fund their desired causes, to allowing employees time to participate in charitable activities, to the deliberate employment of disadvantaged people, to the provision of urgent and immediate help to others

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A non-dividend company that is created to address and solve a social problem

the investors/owners can gradually recoup the money invested but cannot take any dividend beyond that point

The purpose of the investment is purely to achieve one or more social objectives through the operation of the company

No personal gain is desired by the investors.

The company must cover all costs and be financially sustainable, while achieving the social objective in sectors such as healthcare, education, poverty, environment, housing, climate urgency etc.

Once the original investment has been recouped by the investors, profit stays within the company to expand its outreach and increase the social impact.’