Introduction

 From the time of barter to the age of bitcoin, most people involved in
business transactions have sought trust. Without trust, which is the
fundamental outcome of ethical behavior not just business relationship
but all relationship would collapse.
 Ethics as a form of applied philosophy was a major focus among the
leader of ancient Athens, particularly teachers like Socrates, Plato and
Aristotle.
 They taught that ethics was not merely what some did but some was.
Ethics was a function of being and as a guiding principle for dealing
with others; it naturally applied as well to sensitive areas of money and
commerce.
3.1 Ethical Theories
There are various ethical theories. Some are
1.Teleological Ethics (Consequentialism)
 Ethical Egoism
 Hedonism
 Utilitarianism
2. Deontology
 Kantian
3. Virtue ethics
Teleological Ethics
 The Teleological Ethical Theories are concerned with the
consequences of actions which means the basic standards for our
actions being morally right or wrong depends on the good or evil
generated.
 The teleological theory suggests an action is good or bad depending
on its outcome
 It is based on measuring the probable outcome of the
consequences of the decisions taken.
 For instance, most people would agree that telling a lie is wrong.
But if telling a lie would help to save a person's life,
consequentialism says it's the right thing to do.
3.1.1 Ethical Egoism
 Ethical egoism is the normative theory that the promotion of one's
own good is in accordance with morality.
 Each person should focus exclusively on his or her interest. It
requires that we promote only our self-interest, and not both our
interests. It has the following sub-branches
Hedonism
 The term hedonism is derived from the Greek word “hedone”
which means pleasure.
 Ethical hedonism is said to have been started by Aristippus of
Cyrene, a student of Socrates
There are two types of hedonism
1. Psychological hedonism o Psychological hedonism is the view
that humans are psychologically constructed in such a way that
we exclusively desire pleasure.
2. Ethical hedonism o Ethical hedonism is the view that our
fundamental moral obligation is to maximize pleasure or
happiness.
Utilitarianism
 Utilitarianism is a tradition of ethical philosophy that is associated
with Jeremy Bentham and John Stuart Mill (1806 – 1873) British
philosophers.
 Utilitarianism is a normative ethical theory that places the locus
of right and wrong solely on the outcomes (consequences) of
choosing one actions.
Three Basic Principles of Utilitarianism
1. Pleasure or Happiness Is the Only Thing That Truly Has Intrinsic
Value
2. Actions Are Right as they Promote Happiness, Wrong as they
Produce Unhappiness
3. Everyone's Happiness Counts Equally
Deontology
 Deontology is a theory that suggests actions are good or bad
according to a clear set of rules. Its name comes from the Greek
word deon, meaning duty.
 In moral philosophy, deontological ethics or deontology is the
normative ethical theory that the morality of an action should be
based on whether that action itself is right or wrong under a series
of rules, rather than based on the consequences of the action
Kantian
 Kantian ethics refers to a deontological ethical theory developed by
German philosopher Immanuel Kant.
 According to these theories, the rightness or wrongness of actions
does not depend on their consequences but on whether they fulfill
our duty.
Virtue ethics
 Virtue ethics is developed by the philosopher Aristotle. Virtue
ethics mainly deals with the honesty and morality of a person.
 It states that practicing good habits such as courage, honesty,
ambitious, truthfulness and patience makes a moral and virtuous
person.
 Virtues are admirable qualities that lead to moral excellence
3.2 Ethical Relativism
 Relativism is the denial that there are certain universal truths.
 Thus, ethical relativism posits that there are no universally valid
moral principles
 According to the ‘conventional’ ethical relativism it is the mores
and standards of a society which define what is moral behavior
and ethical standards are set, not absolutely, but according to the
dictates of a given society at a given time.
3.2.1 Subjectivism
 Subjectivism is inadequate as an ethical theory. It puts an end to
rational discourse about morality as surely as intuitionism does.
 It precludes justification of basic moral principles and reduces
them to the status of facts. And it renders unintelligible the fact
that one can be mistaken in one's moral judgments and be in need
of correction.
3.2.2 Ethical Objectivism
 This philosophical position is in direct opposition to ethical
relativism; it asserts that although moral principles may differ
between cultures, some moral principles have universal validity
whether or not they are universally recognized.
 There are two key variants of ethical objectivism: ‘strong’ and
‘weak’. Strong ethical objectivism or ‘absolutism’ argues that
there is one true moral system.
 Weak ethical objectivism holds that there is a ‘core morality’ of
universally valid moral principles, but also accepts an
indeterminate area where relativism is accepted.
3.3 Unethical Behavior
 The Civil Service Commission of Philippines defined an unethical
behavior as any behavior prohibited by law.
 An unethical behavior would therefore be defined as one that is not
morally honorable or one that is prohibited by the law.
 Many behaviors will fall in the classification including corruption,
mail and wire fraud, discrimination and harassment, insider
trading, conflicts of interest, improper use of company assets,
bribery.
Causes of Unethical Behavior in Workplace
 Misusing Company Time
 Unethical Leadership
 Lying to Employees
 Harassment and Discrimination
Ethical Abuses in Business
Corporate ethical/legal abuses include:
 Creative accounting
 Earnings management
 Misleading financial analysis
 Insider trading
 Securities fraud
 Bribery/kickbacks
 Facilitation payments
Work Ethics Work
 Ethic is a value based on hard work and diligence.
 It is also a belief in the moral benefit of work and its ability to
enhance character.
 Workers exhibiting a good work ethic in theory would be
selected for better positions, more responsibility and ultimately
promotion.
 Workers who fail to exhibit a good work ethic may be regarded
as failing to provide fair value for the wage the employer is
paying them and should not be promoted or placed in positions
of greater responsibility.
Characteristics of a Good Work Ethics
Reliability
 Reliability goes hand in hand with a good work ethic. If
individuals with a good work ethic say they are going to attend
a work function or arrive at a certain time, they do, as they
value punctuality.
 Individuals with a strong work ethic often want to appear
dependable, showing their employers that they are workers to
whom they can turn.
Dedication
 Those with a good work ethic are dedicated to their jobs and
will do anything they can to ensure that they perform well.
 Often this dedication leads them to change jobs less frequently,
as they become committed to the positions in which they work
and are not eager to abandon these posts
Productivity
 Because they work at a consistently fast pace, individuals with a
good work ethic are often highly productive.
 They commonly get large amounts of work done more quickly
than others who lack their work ethic, as they don't quit until
they've completed the tasks with which they were presented.
Cooperation
 Cooperative work can be highly beneficial in the business
environment, something that individuals with a strong work
ethic know well.
Character
 Those with a good work ethic often also possess generally
strong character.
 This means they are self-disciplined, pushing themselves to
complete work tasks instead of requiring others to intervene
Why Ethical Reflection Remains Necessary
 Legal standards direct and regulate society and provide means
by which members of society can pursue their purposes in
orderly and recognized ways.
 Moral standards are primarily sought by persons to shape their
own activities. It is a mistake to think of moral norms as if they
formed an additional legal code.
 Upright persons undertake ethical reflection about moral
questions not so much to settle controversies with others as to
make sure that their own lives will meet the test of
reasonableness, will be examined lives worth living by persons
conscious of and grateful for the human capacity for rational
reflection and self-criticism
 There are a number of reasons why moral guidelines are
necessary and legal standards by themselves are insufficient,
 First, is the conception of government which is based solely
upon the commonly accepted principles of liberty and justice
morally defensible?
 In chapter two we articulated this conception as an expression
of the American consensus (or, more broadly, of the form of
liberal democracy common to the English-speaking nations).
 Throughout our treatment of the jurisprudential questions we
have assumed that this conception of government is sound
 The other assumptions is that human life is, not a good
intrinsic to human persons, but merely a necessary condition
of personal fulfillment.
 On this assumption life is an instrumental good at the material
or biological level. The other assumption is that the rightness
and wrongness of human acts depends strictly upon their
measurable good or bad consequences for human persons.
 On this assumption, when continued life is of no benefit and
its termination would prevent further suffering, then beneficent
killing is morally require
Chapter four
Ethics of management (management and
leadership)
Term paper assignment on the following topics
(weights=20%)
4.1 Statement of value (Group 1)
4.2 Code of conduct and ethic ( Group 2)
4.3 Ethics training, audits, and consultants (Group 3)
End of chapter three!!
THANK YOU
FOR YOUR
FULL ATTENTION!
5.1 Rationale for CSR
 It can be said that business ethics are integrated into
companies through Corporate Social Responsibility
(CSR), which cannot be defined in a single way, nor has
its concept remained unchanged since its appearance in
the business world.
 The labor conflicts that developed at the end of the 19th
century as a result of the industrial revolution, when the
model of artisan work was changed to one of mass
production, revealed a series of social problems that
forced companies to take measures that could be
considered as the origin of CSR (Jenkins 2009).
 In the business world, the objectives and purposes of CSR have
evolved over time. In the early days of CSR, it was considered
exclusively as a marketing tool aimed at achieving legitimacy
or improving image.
 Today, however, it is considered a fundamental strategic
element in organizations, essential for the long-term
sustainability of companies.
 Why corporate social responsibility? Because individuals have
largely abandoned, at least seriously neglected, the role of
caring for one another and corporations have assumed it.
 Why now? Because we have recently become painfully aware
of how ill-suited the modern corporation is for the task, lacking
both the credibility and the voice of moral authority
5.2 Social Responsibility Debate
 We are fully aware of these possibilities, just as we are of
critiques from the Left and the Right.
 From the perspective of neoliberal economics, CSR is wrong-
headed: a violation of the principles of free enterprise and a
confusion of roles of the private, governmental, and nonprofit
sectors.
 From the Left, CSR is viewed as at best a public relations
strategy for complacency and control; at worst, an illusion
arising from an oxymoron—a misunderstanding of the social
potential of the corporate form .
 According to Friedman, the doctrine of CSR required accepting
that “political mechanisms, not market mechanisms, are the
appropriate way to determine the allocation of scarce resources
 By contrast, scholars such as Archie Carroll (1979) acknowledged
the profit motive of corporations but also extended their
responsibilities to encompass the “legal, ethical, and discretionary
expectations that a society has of organizations at a given point in
time” (p. 500).
 Carroll and others moved discussions of CSR beyond the
economic bottom line and legal compliance to the range of
contemporary social issues that may concern the public at any
historical moment.
 This indicates that there is no agreed definition of CSR so this
raises the question as to what exactly can be considered to be
corporate social responsibility.
 Even the way scholars perceive and define CSR is different from
each other. Some of the views on CSR definition are as follows;
5.2.1Corporations are part of society
 A growing number of writers however have recognized that
the activities of an organization impact upon the external
environment and have suggested that one of the roles of
accounting should be to report upon the impact of an
organization in this respect.
 Such a suggestion first arose in the 1970’s and a concern with
a wider view of company performance is taken by some
writers who evince concern with the social performance of a
business, as a member of society at large.
 “There is no reason to think that shareholders are willing to
tolerate an amount of corporate non-profit activity which
appreciably reduces either dividends or the market
performance of the stock.”
5.2.2 Profit is all that matters
 Some writers have taken the view that a corporation should not be
concerned with social responsibility and you are certain to come
across the statement from Milton Friedman, made in 1970:
 “There is one and only one social responsibility of business – to
use its resources and engage in activities designed to increase its
profits so long as it stays within the rules of the game, which is to
say, engages in open and free competition without deception or
fraud”.
5.2.3 CSR is conditional
While Robertson and Nicholson (1996) thought that:
“A certain amount of rhetoric may be inevitable in the area of social
responsibility.
Managers may even believe that making statements about social
responsibility insulates the firm from the necessity of taking socially
responsible action.”
Moir (2001) is more ambivalent:
“Whether or not business should undertake CSR, and the forms that
responsibility should take, depends upon the economic perspective of
the firm that is adopted”.
So we can see that CSR is a contested topic and it is by no means
certain that everybody thinks that it is important or relevant to
modern business.
5.3 Theories of Corporate Social Responsibility
 In a study, Garriga and Mele (2004) distinguish four groups of
CSR theories, considering their respective focus on four
different aspects of the social reality: economics, politics, social
integration and ethics.
 The first one focuses on economics, because the organization is
seen as a mere instrument for wealth creation, while the second
group focuses on the social power of the firm and its
responsibility in the political arena associated with its power.
 The third group focuses on social integration, and include
theories which consider that business should integrate social
demands.
 The fourth and final group of theories focuses on ethics,
including theories which consider that the relationship between
business and society should be embedded with ethical values
Corporate Social Performance (CSP): Corporate Social
Performance is a theory grounded in sociology and has evolved
from several previous notions and approaches.
In one of its prominent versions, Corporate Social Performance is
understood as “the configuration in the business organization of
principles of social responsibility.
Conceptual bases for Corporate Social Performance (CSP):
The CSP model presented by Wood (1991b) is one of the most
representatives within this theory. It is a synthesis which includes:
(i) principles of CSR, expressed on three levels: institutional,
organizational and individual; (ii) processes of corporate social
responsiveness, and (iii) outcomes of corporate behavior.
Shareholder Value Theory (SVT): Shareholder Value Theory
(SVT) or Fiduciary Capitalism holds that, the only social
responsibility of business is making profits and, as the supreme goal,
increasing the economic value of the company for its shareholders.
 Shareholder theory represents the classical approach to business,
according to this theory a firm’s responsibility rests solely with its
shareholders.
 According to this theory, the sole constituency of business
management is the shareholders and the sole concern of
shareholders is profit maximization.
 This view holds that, other social activities that organizations
could engage in would be acceptable if they are prescribed by law
or if they contribute to the maximization of shareholder value.
 Stakeholder Theory: In contrast the Shareholder Theory, the
Stakeholder Theory takes into account the individuals or groups
with a stake in the claim on the organization.
 In a very general sense, stakeholders are groups and individuals
who benefit from or are harmed by corporate actions (Crane, et
al. 2008).
 Stakeholder theory essentially challenges the notion that
shareholders have a privilege over other stakeholders, such as,
customers, employees, creditors, vendors and the community at
large.
 So, in essence stakeholder theory is a rhetorical response to the
dominant shareholder theory that asserts that organizational
managers should only focus on maximizing the economic
interests of shareholders.
Corporate Citizenship: For decades numerous business leaders
have been involving their organizations in philanthropic activities
and donations to the community where their organizations
operated, and this has been recognized and understood as an
expression of good corporate citizenship.
5.4 Pyramid of CSR
The Components of Corporate Social Responsibility
 For corporate social responsibility (CSR) to be accepted by
conscientious business.
 It is suggested in the literature that four kinds of social
responsibilities constitute total CSR: economic, legal, ethical,
and philanthropic.
 Economic Responsibilities: The pyramid portrays the four
components of CSR, beginning with the basic building block
notion that economic performance undergirds all other
organizational activities.
 Legal Responsibilities: The second layer in the pyramid is a legal
responsibility which is also required by society. Legal
responsibilities require an organization to abide by the laws of
society.
 Ethical Responsibilities: Next is an organization’s responsibility
to be ethical. At its most fundamental level, this is the obligation
to do what is right, just, and fair, and to avoid or minimize harm to
stakeholders (employees, stockholders, consumers, the
environment, and others).
 Philanthropic Responsibilities: Finally, an organization is
expected to be a good corporate citizen. This is captured in the
philanthropic responsibility, wherein business is expected to
contribute financial and human resources to the community and to
improve the quality of life.
Figure 5.1: Pyramid of Corporate Social Responsibilities
(CSR)

Philanthropic responsibilities (Be

Corporate citizen)
Ethical responsibilities (Ethics)
Legal responsibilities (Law)

Economic responsibilities (Be

profitable)
5.5 Contemporary CSR concepts

CSR Dimensions Goals Key indicators/Practices

Value creation Economic Capital investment (financial, manufacturing, social,
development human and natural capital.
Beneficial products (sustainable & responsible goods
and services) Inclusive business (wealth distribution,
bottom of the pyramid markets)
Legal compliance Legitimate Compliance to all laws and by laws affecting the
operations industry and the organization, including statutory
requirements, employment laws, product safety laws,
environmental protection laws, safety and health
legislations, and etc
Good governance Institutional Leadership (strategic commitment to sustainability &
effectiveness responsibility) Transparency (sustainability &
responsibility reporting, government payments) Ethical
practices (bribery and corruption prevention, values in
business)
Work place concerns Employee Fair labor practices (working conditions, employee
wellbeing rights, health & safety, employee Involvement,
workplace diversity, gender Issues, human capital
development, quality of life, equal opportunities, non –
discrimination). Supply chain integrity (SME
empowerment, labor & environmental standards)
Philanthropical Community Employee Volunteerism, Education (Schools Adoption
engagements outreach Scheme), Youth Development, Underprivileged,
Graduate Employment and Children, charitable
donations, sponsorships, scholarships, support for
socially beneficial events and causes, provision of public
goods and services)
Environmental Sustainable Ecosystem protection (biodiversity conservation &
integrity ecosystem ecosystem restoration) Renewable resources (tackling
climate change, renewable energy and materials) Zero
waste production (cradle-to-cradle processes, waste
elimination)
End of chapter five!!
THANK YOU
FOR YOUR
FULL ATTENTION!
Introduction
 Most business organizations now believe that investing a part of
their profits and efforts in the society and natural environment from
which they draw resources has positive implications for their own
well-being.
 The benefits of CSR are also substantiated by research focusing on
the relationship between CSR activities and firm’s financial
performance, competitive advantage, reputation and legitimacy,
employee attitudes, and synergistic value creation.
 Recent meta-analysis studies have reported an overall positive
relationship between presence of CSR activities and financial
performance.
 The jury is still not out on many such relationships; nonetheless,
organizations are going ahead and making investments in CSR.
6.1. Responses to corporate social responsibility
 Corporate social responsibility (CSR) is increasingly becoming an
important strategic agenda for companies.
 As evidence accumulated by various studies in support of
effectiveness of CSR, strategic implementation of CSR is gradually
replacing the old view of CSR, which simply considers it an act of
charity.
 Consequently, many companies attempt to communicate their CSR
initiatives specifically to their customers who are among various
stakeholders that can have significant impact on their performance.
6.2. Planning for CSR
 (CSR) it is the obligation that corresponds to any profit-making
organization regarding the improvement of the field in which it
operates, that is, with the economic, social and cultural
improvement of the surrounding community.
 This type of responsibility should goes beyond the necessary
compliance with laws and regulations, and the ordinary operation of
the company, and assigns it an active and voluntary role within the
dynamics of supporting local impact initiatives.
 In other words, it is a community social work that the company
carries out, to give back to the community a part of the wealth that,
thanks to it, the organization can generate on a daily basis.
 Thus, a company can support cultural, educational, environmental,
sports, community plans or of any kind, as long as they lead to the
improvement of the quality of life, so that the presence of the
company not only benefits its shareholders, but society in general.
 The larger the size of the company, the greater is expected to be its
contribution to improving people’s quality of life
6.3. Corporate philanthropy, voluntarism, and sponsorship
 Philanthropy is a form of humanity that consists of "private
initiatives, for the public good, focusing on quality of life".
Philanthropy contrasts with business initiatives, which are private
initiatives for private good, focusing on material gain; and with
government endeavors, which are public initiatives for public
good, notably focusing on provision of public services.
 A person who practices philanthropy is a Philanthropist. Corporate
philanthropy is meant to be driven by a desire to make a social
change.
 The company just makes donations of property or money to have
an impact and improve their brand image.
 But it isn’t involved in the corporate main activities.
List some of the famous African Philanthropist being appreciated in
practice?
 According to the Council on Foundations, corporate philanthropy
refers to the investments and activities a company voluntarily
undertakes to responsibly manage and account for its impact on
society. Philanthropic investments and activities include:
 Money
 Donations of products
 In-kind services
 Technical assistance
 Employee volunteerism
 Other business transactions
 The purpose of these investments and activities is to advance a
social cause, issue or the work of a nonprofit organization.
Types of Corporate Philanthropy
The seven most common forms of corporate philanthropy are:
 Matching Gifts: Companies financially match donations that their employees
make to nonprofit organizations.
 Volunteer Grants: Companies provide monetary grants to organizations where
employees regularly volunteer.
 Employee & Board Grant Stipends: Corporations award grants to employees
and/or public boards to donate to the nonprofit of their choice.
 Community Grants: Company programs award nonprofit organizations that
apply for grants based on defined criteria.
 Volunteer Support Initiatives: Companies partner their employees with
nonprofits to provide specialized support
 Corporate Sponsorships: Companies provide financial support to a nonprofit
that in return acknowledges that the business has supported their activities,
programs or events.
 Corporate Scholarships: Corporations provide scholarship dollars to
universities on behalf of students seeking support to continue their studies,
encouraging college education and workforce development.
Benefits of Corporate Philanthropy
 Companies with successful corporate giving strategies publicly live the values of
their organizations and in return benefit from high employee engagement,
employee retention and the ability to attract top talent.
 Corporate philanthropists also see a more positive work environment, increased
employee engagement, a boost to their company’s public image and brand equity,
enhanced customer relationships and consumer confidence as well as
strengthened government relations.
Corporate volunteerism
 Offer your employee’s incentives to participate in your corporate volunteerism.
Corporate volunteerism is a way for corporations and their employees to give
back to their community.
 Volunteer time off (VTO) is a great tool to promote work/life balance and
corporate responsibility, two things that are important to workers today. Some
creative ideas include:
 Paid time off for volunteering
 Rewards for charitable donations
 Contests
 Team building volunteer events
How Does It Work?
 Companies use a few different models in their volunteer efforts.
Your company may already be doing some of this without taking
credit for it:
 Organizing specific events where teams from within the office (or
sometimes the entire office) head out to do a joint volunteer
activity. (Habitat for Humanity has some great options.)
 Giving employees a bank of time (separate from vacation and sick
time) to use at their discretion
 Offering flexibility to leave during the day for a couple of hours (to
allow a parent to volunteer with their kid’s school or for an
employee attend a volunteer board meeting, for example)
 Matching employee’s hours with a monetary donation to the
organization
 Formalizing a program is not only a good way to track employees’
volunteer work, but it’s also a great tool to promote the company
and recognize employees for the hard work they do outside of the
office.
Corporate Sponsorship
 A corporate sponsorship is a form of marketing in which a
company pays for the right to be associated with a project or
program.
 A common template for corporate sponsorships entails a
collaboration between a nonprofit organization and a sponsor
corporation, in which the latter funds a project or program
managed by the former in exchange for recognition.
 Corporations may have their logos and brand names displayed
alongside of the organization undertaking the project or program,
with specific mention that the corporation has provided funding.
 Corporate sponsorship is common for programs at museums and
festivals, but is also seen in the commercial sphere, such as athlete
endorsements.
 For example, athletic facilities may bear the name of a company
and the name of a sporting competition may be proceeded by the
name of a company
6.4. Social venture philanthropy (SVP)
 Venture philanthropy is the application or redirection of principles
of traditional venture capital (VC) financing to
achieve philanthropic endeavors.
 Often, it is exercised in the context of charitable startups, green
companies, or corporations, as the venture capitalists offering
funding to these types of firms will have the greatest extent of
experience in these areas.
6.5. Social auditing and reporting
Concept of Social Audit:
 Although no unanimous definition has yet been evolved, the term
Social audit, in its simple sense, may be defined as the audit of the
social responsibilities that should have been discharged by a
business enterprise.
 Its meaning and content are synonymous with that of social
responsibility accounting.
The term ‘social audit’ is understood in different connotations by
different men to include various practices, such as:
 Inventory of ‘social programmes’ undertaken by a company.
 Inventory of their ‘social impacts’.
 Estimates in terms of money of various company activities having
‘special social significance’.
 Results of surveys on environmental pollution, employment
discrimination, occupational health and safety, etc., undertaken at
the instance of the Government’s regulatory measures.
 Critical report or surveys made on an area external to a company
or industry, for example, sexual discrimination, caste
discrimination, etc.
Major reasons advanced in this respect are:
 Increasing awareness of society about corporate social
contributions; that is, comparatively better-off citizens in business
should develop an emotional involvement in the improvement of
socio-economic conditions,
 Providing means of identifying and rewarding business for social
contributions,
 Identifying adverse effects on the environment,
 Improving the credibility and reputation of business, and
 Transferring costs of social activities to other various segments of
society.
 In the words of some eminent writers’ “social auditing is defined
as a systematic attempt to identify, analyses, measure (if
possible), evaluate, and monitor the effect of an organization’s
operations on society (that is, specific social groups) and on the
public well-being.”
Social audit may have three objectives basically:
1. To identify and measure the periodic net social contribution of an
individual firm, which includes not only the costs and benefits
internalized to the firm, but also those arising from externalities
affecting different social segments;
2. To help determine whether an individual firm’s plans, strategies
and practices that directly affect the relative resource and
earnings are consistent with social principles;
3. To make available in an optimum manner to all social
commitments, relevant information on a firm’s objectives,
ultimate goals, policies, programs, performances and
contributions to the social goals. Relevant information is that
which should provide for a scheme of public accountability and
public decision—making regarding capital choices and social
resources allocation.
Social Audit Report
Contents of a Social Audit Report
 When work of social audit is completed by a social audit team a
report is prepared by it and submitted to the management of the
business organization whose social audit it has conducted.
The major items which are included in the social audit report
are as under:
Activities related to the shareholders/owners
 Use of capital is it done in an optimum way and if not, which
alternate uses are suggested.
 Precautions taken for safety of the capital.
 Is return given on the capital satisfactory from the
shareholders’/owners’ point of view? Where the rate of return
stands for the current year in comparison with previous year’s rate
and in comparison with the rates of other similar organizations?
 Has capital appreciation taken place and is it satisfactory from the
owners’ point of view?
6.6. Corporate reputation and CSR
 Corporate social responsibility (CSR) as a strategy is an essential
part of your company’s reputation.
 Not only will your CSR help build your corporate reputation and
customer base, it will also help protect your business from
reputation damage and accelerate your recovery time after a
crisis.
 Corporate social responsibility mistakes can damage or even ruin
your reputation, so it’s vital to properly plan and implement your
strategy. Because as Ethiopian Oromo saying goes” Maqaan badu
mannaa mataan badu wayya” To mean it is better to die than
having bad name or than being unhonoured in one’s individual or
organization’s name.
 End of chapter six!!
THANK YOU
FOR YOUR
FULL ATTENTION!
Introduction
 Environmental ethics is the discipline in philosophy that studies the moral
relationship of human beings to, and also the value and moral status of, the
environment and its nonhuman contents. -Stanford Encyclopedia of Philosophy
 The definition of environmental ethics rests on the principle that there is an
ethical relationship between human beings and the natural environment. Human
beings are a part of the environment and so are the other living beings.
 When we talk about the philosophical principle that guides our life, we often
ignore the fact that even plants and animals are a part of our lives.
 They are an integral part of the environment and hence cannot be denied their
right to live. Since they are an inseparable part of nature and closely associated
with our living, the guiding principles of our life and our ethical values should
include them. They need to be considered as entities with the right to co-exist
with human beings.
 Discuss the relationship between environment and ethics?
 Approaches to environmental issues
Recognizing that protection of the global environment is the most important task
common to humankind in every field of our business activities.
The various approaches developed for the environmental management are:
I. Ad hoc approach-, developed in reaction to a specific situation.
II. Problem-solving approach: for identification of problems and needs and
implement solutions.
III. Systems approach: such as ecosystem, agro-ecosystem, etc. Regional approach:
based on ecological zones such as watershed, river basin, coastal zone,
command area development, island, etc.
IV. Specialist discipline approach: often adopted by professionals for air, water
and land management, urban management, tourism management, and
environmental health.
V. Voluntary sector approach: encouraged and supported by NGOs.
VI. Commercial approach: for environmental management for business.
VII. Human ecology approach: for study of relations between humans or society
and nature.
VIII.Political ecology approach: to develop policies and laws.
IX. Apart from the above, an environmental management system (EMS) approach
has been developed as an integrated and proactive approach to environmental
issues.
 Opposition to green environmentalism
The concept of opposition of green environmentalism
Opposition of green environmentalism/Anti-environmentalism is a movement
that favors loose environmental regulation in favor of economic benefits and opposes
strict environmental regulation aimed at preserving nature and the planet.
 Anti-environmentalists seek to persuade the public that environmental
policy impacts society negatively.
 The movement's goals include to counter the effects of environmental ideology
and movements, to diminish public concern about the environment and to
persuade politicians against increasing environmental regulations.
 Concern for economic growth is the source of anti-environmentalist beliefs. Anti-
environmentalists weigh the benefits to the business sector of the economy more
heavily than the consequences of lack of regulation has to the environment and
inhabitants.
 Anti-environmentalists believe that humans do not need to interfere with the
Earth's natural processes and therefore environmental regulation is unnecessary.
Anti-environmentalists argue that the Earth's system is not as fragile as
environmentalists maintain.
 They believe Earth will continue to maintain and restore itself through natural
cycles as it did long before humans arrived and will continue to maintain itself
long after humans are gone.
 7.3 Sustainable development
 The concept of sustainable development has been there for
decades and as a modern concept was simply defined as
“development that meets the needs of the present world without
compromising the ability of future generations to meet their own
needs”.
 The concept of sustainable development aims to encourage the use
of products and services in a manner that reduces the impact on
the environment and optimizes the resources in order to satisfy
human needs.
 Sustainable development can be facilitated through five guiding
principles, i.e. living within environmental limits, ensuring a
strong, healthy and just society, achieving a sustainable economy,
promoting good governance and utilizing information
communication technology as a social responsibility.
 Do you know about MDG and SDG”s?
Why it is important
To understand why sustainable development is the need of the hour, take a look at the
following key pointers that elucidate upon its importance:

 Development of non-polluting Conservation of biological diversity

renewable energy systems

 Population stabilization Control of pollution in water and of
the air
 Integrated land-use planning Recycling of waste and residues

 Healthy cropland and grassland Ecologically compatible human

settlements
 Woodland and re-vegetation of Environmental education and
awareness at all levels
marginal lands
 Development of non-polluting Conservation of biological diversity

renewable energy systems

 Population stabilization Control of pollution in water and of
the air
 Integrated land-use planning Recycling of waste and residues
Three Pillars of Sustainable Development
 The concept of sustainable development is rooted in three main
pillars that aim to achieve inclusive growth as well as create
shared prosperity for the current generation and to continue to
meet the needs of future generations.
 These three pillars are Economic, Social and Environmental
Development and are interconnected and reflect the goals of
community development and social and environmental stability.
Let’s take a look at these the pillars of sustainable development
in further detail.
1. Economic Sustainability
Economic sustainability strives to promote those activities through
which long-term economic growth can be achieved without having
a negative impact on the environmental, social, and cultural aspects
of the community.
As a key facilitator for the concept of sustainable development, the
basic fundamentals of economic sustainability are as follows:
 Finding effective solutions for hunger and poverty in the world in
environmentally sound ways;
 Economics is the study of how societies use their resources (water,
air, food, fuel, etc.) and when combined with the concept of
sustainable development, it focuses on attaining economic growth
which is only sustainable and simultaneously improves our quality
of life and environment;
 Economic sustainability is grouped into three general categories to
encompass sustainable growth, i.e values and valuation, policy
instruments and poverty and environment.
Social Sustainability
 Social sustainability is a form of social responsibility that
significantly takes place when a community’s stable and unstable
components need a revival of depleted resources.
 It combines the design of the physical environment with the social
environment and focuses on the needs of different sections in a
community and puts special emphasis on providing the right
infrastructure and required support to weaker section.
 It is another parameter involved in understanding the concept of
sustainable development and the key fundamentals of social
sustainability are:
 Systematic community participation
Strong civil society, including government
 Commonly accepted standards of honesty (tolerance, compassion,
forbearance, love)
 Gender equality
Cultural Sustainability
 Culture is one of the main components of the concept of
sustainable development.
 The need for cultural sustainability arises from the growing
awareness of the importance of cultural rights and the
preservation of cultural heritage.
Some of the major factors that cultural sustainability is based on are:
 Cultured Individual: A developed state of mind can result in
increasing awareness among communities which will protect and
promote cultural diversity vital to universal human rights
 Globalization: With diverse cultures spread across different
countries, the effects of globalization need to be imperatively
discussed to address the rise of multicultural nations as well as the
different issues faced by them.
Benefits of Sustainable Development
Here are some of the pivotal benefits that can be reaped by
implementing the concept of sustainable development:
 Global Equity: Environmental benefits need to be equitably
distributed over the present and future generations.
 Ethical Guiding Principle: Incorporation of the characteristics
and values that most people associate with ethical behavior
democracy, equality or social justice.
 Physical Sustainability: Recognition of the limits to nature and
striving towards an overall global ecological balance.
 Intergeneration Equity: Environmental resources and economic
welfare should be available for future generations at least equal to
the present ones.
End of chapter seven!!
THANK YOU
FOR YOUR
FULL ATTENTION!!
CSR and Ethics in a Global Context
 Ethics and corporate social responsibility (CSR) have become
watchwords for the governance industry in recent years.
 Growing pressure on businesses, coupled with companies'
ambitions to 'do better' regarding ethical and corporate social
responsibility, has pushed the issue to the top of board agendas.
 Despite this, the concepts of corporate social responsibility and
ethics are not always fully understood by businesses
 8.1 Global business activity and practice
 With the advent of globalization, global business practices and
international business have become common phenomena.
 Large companies often operate in more than one country.
Managing such cross-border operations requires a thorough
understanding of local cultures, practices, laws and business
environments. International managers, thus, have to play several
important roles in their businesses.
 International business basically means commercial transactions
that involve two or more countries. These transactions can occur
between private entities as well as government agencies.
 The only prerequisite of such transactions is that they should
involve multiple nations
 For example, a lot of big companies import their products from one
country and sell them in another.
 Even governments do so in many cases. These transactions can
also include an exchange of finance, technology, people, services,
etc. International management refers to the practice of managing
these kinds of international businesses and global practices.
 This field of management has gained a lot of prominence after
globalization. Even small and medium-sized companies these days
transact with foreign entities.
Features of International Business
 A cross-border business is very different from one that involves a
single country.
The main feature of such businesses is that they operate on very
large scales and involve multiple jurisdictions.
 Another feature of international businesses is that they integrate
the economies of multiple countries. Functions like importing,
exporting, financing, hiring, selling and managing may all happen
in separate nations.
 Thirdly, international businesses and MNCs also have the
distinction of emerging from only a few developed countries.
Companies from large economies like the USA, UK, Japan, China,
Germany, India, etc. dominate international trade.
 Another feature of cross-border businesses is that they face fierce
competition. Smaller companies from developing nations often
have to compete with MNCs that have no shortage of resources.
Importance of International Business
 International business offers the following benefits to the economies and
organizations it involves in its transactions:
 Since import and export are common functions of cross-border business, they
involve the use of foreign exchange. The country exporting goods and services,
thus, can earn foreign exchange from the country importing them.
 Cross-border operations offer businesses the opportunity to earn higher profits.
This is because they can sell their products to a large customer base from
multiple countries.
 Since international business helps a nation’s economy, governments often provide
benefits to attract foreign business. Such government benefits may be in the
form of tax sops, subsidized resources, financial incentives, etc.
 International businesses also facilitate optimum utilization of resources.
Companies use natural and human resources from various countries in their
operations.
 It is very easy for international businesses to diversify and expand their
activities. This is because they earn very high profits and receive many
governments’ benefits.
 8.2 Operating in conflict zones
 “Businesses are not neutral actors; their presence is not without impact. Even if
business does not take a side in the conflict, the impact of their operations will
necessarily influence conflict dynamics”
 The safety and security of an organizations and its personnel is an important
consideration in a country, but especially so when it is in an area of potential or
ongoing conflict.
 Peace contributes to economic development and conflict has negative effects.
Business investment benefits from security and stability. During peacetime,
economies prosper and business becomes efficient.
 In contrast, conflict impinges upon traditional business activities and pushes
businesses into otherwise less transparent and competitive settings. With fewer
opportunities, private sector activity is stifled.
 Globally, companies tend to eschew investments in conflict zones, as the
physical and financial risks are viewed as outweighing the benefits of such
high-risk venues. In such milieus, businesses also become targets of
kidnappings and extortion, further undermining private sector activities.
Barriers to Doing Business, Particularly in Conflict Zones
 Barriers to doing business comprise political instability, traditional
crime, inadequate infrastructure, taxes, policy uncertainty and
corruption.
 Other obstacles for conducting business include limited
entrepreneurship skills, such as customer service and accounting.
 Also, small and medium-sized enterprises (SMEs), which are
among the main drivers of job growth worldwide, unfortunately
suffer from a number of barriers, encompassing: access to
financing, networks and business skills.
 The lack of strong and predictable business regulatory environment,
like difficulties with registering business and the enforcement of
contracts, escalation an increasingly informal business framework
often found in conflict zones with higher levels of inefficiencies
Doing Business in Conflict Zones
 The private sector creates wealth, promotes socio-economic
development and contributes to preventing and resolving conflict.
For successful entrepreneurship, particularly in conflict-affected
areas, public-private-non-profit partnerships are critical.
 Through their operations, firms can take advantage of first-mover
advantages, even in conflict zones.
 Still, companies should be cognizant of the unique business
factors and risks – security, costs, insurance, contractual
obligations, personnel – that exist in distinct conflict zones, as
they are all not alike.
 Despite various externalities inherent in doing business in conflict
zones, some opportunities appear too attractive to dismiss.
 This is particularly true for companies working in extractive
industries where business in inextricably tied to the host country,
even one suffering the ailments of conflict.
 8.3 Bottom-of-the Pyramid – doing business in poverty
markets
 The more current usage refers to the billions of people living on
less than $2.50 per day, the definition proposed in 1998 by C.K.
Prahalad.
 It was subsequently expanded upon by both in their books.
Prahalad proposes that businesses, governments, and donor
agencies stop thinking of the poor as victims and instead start
seeing them as resilient and creative entrepreneurs as well as
value-demanding consumers.
 He proposes that there are tremendous benefits to multi-national
companies who choose to serve these markets in ways
responsive to their needs. After all the poor of today are
the middle class of tomorrow.
 There are also poverty reducing benefits if multi-nationals work
with civil society organizations and local governments to create
new local business models.
 The Bottom of the Pyramid concept is not that old but has
undergone some significant discussion and change in perspective
over the past 15 years since Prahalad and Hart (1999, 2002) first
introduced the concept.
 Bottom of the pyramid (BOP), also called base of the pyramid,
term in economics that refers to the poorest two-thirds of the
economic human pyramid, a group of more than four billion
people living in abject poverty.
 More broadly, BOP refers to a market-based model of economic
development that promises to simultaneously alleviate widespread
poverty while providing growth and profits for multinational
corporations (MNCs).
Challenges at the Bottom of the Pyramid
Bottom of the Pyramid can be turned into a huge business
opportunity by developing innovative products and services for the
underserved markets, and several companies have already started
doing so. However, it requires overcoming a lot of challenges and
hurdles.
 Cultural and Social Roadblocks
 A lot of rural and underserved markets have cultural and social
practices that have been deeply ingrained since generations,
making them resistant to try out anything which either goes
against those beliefs or has a steep learning curve.
 That's why companies must ensure that their product or service is
easy to understand and simple to use.
 Economic Drawbacks
 Lack of disposable income means that companies can't sell the
same products or at least the exact SKUs (Stock Keeping Unit) in
rural markets which they do in their urban and metro counterparts.
What is the actual shape of the wealth pyramid?
 The pyramid is a graphical depiction of inverse relationship
between two variables as one increases the other decreases.
 We find that the percent of world wealth and the percent of world
population controlling it are related with each other in an inverse
relation.
 If we plot the world wealth in percent terms along the vertical axis
of a graph and the corresponding percent population having control
on it on the horizontal axis of a graph and add the mirror image of
this graph on the left side of the vertical axis we get a wealth
pyramid and can see that as we move to higher and higher wealth
brackets we find that fewer and fewer people have access to it, thus
the figure has a wide bottom and a lean top similar to the pyramids.

 It has been reported that the gap between the ToP and BoP is
widening over time in such a way that only 1% of the world
population controls 50% of the wealth today, and the other 99% is
having access to the remaining 50% only
Approximate visualization of the wealth pyramid when 1% population controls
50% of the wealth
 8.4Corruption and its impact on the national and global economy
 Corruption is one of the main criticisms of citizens to political actors, usually
made from outside and disseminated by the media.
 Corruption is now a popular theme in the social sciences. Rising interest it is
evident in the economy and in other fields, where major journals have published
numerous articles on the subject.
 Some organizations publish indicative data on corruption. "Dishonest or
fraudulent conduct by those in power, Typically Involving bribery" "The action or
effect of making someone or something morally depraved"
Impact On investment and economic growth.
 Corruption reduces economic growth by reducing incentives for investment? Is
the answer we seek in the hypothesis? Wei (1999), on the other hand, finds
evidence that corruption reduces foreign direct investment, acting as a tax
equivalent to 20% of the return of a project.
 The quality of potential investors, will deteriorate because the only ones interested
are those with higher skills for corruption and not the most efficient, i.e.
entrepreneurs "friends" of the government
Impact On economic efficiency
Bribery raises transaction costs and uncertainty in an economy (Soto10 , 2000). Diverts
talent to rent-seeking activities and distorts sectoral priorities and technological choices.
Available data refute the argument of bribery as an accelerator to demonstrate a positive
relationship between the extent of bribery and time spent negotiating business managers
involved with public officials (Kaufmann11 and Wei, 1999) .The corruption distorts
incentives which operates the private sector by reducing economic efficiency.
Impact As a hidden tax
Economic analysis is common to find that equate corruption to tax Although both taxes and
corruption impose higher costs to producers, the collection of the latter is "private" and,
therefore, the potential use of these resources is lost socially productive purposes.
Corruption is costly to society by being illegitimate same. On the one hand there are
resources to prevent and punish corruption, and on the other hand, those involved in corrupt
acts must allocate resources to avoid detection. -Impact
In the allocation of public spending
 It is appreciated that a network of kickbacks in public works,
or the execution of expenditure State (whatever this state,
national, provincial or municipal), creates a distortion of
public spending.
End of chapter Eight!!
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FOR YOUR
FULL ATTENTION!!