Corporate Social Responsibility efforts and Ethics

Lecture Topics

• B Corporations

• Ethics

• Corporate Social Responsibility



Benefit Corporation B Corp Certification is administered by Standards Analysts at the non-profit B Lab. Standards Analysts are located at B Lab’s Pennsylvania, New York, and Amsterdam offices. The standards for B Corp Certification are overseen by B Lab’s independent Standards Advisory Council.

Benefit Corporation is a legal structure.







• Ethics is an area of study that deals with

ideas about what is good and bad behavior

• A branch of philosophy dealing with what is

morally right or wrong

• Ethics is about our actions and decisions

• Right vs. Wrong




ETHICS – The moral principles, values and beliefs that govern group or individual behavior according to what is right or wrong and what contributes to the balanced good of all stakeholders.

ETHICAL DILEMMA – A situation in which no choice is entirely right



Public vs. Private Ethic Public Ethic—what do you claim or express publicly to others about your underlying values, intentions and motivations in a particular situation.

Private Ethic—what are your true values, intentions and motivations in the situation.

Public and Private ethics may be the same (transparent) or they may be different (deceptive)



Unethical Act

UNETHICAL ACT has immoral intent. It is done with the full knowledge that it is fundamentally wrong legally and morally.



Ethical Mistake Ethical Mistake is a decision or action that is unintentionally unethical.

Why we make ethical mistakes – • a lack of experience in making value-based


• lack of comprehension regarding the consequences of their actions on society, on our organization, on our colleagues…

• and an inability to articulate and act on our own values and ethics in a leadership role



Making Ethical Decisions

Impartial analysis • Visibility – the “newspaper test” • Generality – would all organizational members be comfortable with action taken • Legacy – would decision maker be

comfortable being remembered for action taken

Codes of conduct – organization’s published guidelines of its expectations about ethical behavior



Wells Fargo • Cross-selling means getting customers who use one service, such

as checking, to use other services, such as savings or credit cards. There is nothing wrong with cross-selling – all banks do it.

• In order to encourage employees to support the program, Wells Fargo provided incentives to employees who succeeded at cross- selling.

• Employees manufactured fake accounts in the names of existing Well Fargo customers.

• The problem was huge. In attempting to correct the problem the company fired 5,300 employees and lost its highly respected CEO, John Stumpf.

• Wrong at a massive scale.

• In the face of pressure at work do people become less concerned with ethics?



Enron Code of Ethics (64 Pages)



Student Core Values:

Respect Treat our classmates, professors, staff, and administrators with respect. We respect diversity and do not discriminate on the basis of race, color, ethnicity, religion, gender, disability, sexual orientation, age, or other characteristics. We respect different points of view that add to our knowledge. We respect our learning opportunities by behaving professionally in the classroom, and making academic achievement an important priority.

Honesty Communicate truthfully with our classmates, professors, staff, and administrators in all academic matters while remaining respectful. We observe university policies on academic dishonesty in completing all academic work. In seeking employment, internships, and other opportunities we represent ourselves truthfully, understanding that misrepresentation may not only harm our own reputation but that of our classmates and the college.

Integrity Maintain integrity. Because we zealously integrate these core values into our academic work and preparation for our profession, our integrity enables us to reach our goals, overcome obstacles, and successfully resolve ethical dilemmas.

Commitment Strive for success as students, professionals, and citizens. We keep our promises, and adhere to our core values in all our activities both as students and alumni. We are committed to acting honestly, respectfully, and responsibly in our effort to achieve our goals. We understand that commitment to our core values benefits both students and the community now and in the future.

Responsibility Embrace the responsibility we have to ourselves and to each other to maintain high ethical standards. With each task at hand comes the responsibility to uphold the core values that unite us. We support each other in our adherence to these standards. We recognize that reporting unethical conduct is a responsibility we all share.

My Pledge:

I pledge to join my classmates in upholding these core values.

(Print Name) (Signature) (Date)






Relationship Between Ethics and Corporate Social Responsibility

The main meaning of social responsibility is that it’s more of an obligation or a duty towards the people that the business affects.

Ethics is about right and wrong behavior.

What is good for the society is sometimes not good for the business, and what is good for the business is sometimes not good for the society.



Corporate Social Responsibility (CSR)

• Business practices that involve accessing and taking responsibility for the company’s effects on the environment and social issues

• Generally applies to corporate efforts that go beyond what might be required by regulations

• Proactive approach

• Programs that coordinate the company’s efforts to address societal and community challenges as they emerge



The Triple Bottom Line


• Revenue • Accounting

Profit • Supply and



• Humanitarian • Responsibility • Accountability


• Reuse/Recycle • Sustainability • Going Green



How Do Managers Make a Difference?

• Managers’ bottom line defined by the “3 P’s” • People – invest in the well-being of employees and provide interesting and rewarding jobs that offer the opportunity to be productive

• Profit – ensure that the company is financially healthy

• Planet – protect and support the environment, causes, and communities



Social Responsibility Approaches to Social Responsibility

Proactive approach – organization goes beyond industry norms to solve and prevent problems

Accommodative approach – organization accepts responsibility and takes action in response to societal pressures

Defensive approach – organization accepts responsibility, but does only the minimum required

Reactive approach – organization denies responsibility for social problems and responds only when legally required



Social Responsibility Social entrepreneurs – people who start a business for the dual purpose of profits and societal benefits

• Consumers and investors are becoming more active in supporting and investing in socially responsible companies

• Calvert Social Investment Fund screens companies on financial performance and:

• Environment • Human Rights • Community Relations • Governance Business Ethics • Workplace • Indigenous peoples’ rights • Product safety and impact



“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.” Milton Friedman American Economist 1962



Criticism of CSR

• Detracts from the fundamental economic role of business

• Just superficial window-dressing

• Pre-empts the role of governments as the watchdog over powerful multinational corporations



How CSR Programs Benefit Employers What do employees want the companies they work for to provide for them?

• Traditional benefits like health insurance (94 percent)

• A competitive financial package (92 percent)

• Support the issues and causes that matter to them (64 percent

• And most (78 percent) say they want to be able to actively participate in helping improve their companies CSR practices

Study by Cone Communications



Corporate Social Responsibility


Tom’s Shoes

Apple Computer





Our values reflect those of a business started by a band of climbers and surfers, and the minimalist style they promoted. The approach we take towards product design demonstrates a bias for simplicity and utility. Our mission is to build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis



Record-breaking Black Friday Sales to Benefit the Planet

“100 percent of our global retail and online Black Friday sales directly to grassroots nonprofits working on the frontlines to protect our air, water and soil for future generations, we heard from many of our customers calling it a “fundraiser for the earth.”

We’re humbled to report the response was beyond expectations: With your help, Patagonia reached a record-breaking $10 million in sales. We expected to reach $2 million in sales—we beat that expectation five times over. The enormous love our customers showed to the planet on Black Friday enables us to give every penny to hundreds of grassroots environmental organizations working around the world.



• More than 90 percent of Apple’s products –

including the iPhone, iPad and Mac

computer are assembled in China

• Labor practices and working and living

conditions at factory-owned dorms came

under scrutiny after more than a dozen

workers committed suicide starting in 2010

• Average worker salary $1.78 per hour



iPhone 7 (2016)

• Price $649 for 32GB

• Material costs $219.80

• Labor costs about $5.00 per phone

• Total build $224.80 Tim Cook states these costs are not accurate. There are other expenses not captured in these numbers.



Apple X iPhone 2017 report • 3,000 student interns were “forced” to work at Foxconn in order to

graduate from their high school

• Factory hires students every year during the busy season between August and December. Such hiring increases the number of employees from 100,000 to more than 300,000 workers

• Produce up to 20,000 iPhones a day

• One person can assemble 1,200 iPhone cameras per day

Financial Times, Yuan Yang in Zhengzhou, NOVEMBER 21, 2017



Apple Computer Earlier this year, the Justice Department filed a lawsuit against Apple, seeking the company’s help in unlocking the iPhone 5c used by San Bernardino attacker Syed Farook. Apple declined the request even after a judge said it would need to create software to let the FBI unlock the smartphone. In an open letter, Apple CEO Tim Cook argued that user privacy was at risk and opening one iPhone could open the floodgates to the FBI accessing other users’ smartphones. He added that he was willing to take the fight to the U.S. Supreme Court. Fortune Don Reisinger







• Comprise 71% of earth • 60% of the adult body • Water business grosses $600 billion

annually • Is clean water a human right?




What are the 3 Things Most of the World Cannot Do?



Nestle • Owns 70 of the bottled water companies

• At one site in Michigan they pump 450 gallons per minute

• Nestle does not pay for this water

• Estimated profits from this pumping site is $1.8 million per day



Nestle Tim Brown, Nestle North America CEO

In response to CA drought

“If I stop bottling water tomorrow, people would buy a different brand of bottled water. We see this everyday,” Brown told KPCC. “In fact, if I could increase [bottling], I would.”

Brown claims the company has complied with all regulatory agencies

Bottling water still takes 30% to 50% more water than turning on the tap

Is this really an environmentally, ethically correct thing to be doing right now?



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