Po b lecture 6 economic systems and csr students

Principles of Business

Economic Systems & CSR – Part 2

2

Overview

• Business and the natural environment: sustainable creation of goods, environmental considerations, new models of ‘green’ innovation

• Efforts to conserve resources and reduce pollution

• Trends towards sustainability; role of various stakeholders

• Determine what is ethical behaviour

• Critically evaluate the factors that influence ethical behaviour

• Describe the various ethical decision making methods

• Approaches to resolving ethical dilemmas

3

Learning Outcomes

• Discuss the role of business in protecting the natural environment of define sustainable development

• Explain the responsibilities businesses have toward their employees

• Discuss what it means to practise good business ethics and highlight three factors that influence ethical decision-making

Sustainability at the heart of business

Why would you invest in a company which is out of synch with the needs of society, that

does not take its social compliance in its supply

chain seriously, that does not think about

the costs of externalities, or of its negative impacts on

society?Paul Polman, CEO Unilever

An eye on the issues

View video: http://www.ted.com/talks/hans_rosling_on_global_population_growth#t-2772

The Bottom of the Pyramid

We are consuming equivalent of 1.5 planets

Source: World Wildlife Fund, 2013

CSR and the Natural Environment

The creation, delivery, use, and disposal of products that society values virtually always generate pollution and consume natural resources

Environmental causes are often as much about human health and safety as they are about forests, rivers, and wildlife.

Many of these issues often require tough trade-offs, occasional sacrifice, disruptive change, and decision making in the face of uncertainty.

Green or clean in electricity

Source: Bovee et al, 2013

United Nations Millennium Development Goals

Source: UN

Environmental Sustainability

Target 7.A: Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental resources

Target 7.B:Reduce biodiversity loss, achieving, by 2010, a significant reduction in the rate of loss

Target 7.C:Halve, by 2015, the proportion of the population without sustainable access to safe drinking water and basic sanitation

Target 7.D: Achieve, by 2020, a significant improvement in the lives of at least 100 million slum dwellers

Source: UN

The Trend Towards Sustainability

• Sustainable Development– Operating business in a manner that minimizes pollution

and resource depletion, ensuring that future generations will have vital resources

FTSE4Good

Source: LSE

Creating Sustainable Business Models

View video: https://www.youtube.com/watch?v=aTzEBoIBro0

CSR: Consumers

• Consumerism – A movement that pressures

businesses to consider consumer needs and interests

• The right to buy safe products – and to buy them safely

• The right to be informed• The right to choose which products to

buy• The right to be heard

CSR: Employees

• Discrimination – In a social and

economic sense, denial of opportunities to individuals on the basis of some characteristic that has no bearing on their ability to perform in a job

• Affirmative Action – Activities undertaken by

businesses to recruit and promote members of groups whose economic progress has been hindered through either legal barriers or established practices

CSR: Employees

A global supply chain creates increased issues and challenges for organisations to ensure that they monitor and

control the conditions of their workers.

What is business ethics?

• Ethics – The rules or standards

governing the conduct of a person or group

• Transparency – The degree to which

affected parties can observe relevant aspects of transactions or decisions

Source: Bovee et al, 2013

What is Ethical Behavior?

• Competing fairly and honestly

• Communicating truthfully

• Being transparent

• Not causing harm to others

Consider how these might play out with various stakeholders such as:

MediaSuppliersCustomers

3 Core Factors that influence ethical behavior…

Cultural differences Knowledge Organizational

behavior

Code of Ethics A written statement that sets forth the principles that guide

an organization’s decisions

Whistle-Blowing The disclosure of information

by a company insider that exposes illegal or unethical

behavior by others within the organization

Consider the impact on:

Source: Bovee et al, 2013

Consider their stance on ethics

Ethical Decision Making

• Ethical Lapse– A situation in which an

individual or a group makes a decision that is morally wrong, illegal, or unethical

• Ethical Dilemma – A situation in which more

than one side of an issue can be supported with valid arguments

Finding the Right Answer When Faced with an Ethical Dilemma

• Make sure you frame the situation accurately, taking into account all relevant issues and questions.

• Identify all parties who might be affected by your decision

• Be as objective as possible• Don’t assume that other

people think the way you do

• Watch out for conflicts of interest

• Conflict of interest – A situation in which

competing loyalties can lead to ethical lapses, such as when a business decision may be influenced by the potential for personal gain

Conflicts of interest

View video: http://www.ted.com/talks/dan_ariely_beware_conflicts_of_interest#t-264562

Approaches to Resolving Ethical Dilemmas

Source: Bovee et al, 2013

The Prisoners Dilemma

Ethical Dilemmas: What would you do?

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Essential work for next week

• Please consult the OLE for details of:– Essential readings*– Seminar/workshop preparation work*– Recommended further readings– Any additional learning

* Essential readings and preparation work must always be completed in time for the next session

Appendix – Sources for illustrations

Slide 4:www.unilever.com

Slide 12www.shutterstock.com

Slide 15:www.unlatched.com

Slide 17:www.thesimpleurbannite.com & www.primark.com

Slide 21:Coca Cola, Starbucks and McDonalds websites

Slide 22:www.denverpost.com

Slide 26: www.answers.com

End of presentation

© Pearson College 2013