Chapter 16 Ethics, sustainability and corporate responsibility Flashcards
1.1 Ethics
Ethics in business can be deemed to occur on 3 levels:
- Personal ethics: relate to the way individuals conduct themselves
- Business ethics: way the firm as a whole behaves and whether it lives up to society’s expectations
- Corporate responsibility: the belief that a firm owes a responsibility to society and stakeholders
These are thee tests to identify and explain ethical issues:
- Transparency: does company mind others knowing about its decision
- Effect: who does the decision hurt? Are one or more stakeholder groups receiving a negative outcome
- Fairness: would the company’s decision be considered fair
Other issues to consider are legality, confidentiality, sustainability and honesty.
2.1 Sustainability
Ability to meet the needs of the present without compromising the ability of future generations to satisfy their own needs. There are three types of issues to consider: social, environmental and economic.
2.2 Natural capital
Considers the natural assets of the planet that provide resources required by people and organisations to survive. Increased focus on natural capital has moved businesses to improve their monitoring and reporting of the impacts of their operations. This allows greater transparency and allows more informed business decisions.
3.1 Corporate responsibility
This is a belief that a firm owes a responsibility to society and stakeholders. A firm with good corporate responsibility goes beyond its minimum contractual obligations to its stakeholders.
- The benefits of good corporate responsibility are that this may help to gain good publicity for the business
- The risks of poor corporate responsibility are long-term damage to the reputation of the business caused by upsetting customers or receiving negative publicity.
Corporate responsibility issues include health and safety, protecting the environment, staff welfare, customer welfare, using fair trade suppliers and charitable giving.
