4.

1 Corporate Social Responsibility

4.2 Arguments for and Against
Corporate Social
Responsibility
4.3 Relationship Between C. S. R. and
Business Ethics
4.4 Justice and Economics Systems
4.5 Business Ethics Relating to
Environment Protection
4.6 Business Ethics and Consumer
Protection
4.7 Business Ethics and Social Justice
 Introduction
 Business invariably will face potential moral issues and approaches.
 Most importantly, however, morals should be clear and they will define one's business and
what it stands for.
 To be employed by an employer or self and rendering income for services is accomplished
successfully through good practice of ethical and moral behavior.
 Morality consists of rules of human behavior and specifies that certain actions are wrong or
immoral and that others are right or moral.
 Immorality is always present in business just as it exists in other aspects of life.
 Ethical issues in reference to business are a set of guidelines an employee does not follow or
disregards.
In business, a moral background is expected of individuals employed by employers and when
behavior expectations are not met.
 4.1 Corporate Social Responsibility

 Corporate social responsibility is a form of corporate self-regulation integrated into a business

model.
 CSR is a process with the aim to embrace responsibility for the company's actions and
encourage a positive impact through its activities on the environment, consumers, employees,
communities, stakeholders.
 CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and
ensures its active compliance with the spirit of the law, ethical standards, and international
norms.
 4.1 Corporate Social Responsibility

A) Meaning:
Corporate social responsibility is an umbrella term used to describe voluntary corporate initiatives
concerned with community development, the environment and human rights.
B) Definitions:

1) Bauer:
"Corporate social responsibility means seriously
considering the impact of the company's actions on
society.”

2) Mallenbaker:
"CSR is about how companies manage the
business processes to produce an overall positive
impact on society.”
 4.1 Corporate Social Responsibility

C) Drivers for Corporate Social Responsibility:

Drivers for Corporate Social Responsibility

 4.1 Corporate Social Responsibility

C) Drivers for Corporate Social Responsibility:

 4.1 Corporate Social Responsibility

C) Drivers for Corporate Social Responsibility:

5) Globalisation :
Anti-globalisation groups, such as Earth First, have demanded greater accountability from
governments and companies alike.
6) Competitive Pressure :
As more companies in an industry adopt CR practices, the laggards come under
increasing pressure to follow suit. A typical example is the oil industry, where almost all companies
now engage in some form of CR programme.
7) Competitive Advantage :
Many companies regard the intangible benefits of a CR programme, such as a better
brand image, as a way of gaining the upper hand over their rivals.
8) The Shrinking Role of Government :
In the past, governments have relied on legislation and regulation to deliver social and
environmental objectives in the business sector.
 4.1 Corporate Social Responsibility

C) Drivers for Corporate Social Responsibility :

9) Demands for Greater Disclosure :
There is a growing demand for corporate disclosure from stakeholders, including
customers, suppliers, employees, communities, investors, and activist organisations.
10) Increased Customer Interest :
There is evidence that the ethical conduct of companies exerts a growing influence on the
purchasing decisions of customers.
11) Growing Investor Pressure :
Investors are changing the way they assess companies' performance, and are making
decisions based on criteria that include ethical concerns.
12) Competitive Labor Markets :
Employees are increasingly looking beyond paychecks and benefits, and seeking out
employers whose philosophies and operating practices match their own principles.
 4.1 CorporateSocial
4.1 Corporate SocialResponsibility
Responsibility
B) Drivers for Corporate Social Responsibility :
C) Drivers for Corporate Social Responsibility :
9)
13) Demands for Greater
Supplier Relations : Disclosure :
There is a growing demand for corporate disclosure from stakeholders,
including Ascustomers,
stakeholderssuppliers,
are becoming increasingly
employees, interested ininvestors,
communities, business and
affairs,activist
many
organisations.
companies are taking steps to ensure that their partners conduct themselves in a socially
responsible manner. Some are introducing codes of conduct for their suppliers, to ensure that other
10) Increased Customer Interest :
companies' policies
There is orevidence
practices do notthe
that tarnish their reputation.
ethical conduct of companies exerts a growing
influenceLaws
14) on the andpurchasing
Regulationdecisions
: of customers.
Another driver of CSR is the role of independent mediators, particularly the government,
11) Growing Investor Pressure :
in ensuringInvestors
that corporations are prevented
are changing the wayfrom harming
they the companies'
assess broader socialperformance,
good, including people
and are
making
and decisions based on criteria that include ethical concerns.
the environment.

12) Competitive Labor Markets :

Employees are increasingly looking beyond paychecks and benefits, and
seeking out employers whose philosophies and operating practices match their own
principles. In order to hire and retain skilled employees, companies are being forced to
improve working conditions.
 4.1 Corporate Social Responsibility

D) Types of Corporate Social Responsibility:

 4.1 CorporateSocial
4.1 Corporate SocialResponsibility
Responsibility

D) Types of Corporate Social Responsibility:

1) Economic Responsibilities :
A company's first responsibility is its economic responsibility that is, to say a company needs to be
primarily concerned with turning a profit.
2) Legal Responsibilities :
A company's legal responsibilities are the requirements that are placed on it by the law.
3) Ethical Responsibilities :
Economic and legal responsibilities are the two big obligations of a company.
4) Philanthropic Responsibilities :
If a company is able to meet all of its other responsibilities, it can begin meeting philanthropic
responsibilities.
 4.1 Corporate Social Responsibility

E) Approaches to Corporate Social Responsibility:

 4.1 Corporate Social Responsibility

E) Approaches to Corporate Social Responsibility:

1) Community-based Development Approach :
It is becoming widely accepted. The corporations work with local communities to better
themselves.
2) Philanthropy Approach :
This has been the more popular one so far. This includes monetary donations and aid given to
local organisations and impoverished communities in developing countries.
3) Incorporate CSR Strategy into the Business Strategy of an Organisation :
For instance, procurement of Fair Trade tea and coffee has been adopted by various
businesses abroad.
4) Increasing Corporate Responsibility Interest Approach :
This is called Creating Shared Value or CSV. The shared value model is based on the idea that
corporate success and social welfare are interdependent. A business needs a healthy,
educated workforce, sustainable resources and trusting government to compete effectively.
 4.1 Corporate Social Responsibility

F) Benefits from Corporate Social Responsibility :

 4.1 Corporate Social Responsibility

F) Benefits from Corporate Social Responsibility :

1) Human Resources :
A CSR programme can be an aid to recruitment and retention particularly within the competitive
graduate student market.
2) Risk Management :
Managing risk is a central part of many corporate strategies.
3) Brand Differentiation :
In crowded marketplaces, companies strive for a unique selling proposition that can separate
them from the competition in the minds of consumers.
4) License to Operate :
Corporations are willing to avoid interference in their business through taxation or regulations.
5) Innovation:
A company that looks at social trends opens itself up to be a leader in an emerging field or
product.
 4.1 Corporate Social Responsibility

F) Benefits from Corporate Social Responsibility :

6) Less Regulation and Cost :
The government sets limits and regulations for the processes and items used in the production of goods and
services.
7) Global Business Advantage :
Foreign businesses recognize the efforts of a domestic business that is trying to address a common social
problem or issue.
8) Good Publicity :
A company that is responding to a societal concern by changing business processes or offering new services
and products generally receives coverage from local, national and sometimes global media outlets.
9) Public Relations :
Public relations advantages of corporate social responsibility should not be overlooked.
10) Protection against Lawsuits and Sanctions :
One of the most important advantages of corporate social responsibility is the protection it provides
against lawsuits and sanctions.
 4.1
4.1Corporate SocialResponsibility
Corporate Social Responsibility
E) Benefits from Corporate Social Responsibility :
6) Less Regulation
G) Ethical DimensionsandofCost :
Corporate Social Responsibility :
The government sets limits and regulations for the processes and items used in the
production of goods and services.

7) Global Business Advantage :

Foreign businesses recognize the efforts of a domestic business that is trying to
address a common social problem or issue.

8) Good Publicity :
A company that is responding to a societal concern by changing business processes
or offering new services and products generally receives coverage from local,
national and sometimes global media outlets.

9) Public Relations :
Public relations advantages of corporate social responsibility should not be
overlooked.

10)Protection against Lawsuits and Sanctions :

One of the most important advantages of corporate social responsibility is the
protection it provides against lawsuits and sanctions.
 4.1 Corporate Social Responsibility

G) Ethical Dimensions of Corporate Social Responsibility :

1) Shareholders :
The first responsibility of a corporation is to its shareholders. Business leaders in
corporations are entrusted with the task of maximizing shareholder value.
2) Employees :
Corporations also have an ethical responsibility to the people who actually implement
policy through their work.
3) Consumers and Clients :
Ultimately, a corporation exists because it provides some good or service to others.
4) Society :
Corporations, especially larger multi-national corporations, also have a duty to society as
a
whole, including people who choose not to do business with them.
5)The Environment :
Manufacturing industries in particular must recognize their responsibilities to the
 4.1
4.1Corporate SocialResponsibility
Corporate Social Responsibility
F)
H) Ethical
EmergingDimensions of Corporate
Management Social Responsibility
Issues Mandating :
Corporate Social Responsibility :

1) Shareholders :
The first responsibility of a corporation is to its shareholders. Business leaders
in corporations are entrusted with the task of maximizing shareholder value.

2) Employees :
Corporations also have an ethical responsibility to the people who actually
implement policy through their work.

3) Consumers and Clients :

Ultimately, a corporation exists because it provides some good or service to
others.

4) Society :
Corporations, especially larger multi-national corporations, also have a duty to
society as a whole, including people who choose not to do business with them.

5) The Environment :
Manufacturing industries in particular must recognize their responsibilities to the
 4.1 Corporate Social Responsibility

H) Emerging Management Issues Mandating Corporate Social Responsibility :

1)Environmental Issues :
a) Contribution to greenhouse gas emissions through energy use and other parts of your process
b) Use of raw materials, both nonrenewable resources which by definition are not sustainable in the
long term, and as importantly renewable resources which are produced in a fashion which is not
currently sustainable.
c) Potential for environmental accidents - releases of pollutants into air, water or land.
d) Waste disposal, deforestation, acid rain, and land degradation.
2) Global Issues :
Corporations increasingly operate in a global environment. The globalization of business
appears to be an irreversible trend, but there are many opponents to it.
3) Technological Issues :
Another contemporary social issue relates to technology and its effect on society. Issues of privacy
and the security of confidential information must be addressed.
 4.1
4.1Corporate SocialResponsibility
Corporate Social Responsibility

H) Emerging Management Issues Mandating Corporate Social Responsibility :

4)Marketplace Issues :
a) The impact on society of the core products and services
b) Ethical trading
c) Ethical advertising
5)Workplace Issues :
a) Work-life balance of employees
b) Managing diversity in the workforce
c) Training, development and life-long learning
d) Eradicating abusive or bullying behavior
6)Community Issues :
a) Impact upon the local community as a result of how the business is done.
b) How as a company invests in the community - either in cash or through in-kind resources to improve the
health of the community or tackle specific social issues.
c) How the company involves its staff in developing a relationship with the community.
d) If the operations of a company run globally, it needs to consider some fairly fundamental responsibilities to the
community.
 4.1
4.1Corporate SocialResponsibility
Corporate Social Responsibility
G) Emerging Management Issues Mandating Corporate Social Responsibility :
I) Social Responsibility towards Different Interest Groups:
4)Marketplace Issues :
a) The impact on society of the core products and services
b) Ethical trading
c) Ethical advertising

5)Workplace Issues :
a) Work-life balance of employees
b) Managing diversity in the workforce
c) Training, development and life-long learning
d) Eradicating abusive or bullying behavior

6)Community Issues :
a) Impact upon the local community as a result of how the business is done.
b) How as a company invests in the community - either in cash or through in-kind
Social the
resources to improve Responsibility
health of thetowards Different
community Interest
or tackle Groups
specific social issues.
c) How the company involves its staff in developing a relationship with the community.
d) If the operations of a company run globally, it needs to consider some fairly
fundamental responsibilities to the community.
 4.1
4.1Corporate SocialResponsibility
Corporate Social Responsibility
H) Social Responsibility towards Different Interest Groups :
a)Social Responsibility of Business b) Social Responsibility of Business towards
towards Owners : Employees :
1) To ensure safety of the capital. 1) Giving them appropriate remuneration.
2) To ensure proper dividend. 2) Providing clean work atmosphere.
3) Timely payment of dividend. 3) Respecting individual dignity.
4) Informing about the progress of the 4) Providing clean work atmosphere.
organisation by presenting correct 5) Respecting individual dignity.
accounts. 6) Giving them a share d profit.
5) To ensure the proper utilisation of 7) Giving security of service.
invested capital. 8) Giving participation in management.
6) To treat equally different types of 9) Adopting incentive-giving system.
shareholders. 10) Solving labour problems in time.
11) Providing for their education and training.
12) Providing opportunity for promotion and
development.
 4.1 Corporate Social Responsibility

c) Social Responsibility of Business towards Consumers :

1) The business organisation has to provide prompt, adequate, courteous services to the
customers.
2) It must produce provide the goods that meet the requirement of the consumers.
3) The business must give prompt replies to the enquiries regarding the company, its products and
services etc.
4) The consumers have their associations and the management must extend its co-operation to
them.
5) The business must conduct the product research to increase the efficiency of the business and
to provide satisfactory service to the consumers.
6) The complaints or objections are to be handled carefully. The objections or complaints must be
removed by providing satisfactory services to the consumers.
7) The business organisation must take necessary steps to correct imperfections in the distribution
system and avoid unfair and unethical practices
 4.1 Corporate Social Responsibility

d) Social Responsibility of Business towards Investors :

1) It is the basic responsibility of a business organisation to ensure safety of investment, highest
long run of return on their investment and a steady capital appreciation.
2) The business organisation must provide necessary information to the shareholders.
3) The business organisation should ensure the shareholders that its public image is such that
the shareholders will feel proud of their company.
4) It should pay dividend regularly.
5) The interest of the shareholders can be protected through direct participation in the
management by being elected to its Board of Directors. Shareholders have right to seek the
financial matters of the company.
6) The business enterprise should offer wholehearted co-operation and support to the
shareholders to protect their interest.
 4.1 Corporate Social Responsibility

e) Social Responsibility of Business towards Society at Large :

1) To use conservatively the scarce resources and to develop alternatives whenever
possible.
2) To hold meetings regularly, periodic and open to representatives of the customers,
employees and community.
3) To prevent environmental pollution and to preserve ecological balance.
4) To undertake development of backward areas.
5) To engage itself only in fair competition and to restrain the community from indulging in
anti-social and unethical attitudes and practices.
6) To contribute towards a social cause like promotion of education, population control, etc.
7) To help the local government to improve public services and facilities.
8)To promote ancillaries and small scale industries.
9)To contribute to national effort to build up a better society.
 4.1 Corporate Social Responsibility

f) Social Responsibility of Business towards Government :

1) It is the responsibility of the business to compensate their employees by paying fair wages.
2) The business should provide favorable working conditions that meet accepted standards of
cleanliness, heat, ventilation, light, safety etc.
3) Welfare facilities to be provided to the employees.
4) It is the responsibility of the management to give the workers opportunities to develop their
capabilities through proper training, education and maintaining a free working atmosphere in the
organisation.
5) The business should encourage them by providing an opportunity to participate in management.
6) The business enterprise should develop an efficient grievance handling system.
 4.2 Arguments for and Against Corporate
Social Responsibility
A) Arguments for and Against Corporate Social Responsibility

A) The "Competitive" B)"Self-Interest"

Argument Argument

The "competitive" argument recognizes A very different argument in favor of

the fact that addressing social issues corporate social responsibility is the
comes at a cost to business. To the "self-interest“ argument. This is a long-
extent that businesses internalize the term perspective that suggests
costs of socially responsible actions, corporations should conduct themselves
they hurt their competitive position in such a way in the present as to assure
relative to other businesses. themselves of a favorable operating
environment in the future.
 4.3 Relationship Between
C.S.R and Business Ethics
A) Relationship Between C.S.R and Business Ethics

1) Both Concepts go Hand in Hand for Companies

2) Both Concepts Concern Values
3) Scope of Business Ethics and CSR Deals on Common Ground
4) Complexity in Distinguishing these Concepts from one another
 4.3 Relationship Between
C.S.R and Business Ethics

1) Both Concepts go Hand in Hand for Companies :

Business ethics are the moral principles a company uses to ensure all employees act in an
acceptable manner when completing business functions.
2) Both Concepts Concern Values :
There is considerable overlapping between business ethics and CSR. Both concepts concern
values, objectives, and decisions based on something other than the mere pursuit of profit and
socially responsible companies must act ethically.
3) Scope of Business Ethics and CSR Deals on Common Ground :
The scope of business ethics and CSR are not separate or even concentric circles, but rather
tangent or secant circles with a significant deal of common ground.
4) Complexity in Distinguishing these Concepts from one another :
The various explanations of the field of business ethics indicate that the distinction between
social responsibility and business ethics is not easily made, certainly not insofar as their
application to the societal marketing concept is concerned.
 4.4 Justice and Economics Systems

A)Justice and Economics Systems

 4.4 Justice and Economics Systems

1) In Capitalist System :
In the capitalist system, justice demands equality of opportunity; it does not demand equality of
results. The best way to tell who is the fastest runner is to have all runners compete under the
same conditions. Capitalism also rewards a number of other attributes work, initiative, energy,
intelligence, and similar qualities applied in the marketplace. Within the system.
2) In Socialist System :
Justice in a socialist system consists not only in equality of opportunity, although it also allows
proportionality of differential rewards. It guarantees that all receive some reward, but it tends to
limit the amount of the reward anyone may get. The social ideal that best embodies justice is the
slogan descriptive of communism.
3) In Economic System :
There is not just one notion of justice that is applicable; there are several different formulations,
and one of them may be appropriate for one purpose and kind of activity and another for another
kind of purpose and activity. Each formulation of justice may be taken as a prima facie
formulation.
 4.5 Business Ethics Relating to Environment
Protection
Business Ethics Relating to Environment Protection:

A) Environmental Ethics :
Environmental ethics is formally defined as
the study of human interaction with nature.
In a business sense, environmental ethics
is concerned with a company's responsibility
to protect the environment in which it
operates.
Public awareness of damage caused to the
environment by human action has driven a
demand for governmental regulations
directly affecting the ability of businesses to
conduct their operations.
 4.5 Business Ethics Relating to Environment
Protection
B) Environmental Issues in Business Ethics :
There are many environmental moral issues relevant to business. These are
a)Ecology,
b)Traditional Business Attitudes Towards The Environment,
c)Problems Involving Environmental Abuse,
d)Environmental Protection,
e)Methods To Pay For Environmental Protection,
f)Other Issues Involving Environmental Ethics.
 4.5 Business Ethics Relating to Environment
Protection
C) Laws of Environment Protection :
Environmental protection laws have been enacted largely in response to concerns over
business's impact on the environment, which began to emerge in the 1960s. Many people have
questioned the cost-benefit analyses often used in making business decisions.
D) Major Concerns of Environments related to Business Activities :
1) Deforestation :
India is witnessing a rising demand for
forest-based products. This is causing
deforestation and encroachment into
forest protected areas, which leads to a
severe loss of natural resources.
2) A Thirst for Palm Oil :
India is a big edible oil consumer. In fact,
it is third largest importers of palm oil in
the world, along with EU and China.
 4.5 Business Ethics Relating to Environment
Protection
3) Water Pollution :
The wetlands and lakes are also being hit hard. Mainly by the industrial boom that hit India a
decade ago, the main problems being improper disposal of industrial waste like chemicals etc.
4) Scarcity of Water :
Perhaps, the largest of the environmental issues in India facing the people of India is
inadequate or lack of access to vital fresh water resources. As India's industries get bigger so
will the amount of water they require and the amounts are already beginning to spiral.
5) Mining :
The unintended environmental impacts resulting from the execution of development projects
like those involving thermal or hydro-power generation, mining industry, agriculture, human
settlements, etc. manifest themselves through one or more of the environmental problems
discussed in the preceding sections.
 4.5 Business Ethics Relating to Environment
Protection
E) Importance of Business Ethics in Environmental Issues :
 4.5 Business Ethics Relating to Environment
Protection
E) Importance of Business Ethics in Environmental Issues :
1) Environmental Awareness :
The contamination of water resources and the pollution of the atmosphere through the use of fossil fuel-
powered vehicles.
2) Increased Environmental Ethical Investment :
The increase in environmental ethical investment has encouraged companies to give attention to corporate
responsibility.
3) Acceptance of Responsibility for Environmental Ethics :
Acceptance of responsibility for environmental ethics is demonstrated through the development of corporate
environmental strategy.
4) Sustainability :
Sustainability refers to the ability of ecosystems to remain healthy and productive over time. One of the
simplest ways to make a positive response to sustainability issues is energy conservation.
5) New Opportunities :
A positive side of environmental business ethics is the creation of new opportunities centered on repairing
existing environmental damage and developing new technologies to enable people to conduct their business
without further damage to the environment.
 4.5 Business Ethics Relating to Environment
Protection

6) Green washing :
The green washing is the practice of announcing environmentally friendly practices in an
attempt to harness public good will, when those practices are either hollow or nonexistent.
7 ) Return on Investment :
Environmental practices sometimes have a positive return on investment. Some companies
think advocating green practices may influence environmentally minded customers to prefer
their products or services; the adoption of sustainability programs is thought to improve
revenues as a result of improved consumer good will.
 4.6 Business Ethics and Consumer Protection

A) Consumer and Consumer Protection :

1) Buys any goods for a consideration
which has been fully or partly paid for,
with a purpose that does not include
resale or any commercial purpose
(except self-employment);
2) Hires or avails of any services for a
consideration which has been fully or
partly paid for, with a purpose that does
not include free service or services
under a personal contract.
 4.6 Business Ethics and Consumer Protection

B)Parties to Consumer Protection :

1) Role of Consumers :
Consumers should as far as possible take care of their own interest and protect themselves from market
malpractices.
2) Role of Business persons :
Producers, distributors, dealers, wholesalers as well as mailers should pay due attention to consumer rights in
their own interest, by ensuring supply of quality goods and services at reasonable prices.
3) Role of Government :
Consumer protection is a responsibility of governments to ensure the general interest of society. reasonably have
foreseen or eliminated.
 4.6 Business Ethics and Consumer Protection

C)The Social Costs View of Manufacturer's Duties :

The view that a manufacturer should pay the costs of any injuries sustained through
any defects in the product even when the manufacturer exercised all due care in the
design and manufacture of the product and has taken all reasonable precautions to warn
users of every foreseen danger.
 4.7 Business Ethics and Social Justice

A) Meaning of Justice :
 Justice as it is applied in business ethics
involves evaluations of fairness or the
disposition to deal with perceived injustices of
others.
 Justice is fair treatment and due reward in
accordance with ethical or legal standards.
 In business, this means that the decision rules
used by an individual to determine the justice of
a situation could be based on the perceived
rights of` individuals and on the intentions of the
people involved in a given business interaction.

Social Justice
 4.7 Business Ethics and Social Justice

B) Types of Justice :

1) Distributive Justice :
Distributive justice is based on the
evaluation of the outcomes or results of
the business relationship.
2) Procedural Justice :
Procedural justice is based on the
processes and activities that produce the
out-come or results.
3) Interactional Justice :
Interactional justice is based on
evaluating the communication processes
used in the business relationship.
 4.7 Business Ethics and Social Justice

C) Relationship between Business Ethics and Social Justice :

Business
Ethics

Social
Justice
 4.7 Business Ethics and Social Justice

Relationship between Business Ethics and Social Justice :

1) Business Ethics Ideology Committed to "Social Justice :
"Business ethics" as it is usually taught is not ethics in any traditional sense but an ideology
committed to "social justice" and other fuzzy abstractions. It is our common-sense
understanding of right and wrong. There is no business ethics or social justice as such. There
are only ethics and justice. Whether the notions are applied to individuals, families,
governments, or societies, it is the application that changes, not the principle.
 4.7 Business Ethics and Social Justice

2) Standards of Social Justice are used by Ethicists :

Standards of social justice are also used by ethicists who are
interested in analyzing moral obligations or duties.
 Justice-based reasoning identifies rules for establishing and
preserving liberty, equality and fairness of opportunity for members
of society.
 These standards are motivated by respect for the moral autonomy
of personhood and the right of individuals to pursue their own
good.
 Because justice theorists are interested in fairness, they insist that
an unfair distribution of benefits and harms be explained and
defended on logical grounds.