MBBE 130
BUSINESS ETHICS AND
LAW
Chapter 4: Relationship between
ethics, governance, the law and
social responsibility
Noor Zainee Binti Seli
(00763) Inns of Court Malaysia
zainee@[Link]
Learning outcomes
At the end of the session, students shall be able to:
• Discuss the principles of ethics and professionalism in
business settings
• Evaluate the difference between various theories of ethics
applicable in the relevant business settings
• Analyze the relationship between ethics, governance and CSR
within the relevant business settings.
• principles and values that
guide individual or
Relationship between ethics, governance & CSR
organizational behavior in
Ethics determining what is right or
wrong. It providAes a moral
compass that goes beyond
legal obligations.
• structures, rules, processes,
and practices that ensure
accountability, fairness, and
transparency in the
management of
Governance organizations, governments,
or any entity. Good
governance ensures that
power is exercised
responsibly and for the
benefit of all stakeholders.
• obligation of individuals and
organizations to act for the
benefit of society at large.
Corporate Social This involves considering the
social, economic, and
Responsibility environmental impacts of
(CSR) actions and making choices
that contribute to sustainable
development and the
common good.
Relationship between ethics, governance & CSR
Ethics & Role in Governance: In governance, ethical principles guide decision-making processes to ensure transparency,
Governance accountability, and fairness. Ethical governance promotes trust and integrity within institutions and society.
, Law & CSR
Relationship with Law: While ethics is broader than law, laws are often based on ethical principles. Laws provide a
minimum standard of behavior, but ethical behavior may require going beyond what is legally
required. An action may be legal but still unethical.
Relation to Social Responsibility: Ethical behavior is at the heart of social responsibility. Organizations and
individuals who act ethically tend to prioritize the well-being of society, the environment, and future
generations.
Governance Role of Ethics: Effective governance must be rooted in ethical principles to avoid corruption, abuse of
& Ethics, power, and unfair practices. Governance frameworks need to embed ethical standards to guide actions.
law & csr
Relationship with Law: Governance is often shaped by legal frameworks, which provide the rules and
regulations for how entities should operate. Laws provide boundaries within which governance occurs, but good
governance also considers ethical responsibilities, which may go beyond legal requirements.
Impact on Social Responsibility: Good governance supports social responsibility by ensuring that
decisions consider the broader impact on stakeholders, society, and the environment. It fosters
practices that align with both ethical values and legal obligations.
CSR & Driven by Ethics: Social responsibility is rooted in ethical values, focusing on doing what is right for
Ethics, law society, beyond self-interest or profit. Ethical considerations often lead organizations to voluntarily engage in
and practices that benefit the broader community.
governance
Governance and Social Responsibility: Good governance promotes social responsibility by embedding
ethical considerations into decision-making processes. Organizations with strong governance structures are
more likely to adopt socially responsible practices that go beyond legal obligations.
Summary of Relationships
1. Ethicsprovides the foundation for both governance and social
responsibility, influencing what is considered morally right or wrong.
2. Governance structures ensure that ethical principles are applied in decision-
making, often shaped by both laws and ethical norms.
3. The law provides enforceable standards, but ethical governance and social
responsibility often go beyond legal requirements.
4. Social responsibility reflects the ethical obligation to contribute positively to
society, and it is promoted through good governance and adherence to
legal frameworks.
5. Together, these elements help create a balanced and responsible system where
individual and organizational actions are aligned with the welfare of society.
Example of Corporate Governance
Structures
Example of Corporate Governance
Structures
Legal Academic
Quality
Assurance Unit
Financial
IT
Advisory Unit
Security
Corporate
Account Accreditatio
Monitoring n Unit
Definition of a Manager
• A manager is an individual
responsible for overseeing and
coordinating the activities of a group,
department, or organization to
achieve specific goals and objectives.
• Managers play a key role in planning,
organizing, leading, and controlling
resources, including people, finances,
and equipment.
• Their primary responsibilities include
making decisions, solving problems,
delegating tasks, and ensuring that
the work is completed efficiently and
effectively.
• Managers also act as intermediaries
between the organization's upper
leadership and its employees,
ensuring alignment with the
Ethical problems of managers
Conflicts of Interest Discrimination and Harassment
Managers often face ethical
Managers may face situations where their Unethical treatment of employees based on
problems as they make personal interests conflict with their race, gender, religion, age, or other factors
decisions that affect various professional responsibilities. For example, a is a significant issue. Managers are
stakeholders, including manager might prioritize a business deal responsible for ensuring equal opportunities
with a friend or relative, even if it is not in and preventing any form of discrimination
employees, customers, the best interest of the organization. This or harassment in the workplace.
shareholders, and society. compromises fairness and transparency.
Here are some common ethical Example: A manager promoting certain
problems that managers Example: A manager hiring a family employees based on favoritism rather than
member without considering better- performance, or ignoring reports of
encounter: qualified candidates. harassment.
Ethical problems of managers
Unfair Treatment of Employees
Managers may face dilemmas in Misrepresentation or Dishonesty
Bribery and Corruption
treating employees equitably, Managers are sometimes pressured to
Managers may encounter situations where
especially in areas like pay, present a misleading view of a situation to
they are offered bribes or incentives in
promotions, or workload distribution. make the organization look more favorable
exchange for favorable decisions, such as
This can lead to resentment and to investors, customers, or regulators. This
awarding contracts, securing deals, or
includes falsifying financial statements,
decreased morale among misreporting data, or lying to customers
influencing policy decisions.
employees, affecting productivity about product quality.
and trust. Example: Accepting gifts or money from a
supplier in return for granting them a
Example: A manager inflating sales figures
contract, even if they are not the best
to meet performance targets or misleading
Example: Underpaying workers or option for the company.
customers about the features of a product.
denying them benefits while cutting
corners to increase profits.
Ethical problems of managers
Whistleblower Retaliation
Managers may face ethical
dilemmas when dealing with Environmental Responsibility Overworking Employees
employees who report unethical In industries that have a significant Managers may push employees to work
practices (whistleblowers). environmental impact, managers may excessively long hours, especially to meet
Retaliating against whistleblowers struggle between maximizing profits and deadlines or productivity goals. This can
taking environmentally responsible actions. lead to burnout, stress, and a decline in
instead of addressing the concerns
Cutting corners on environmental standards employee well-being, creating an unethical
can lead to legal and ethical or regulations can be tempting but harmful. work environment.
problems.
Example: A manager deciding to dump Example: A manager consistently requiring
Example: A manager demoting or waste illegally to reduce disposal costs, employees to work overtime without
harming the environment. adequate compensation or rest.
firing an employee who exposes
fraudulent accounting practices
within the company.
The ethical problems faced by managers are complex and multifaceted,
involving a delicate balance between the demands of the business and
the interests of stakeholders. Ethical decision-making requires managers
to be aware of these challenges, prioritize integrity, and consider the
broader impact of their actions on society, employees, and the
environment. Fostering a strong ethical culture and providing clear
guidelines can help mitigate these issues.
Solutions to the ethical problems faced by managers
Create Open Channels for Communication
Lead by Example (Ethical Leadership) Ethical problems often arise when employees
Develop and Implement a Strong Code of Ethics feel they cannot raise concerns or report
Managers must model ethical behavior
A code of ethics provides clear guidelines for misconduct. Managers should encourage open
themselves. When managers act with integrity,
ethical behavior within an organization. It and honest communication within the
transparency, and fairness, it sets the tone for
outlines acceptable practices, decision-making organization.
the entire organization.
frameworks, and the company’s values.
How it helps: Providing safe, confidential
How it helps: Employees tend to follow the
How it helps: Having a clearly communicated channels (such as whistleblower hotlines or
behaviors demonstrated by leadership. When
code ensures that employees know what is suggestion boxes) encourages employees to
managers act ethically, it creates a culture of
expected of them and what constitutes unethical report unethical practices without fear of
accountability and trust.
behavior. retaliation.
Solution: Managers should consistently make
Solution: Managers should regularly review and Solution: Managers must ensure that there is a
decisions based on ethical considerations, even
update the code, provide training, and ensure transparent process for reporting and handling
if it may not be the most profitable option in the
that everyone in the company understands it. ethical concerns. Addressing concerns promptly
short term.
reassures employees that ethical behavior is a
priority.
Solutions to the ethical problems faced by managers
Establish Clear Policies for Addressing Ethical
Ethics Training Foster a Culture of Ethics and Integrity
Violations
Ethical dilemmas are not always clear-cut. Managers can create a culture of ethics by
It’s essential to have a formal process for
Regular ethics training helps employees embedding ethical principles into the company’s
addressing ethical violations and holding
understand how to handle difficult situations and mission, vision, and daily operations. This
individuals accountable. These policies should be
make decisions that align with the company’s involves making ethics a core value in how the
applied consistently, regardless of an employee’s
ethical standards. company does business.
position or status.
How it helps: Training programs teach employees How it helps: A strong ethical culture ensures
How it helps: Having a process for investigating
how to identify ethical dilemmas, weigh their that employees prioritize ethical decision-making
and addressing ethical issues ensures that
options, and make informed decisions based on and understand the importance of integrity in
employees know unethical behavior will have
company values. their work.
consequences.
Solution: Managers should conduct regular Solution: Managers should promote discussions
Solution: Managers should ensure that there are
training on ethical issues, such as conflicts of about ethics, reward ethical behavior, and
clear procedures for handling violations, and any
interest, workplace discrimination, and data regularly highlight the importance of maintaining
breaches of ethics should be dealt with fairly and
privacy. high standards of integrity.
transparently.
Solutions to the ethical problems faced by managers
Encourage Accountability and Responsibility
Holding employees and managers Avoid Conflicts of Interest Act Quickly and Decisively on Ethical Violations
accountable for their actions is key to Managers should set clear boundaries regarding Delays in addressing ethical violations can erode
addressing ethical issues. Managers should potential conflicts of interest and ensure trust within the organization. Managers need to
ensure that ethical responsibilities are clearly employees are aware of situations that could lead act swiftly when an issue arises to prevent further
assigned and enforced. to such conflicts. damage and demonstrate that unethical behavior
is not tolerated.
How it helps: By addressing conflicts of interest
How it helps: When employees know they will proactively, managers can prevent situations How it helps: Prompt action reinforces the
be held accountable for their actions, they where personal gain could override ethical company’s commitment to ethical standards and
are more likely to act ethically. decision-making. prevents minor issues from escalating.
Solution: Managers should implement Solution: Managers should have clear disclosure Solution: Managers should investigate and resolve
performance evaluations that include ethical policies and require employees to report any ethical violations promptly and apply disciplinary
behavior as a criterion and encourage teams potential conflicts. measures consistently when necessary.
to take responsibility for their actions.
Corporate social responsibility (CSR)
CSR the practice of companies integrating social, environmental, and ethical concerns into
their business operations and interactions with stakeholders. CSR goes beyond the
primary goal of profit-making, aiming to have a positive impact on society, the
environment, and the economy. It represents a company’s commitment to operate in a
sustainable and socially responsible way, considering the well-being of its employees,
communities, and the planet.
Environmental Companies focus on reducing their environmental footprint by minimizing waste,
Responsibility conserving resources, reducing pollution, and promoting sustainability through eco-
friendly practices.
Example: Reducing carbon emissions, using renewable energy, recycling, or ensuring
responsible sourcing of raw materials.
Social This involves contributing to the welfare of society through charitable donations,
Responsibility volunteering, and ensuring ethical labor practices. It also includes supporting community
development and addressing social issues like poverty, education, and healthcare.
Example: Offering fair wages, safe working conditions, and equal opportunities, or
sponsoring local community programs.
SUSTAINABLE DEVELOPMENT GOALS
(SDG)
• The goals build on the
vital principle of
“leaving no one
behind”, and
emphasizes a holistic
approach to achieving
sustainable
development for all.
Types of Corporate social responsibility (CSR)
Philanthropic Philanthropic responsibility is when a company actively seeks to make the world a better place through charitable
Responsibilit activities. This type of CSR involves contributing to social causes, supporting local communities, and engaging in
y volunteerism. Companies often donate money, resources, or employee time to non-profit organizations, disaster
relief efforts, and social initiatives.
Key Initiatives:
• Donations to charities and non-profit organizations
• Supporting education, health, and poverty alleviation programs
• Employee volunteering programs
• Sponsoring local community events or programs
• Partnering with NGOs or social enterprises
• Example:
[Link], the philanthropic arm of Google, donates millions to various charitable causes, including education,
renewable energy research, and disaster relief efforts.
Economic Economic responsibility involves businesses making decisions that benefit not only the company but also society at
Responsibilit large. This includes ensuring that the company is profitable and sustainable, while also considering the financial
y well-being of employees, stakeholders, and the community. Companies focus on creating economic value in ways
that also provide broader societal benefits.
Key Initiatives:
• Offering fair wages and benefits to employees
• Creating job opportunities in local communities
• Supporting small businesses and suppliers through ethical sourcing
• Contributing to local and national economic growth
• Avoiding harmful economic practices like price gouging, corruption, or tax evasion
• Example:
Microsoft creates job opportunities through its support for local entrepreneurs and small businesses, while also
Types of Corporate social responsibility (CSR)
Human Rights This focuses on ensuring that companies respect human rights in their operations and
Responsibility supply chains. This includes avoiding forced labor, child labor, and ensuring workers’ rights
are upheld globally.
Example:
Nestlé has developed programs to eliminate child labor from its cocoa supply chain and
improve working conditions for farmers.
Ethical Ethical responsibility focuses on ensuring that a company conducts its business in a fair,
Responsibility transparent, and moral manner. It involves making decisions that prioritize fairness,
integrity, and respect for individuals and communities. This type of CSR addresses issues
like fair trade, labor practices, and human rights.
Key Initiatives:
Implementing fair labor practices (ensuring fair wages, safe working conditions, etc.)
Promoting diversity, equity, and inclusion in the workplace
Upholding human rights across the supply chain
Ensuring fair trade practices with suppliers and business partners
Transparency in business dealings and decision-making
Example:
Patagonia, a clothing company, emphasizes fair labor practices and ethical supply chains,
ensuring that workers are paid fairly and treated well throughout the production process.
Examples of CSR activity
Environment IKEA: IKEA is committed to sourcing 100% of its wood from sustainable sources and using
al renewable energy. The company also promotes recycling and energy-efficient products.
Sustainabilit Tesla: Tesla focuses on reducing the world’s dependence on fossil fuels by developing electric
y Initiatives vehicles and renewable energy solutions. Its focus on clean energy aligns with its CSR goals
of environmental responsibility.
Unilever: Through its Sustainable Living Plan, Unilever has reduced its environmental footprint
by reducing waste, water use, and carbon emissions. It also promotes sustainable sourcing of
raw materials like palm oil.
Social and TOMS Shoes: TOMS operates a "One for One" model, where the company donates one pair of
Community shoes to a person in need for every pair sold. This initiative supports underprivileged
Development communities across the world.
Coca-Cola: The Coca-Cola Foundation focuses on supporting water stewardship, women's
empowerment, and community well-being. It funds initiatives like providing clean drinking
water and promoting education in underserved regions.
Microsoft: Through its YouthSpark program, Microsoft provides technology training and
educational resources to underprivileged young people worldwide. The company also
supports digital inclusion efforts by donating to education and skill development.
Philanthropy Google: Google donates millions to charitable causes through its philanthropic arm,
and Charity [Link]. It supports initiatives in education, disaster relief, and renewable energy. Google
employees also participate in volunteer programs to contribute to their communities.
Johnson & Johnson: J&J contributes to healthcare initiatives around the world, including
providing free healthcare products to low-income families and offering disaster relief efforts
during emergencies.
Apple: Apple has made substantial donations to various social causes, including education
Examples of CSR activity
Health and Nike: Through its "Made to Play" initiative, Nike promotes physical activity and
Wellness sports for kids, aiming to encourage a healthy lifestyle. The company also invests
in sports facilities and community fitness programs.
CSR for The Body Shop: The Body Shop has long advocated for animal rights, opposing
Animal animal testing in the cosmetics industry. It promotes cruelty-free products and
Welfare works with NGOs to campaign for animal welfare laws.
LUSH Cosmetics: LUSH is committed to fighting animal testing in the beauty
industry. It also donates a portion of its profits to organizations that promote
animal rights and environmental protection.
PepsiCo: PepsiCo is working to reduce its environmental impact by focusing on
Sustainabili sustainable packaging solutions, such as reducing plastic usage and developing
ty in biodegradable alternatives.
Packaging Dell Technologies: Dell focuses on reducing electronic waste by designing products
with sustainable materials. Its recycling programs ensure that old electronics are
disposed of responsibly.
THANK YOU