AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH LUCKNOW

INTERNAL ASSIGNMENT
STRATEGIC MANAGEMENT
MBA (GEN) SEM-III
TOPIC- BUSINESS ETHICS, SOCIAL ENTREPRENUERSHIP
& CORPORATE GOVERNANCE

NAME OF GROUP MEMBERS

% OF INPUT BY THE MEMBERS

DIWAKAR PRATAP SINGH

20%

EKTA AWASTHI

20%

PIYUSH KAPUR

20%

SANA KHAN

20%

YOHAN VANIA

20%

ABHISHEK RAJ
ARJUN RASTOGI

OVERVIEW

What is Business Ethics?

The concept has come to mean various things to various people, but generally
it's coming to know what it right or wrong in the workplace and doing what's
right -- this is in regard to effects of products/services and in relationships with
stakeholders. Wallace and Pekel explain that attention to business ethics is
critical during times of fundamental change -- times much like those faced now
by businesses, both non-profit and for-profit.
In times of fundamental change, values that were previously taken for granted
are now strongly questioned. Many of these values are no longer followed.
Consequently, there is no clear moral compass to guide leaders through
complex dilemmas about what is right or wrong. Attention to ethics in the
workplace sensitizes leaders and staff to how they should act. Perhaps most
important, attention to ethics in the workplaces helps ensure that when leaders
and managers are struggling in times of crises and confusion, they retain a
strong moral compass. However, attention to business ethics provides numerous
other benefits, as well (these benefits are listed later in this document).
Note that many people react that business ethics, with its continuing attention to
"doing the right thing," only asserts the obvious ("be good," "don't lie," etc.),
and so these people don't take business ethics seriously. For many of us, these
principles of the obvious can go right out the door during times of stress.
Consequently, business ethics can be strong preventative medicine. Anyway,
there are many other benefits of managing ethics in the workplace. These
benefits are explained later in this document.

HISTORY OF BUSINESS ETHICS

The term 'business ethics' is used in a lot of different ways, and the history of
business ethics will vary depending on how one conceives of the object under
discussion. The history will also vary somewhat on the historianhow he or
she sees the subject, what facts he or she seeks to discover or has at hand, and
the relative importance the historian gives to those facts. Hence the story I'm
going to tell will be somewhat different from the story someone else might tell
in various particulars, and I hope that instead of being a dull recitation of facts it
might in fact prompt some discussion at the end by those who would tell a
somewhat different story.
The primary sense of the term refers to recent developments and to the period,
since roughly the early 1970s, when the term 'business ethics' came into
common use in the United States. Its origin in this sense is found in the
academy, in academic writings and meetings, and in the development of a field
of academic teaching, research and publication. That is one strand of the story.
As the term entered more general usage in the media and public discourse, it
often became equated with either business scandals or more broadly with what
can called "ets in business."
In this broader sense the history of business ethics goes back to the origin
of business, again taken in a broad sense, meaning commercial exchanges and
later meaning economic systems as well. That is another strand of the history.
The third stand corresponds to a third sense of business ethics which refers to a
movement within business or the movement to explicitly build ethics into the
structures of corporations in the form of ethics codes, ethics officers, ethics
committees and ethics training. The term, moreover, has been adopted worldwide, and its meaning in Europe, for instance, is somewhat different from its
meaning in the United States.

10 Benefits of Managing Ethics in the Workplace

Many people are used to reading or hearing of the moral benefits of attention to
business ethics. However, there are other types of benefits, as well. The
following list describes various types of benefits from managing ethics in the
workplace.
1. Attention to business ethics has substantially improved society.
A matter of decades ago, children in our country worked 16-hour days.
Workers limbs were torn off and disabled workers were condemned to poverty
and often to starvation. Trusts controlled some markets to the extent that prices
were fixed and small businesses choked out. Price fixing crippled normal
market forces. Employees were terminated based on personalities. Influence
was applied through intimidation and harassment. Then society reacted and
demanded that businesses place high value on fairness and equal rights. Antitrust laws were instituted. Government agencies were established. Unions were
organized. Laws and regulations were established.
2. Ethics programs help maintain a moral course in turbulent times.
Attention to business ethics is critical during times of fundamental change
times much like those faced now by businesses, both non-profit or for-profit.
During times of change, there is often no clear moral compass to guide leaders
through complex conflicts about what is right or wrong. Continuing attention to
ethics in the workplace sensitizes leaders and staff to how they want to act
consistently.
3. Ethics programs cultivate strong teamwork and productivity.
Ethics programs align employee behaviours with those top priority ethical
values preferred by leaders of the organization. Usually, an organization finds
surprising disparity between its preferred values and the values actually
reflected by behaviours in the workplace. Ongoing attention and dialogue
regarding values in the workplace builds openness, integrity and community
critical ingredients of strong teams in the workplace. Employees feel strong
alignment between their values and those of the organization. They react with
strong motivation and performance.
4. Ethics programs support employee growth and meaning.
Attention to ethics in the workplace helps employees face reality, both good and
bad in the organization and themselves. Employees feel full confidence they
can admit and deal with whatever comes their way. Bennett, in his article
Unethical Behaviour, Stress Appear Linked (Wall Street Journal, April 11,
1991, p. B1), explained that a consulting company tested a range of executives
and managers. Their most striking finding: the more emotionally healthy

executives, as measured on a battery of tests, the more likely they were to score
high on ethics tests.
5. Ethics programs are an insurance policy they help ensure that policies are
legal.
There is an increasing number of lawsuits in regard to personnel matters and to
effects of an organizations services or products on stakeholders. As mentioned
earlier in this document, ethical principles are often state-of-the-art legal
matters. These principles are often applied to current, major ethical issues to
become legislation. Attention to ethics ensures highly ethical policies and
procedures in the workplace.
6. Ethics programs help avoid criminal acts of omission and can lower fines.
Ethics programs tend to detect ethical issues and violations early on so they can
be reported or addressed. In some cases, when an organization is aware of an
actual or potential violation and does not report it to the appropriate authorities,
this can be considered a criminal act, e.g., in business dealings with certain
government agencies, such as the Defence Department. The recent Federal
Sentencing Guidelines specify major penalties for various types of major ethics
violations. However, the guideline potentially lowers fines if an organization
has clearly made an effort to operate ethically.
7. Ethics programs help manage values associated with quality management,
strategic planning and diversity management this benefit needs far more
attention.
Ethics programs identify preferred values and ensuring organizational
behaviours are aligned with those values. This effort includes recording the
values, developing policies and procedures to align behaviours with preferred
values, and then training all personnel about the policies and procedures. This
overall effort is very useful for several other programs in the workplace that
require behaviours to be aligned with values, including quality management,
strategic planning and diversity management. Total Quality Management
includes high priority on certain operating values, e.g., trust among
stakeholders, performance, reliability, measurement, and feedback. Eastman and
Polaroid use ethics tools in their quality programs to ensure integrity in their
relationships with stakeholders. Ethics management techniques are highly
useful for managing strategic values, e.g., expand market share, reduce costs,
etc. McDonnell Douglas integrates their ethics programs into their strategic
planning process. Ethics management programs are also useful in managing
diversity. Diversity is much more than the colour of peoples skin its
acknowledging different values and perspectives. Diversity programs require
recognizing and applying diverse values and perspectives these activities are
the basis of a sound ethics management program.

8. Ethics programs promote a strong public image.

Attention to ethics is also strong public relations admittedly, managing ethics
should not be done primarily for reasons of public relations. But, frankly, the
fact that an organization regularly gives attention to its ethics can portray a
strong positive to the public. People see those organizations as valuing people
more than profit, as striving to operate with the utmost of integrity and honour.
Aligning behavior with values is critical to effective marketing and public
relations programs. Consider how Johnson and Johnson handled the Tylenol
crisis versus how Exxon handled the oil spill in Alaska. Bob Dunn, President
and CEO of San Francisco-based Business for Social Responsibility, puts it
best: Ethical values, consistently applied, are the cornerstones in building a
commercially successful and socially responsible business.
9. Overall benefits of ethics programs:
Donaldson and Davis, in Business Ethics? Yes, But What Can it Do for the
Bottom Line? (Management Decision, V28, N6, 1990) explain that managing
ethical values in the workplace legitimizes managerial actions, strengthens the
coherence and balance of the organizations culture, improves trust in
relationships between individuals and groups, supports greater consistency in
standards and qualities of products, and cultivates greater sensitivity to the
impact of the enterprises values and messages.
10. Last and most formal attention to ethics in the workplace is the right
thing to do.

EXAMPLES
1.Salesforce.com
For years, Salesforce.com has been honoured for its philanthropy and good
practices. Through its Salesforce.com Foundation, the company has donated
millions of dollars toward education grants and technology, and even discounts
its services to non-profit organizations. The company also encourages its
employees to get into the action by giving them six days off per year to do any
type of charitable work they choose. Saleforce.com frequently ranks highly on
lists of companies offering the best salaries and hourly rates for employees.

2.Starbucks
While some may argue that Starbucks has no place on this list due to its
competition-crushing business practices, the company's bad press shouldn't
outshine what it does for society. While it isn't perfect, the company is often
quick to fix its environmental problems, from greatly reducing the water it uses
for its dipper well to using recycled paper in its cups. The company also
encourages consumers to be environmentally conscious by offering a 10-cent
discount to those who bring their own reusable cups and giving free coffee
grounds to consumers who want to use them for compost. Starbucks is also
dedicated to its baristas, offering them full health insurance benefits and stock
awards. In addition, like another controversial company on this list, the
company is also a vocal advocate of same-sex marriage.

3.GoldmanSachs
Goldman Sachs could easily be seen as the most controversial pick for this list
because of its business ethics. But its vocal support of marriage equality has
earned it some merit in terms of social ethics. In February 2012, Sachs
CEO Lloyd Blankfein appeared in a human rights campaign ad advocating
marriage equality, much to the surprise of Wall Street. The move was not
without consequence: It was reported that a high-profile client dropped its
account with Goldman Sachs after the announcement, but the company has
maintained its position. To those of you thinking that Goldman Sach's support
of same-sex marriage is a way of buying goodwill, keep in mind that since at
least 2008, the company has offered to completely fund its employee's gender
reassignment surgery pro bono.

4.UltimateSoftware
Another company that enjoys hero status for its treatment of its employees
is Ultimate Software. Every year the company rises in the ranks as one of the
best companies to work for because of perks like the 100% free health care it
offers its employees, including complete coverage for all their dependents. The
company also gives its employees an all-expenses paid vacation every two
years. Ultimate Software is enjoys a great deal of diversity in its hiring practices
-- at least 46% of its staff are women, and 33% are minorities.

5.NuStarEnergy
It's not often that oil companies are thought of as ethical, but NuStar's Energy
treatment of its employees regularly lands it on lists of the best companies to
work for. The company pays 100% of its workers' health insurance premium,
and even matches 401(k) contributions up to 6%. In addition, the company has a
strict no-layoffs policy, and lends its employees the corporate jet in times of
crisis. Although it would have placed higher if it was a little greener, NuStar's
commitment to its people is truly an example of its ethical policies.

6.SASInstitute
SAS Institute is another software company that is renowned for its employee
benefits. Employees at SAS receive subsidized Montessori child care, unlimited
sick time, and access to a free health centre. The company also fosters a strong
sense of community; its staff has intramural sports leagues, and the company
has never had a layoff. SAS also supports education philanthropy, particularly
programs that are dedicated to promoting science, technology, engineering, and
mathematics programs for children. The company also encourages its
employees to volunteer at various charities and even makes cash contributions
to non-profit programs where the employees volunteer.

7.Patagonia
While most winter and outdoor clothing companies advocate environmentalism
to some degree, Patagonia is dedicated enough to the cause to let it seriously
affect its bottom line. In 1985, the company started the 1% for the Planet
pledge and has consistently asked other companies to join it in donating 1% of
its sales to help save the environment. Even more impressive is the fact that
Patagonia, aware of the impact its business has on the environment, has
frequently asked its consumers to refrain from buying its products if they don't
really need them

8.Intel
Since 1988, the computer chip manufacturer Intel has been trying to bolster its
reputation through its efforts to strengthen technological education. Through the
Intel Foundation, the company hosts the Intel Science Talent Search and the
international Science and Engineering Fair to help encourage STEM (science,
technology, engineering, and mathematics) education for young people. Intel is
also interested in making these areas more diverse; the company has many
donation funds and programs to encourage girls and underprivileged minorities
to study in these fields. Employees of Intel also experience the company's
dedication to education through a very strange corporate perk -- the company
promotes or reassigns them to different fields and areas every 16 to 24 months,
in the interest of making sure that workers never become bored with their roles,
and encouraging them to explore new fields. Accepted employees are often told,
"Welcome to your next five jobs."

9.Microsoft
Given the fact that it was started by Bill Gates, one of America's most generous
philanthropists, it follows that Microsoft would do well in following his
example. The tech company and its employees donate over $1 billion yearly to
charities and non-profit organizations. If that wasn't enough, Microsoft's
management and employee's have also decided to tackle Americas IT
professionals shortage through its TEALS program. Through the TEALS
program, Microsoft employees are encouraged to volunteer at local schools to
instruct students in computer science, in the hopes that it will inspire them to
enter the technology industry. It's only natural that Microsoft employees would
be generous people; in addition to being among the highest paid employees in

America, they also enjoy a plethora of perks, including 100% coverage on their
health care premiums.

10.Google
Although some may criticize the company, Google regularly makes good on its
motto: "Don't be evil." Through its Google Green Program, the company has
donated over $1 billion to renewable energy projects, and has decreased its own
footprint by using energy efficient buildings and public transportation. The
company is also a staunch advocate of free speech, which can be observed from
its frequent conflicts with the Chinese government. Google is also an open
supporter of gay rights. Yet all this pales in comparison to Google's status as a
paragon for employee benefits. Just to name a few, Google employees have
access to free health care and treatment from on-site doctors, free legal advice
with discounted legal services, a fully stock snack pantry and onsite cafeteria
(staffed by world-class chefs, no less), and a free on-site nursery. With such a
stellar record of social awareness and positive employee relations, Google is
easily the best example of ethics in the corporate world today.

SOCIAL ENTREPRENEURSHIP

Over the past two decades, the citizen sector has discovered what the business
sector learned long ago: There is nothing as powerful as a new idea in the hands
of a first-class entrepreneur. Social entrepreneurs are individuals with
innovative solutions to societys most pressing social problems. They are
ambitious and persistent, tackling major social issues and offering new ideas for
wide-scale change.
Rather than leaving societal needs to the government or business sectors, social
entrepreneurs find what is not working and solve the problem by changing the
system, spreading the solution, and persuading entire societies to move in
different directions.
Social entrepreneurs often seem to be possessed by their ideas, committing their
lives to changing the direction of their field. They are visionaries, but also
realists, and are ultimately concerned with the practical implementation of their
vision above all else.
Social entrepreneurs present user-friendly, understandable, and ethical ideas that
engage widespread support in order to maximize the number of citizens that will
stand up, seize their idea, and implement it. Leading social entrepreneurs are
mass recruiters of local change makers role models proving that citizens who
channel their ideas into action can do almost anything.
Social entrepreneurship is the process of pursuing innovative solutions to social
problems. More specifically, social entrepreneurs adopt a mission to create and
sustain social value. They draw upon appropriate thinking in both the business
and non-profit worlds and operate in a variety of organizations: large and small;
new and old; religious and secular; non-profit, for-profit, and hybrid.
Business entrepreneurs typically measure performance in profit and return, but
social entrepreneurs also take into account a positive return to society. Social
entrepreneurship typically furthers broad social, cultural, and environmental
goals and is commonly associated with the voluntary and not-for-profit sectors.
Profit can at times also be a consideration for certain companies or other social
enterprises.

Social entrepreneurship practiced in a world or international context is called

international social entrepreneurship

Successful example of social entrepreneurship

AMUL- Founded in 1946, Amul was established initially as a reaction to unfair

milk trade practices in India, inspiring local and marginalized farmers to form
cooperatives independent from trade cartels. With the notable help of
Tribhuvandas Patel and Verghese Kurien, the Amul cooperative model became
so successful that it was eventually replicated all over India in 1965. Amul has
since:
Produced excellent value for money food products for customers created a
lucrative source of income for local dairy farmers in India
JAIPUR RUGS- Starting out in Jaipur, India and currently operating from
Atlanta, Georgia, Jaipur Rugs is a primarily focused on producing high-quality
and socially responsible floor coverings. Founded by NK Chaudhary in 1978,
this company elevated the art of knotted carpet weaving by nurturing it at the
grassroots level and empowering local artisans by directly connecting them to
the global market. Thus far, Jaipur Rugs has:
Produced breathtaking, well-crafted handmade rugs for discerning customers
Continued to connect gifted rug makers to consumers sponsored health, literacy,
vocational, legal, financial and entrepreneurial initiatives to inspire progress in
communities where their artisans work and live.

CORPORATE GOVERNANCE
Governance is concerned with the intrinsic nature, purpose, integrity and
identity of an organization with primary focus on the entitys relevance,
continuity and fiduciary aspects.
The root of the word Governance is from gubernate, which means to steer.
Corporate governance would mean to steer an organization in the desired
direction. The responsibility to steer lies with the board of directors/ governing
board.
Noble laureate Milton Friedman defined Corporate Governance as the
conduct of business in accordance with shareholders desires, which generally is
to make as much money as possible, while conforming to the basic rules of the
society embodied in law and local customs

Definition
Corporate governance deals with laws, procedures, practices and implicit rules
that determine a companys ability to take informed managerial decisions vis-vis its claimants - in particular, its shareholders, creditors, customers, the State
and employees. There is a global consensus about the objective of good
corporate governance: maximising long-term shareholder value

Principles of Corporate Governance (ICSI)

1. Sustainable
development of all
stakeholders

Ensure growth of all individuals associated with or effected

by the enterprise on sustainable basis.

2. Effective
management and
distribution of wealth

Ensure that enterprise creates maximum wealth and judiciously uses

the wealth so created for providing maximum benefits to all
stakeholders and enhancing its wealth creation capabilities to
maintain sustainability.

3. Discharge of social
responsibility
4. Application of best
management practices

Ensure that enterprise is acceptable to the society in which

it is functioning.

Ensure excellence in functioning of enterprise and optimum

creation of wealth on sustainable basis

5. Compliance of law
in letter and spirit

Ensure value enhancement for all stakeholders guaranteed

by the law for maintaining socio-economic balance.

6. Adherence to
ethical standards

Ensure integrity, transparency, independence accountability in

dealings with all stakeholders

NEED FOR CORPORATE GOVERNANCE

Corporate Governance is needed to create a corporate culture of Transparency,
accountability and disclosure. It refers to compliance with all the moral &
ethical values, legal framework and voluntary adopted practices. This enhances
customer satisfaction, shareholder value and wealth.
Corporate Performance: Improved governance structures and processes help
ensure quality decision-making, encourage effective succession planning for
senior management and enhance the long-term prosperity of companies,
independent of the type of company and its sources of finance. This can be
linked with improved corporate performance- either in terms of share price or
profitability.

Enhanced Investor Trust: Investors consider corporate Governance as

important as financial performance when evaluating companies for investment.
Investors who are provided with high levels of disclosure & transparency are
likely to invest openly in those companies. The consulting firm McKinsey
surveyed and determined that global institutional investors are prepared to pay a
premium of up to 40 percent for shares in companies with superior corporate
governance practices.
Better Access To Global Market: Good corporate governance systems attracts
investment from global investors, which subsequently leads to greater
efficiencies in the financial sector.
Combating Corruption: Companies that are transparent, and have sound
system that provide full disclosure of accounting and auditing procedures, allow
transparency in all business transactions, provide environment where corruption
will certainly fadeout. Corporate Governance enables a corporation to compete
more efficiently and prevent fraud and malpractices within the organization.
Easy Finance from Institutions: Several structural changes like increased role
of financial intermediaries and institutional investors, size of the enterprises,
investment choices available to investors, increased competition, and increased

risk exposure have made monitoring the use of capital more complex thereby
increasing the need Of Good Corporate Governance. Evidence indicates that
well-governed companies receive higher market valuations. The credit
worthiness of a company can be trusted on the basis of corporate governance
practiced in the company.

Enhancing Enterprise Valuation: Improved management accountability and

operational transparency fulfil investors expectations and confidence on
management and corporations, and return, increase the value of corporations.
Reduced Risk of Corporate Crisis and Scandals: Effective Corporate
Governance ensures efficient risk mitigation system in place. The transparent
and accountable system that Corporate Governance makes the Board of a
company aware of all the risks involved in particular strategy, thereby, placing
various control systems to monitor the related issues.
Accountability: Investor relations are essential part of good corporate
governance. Investors have directly/ indirectly entrusted management of the
company for the creating enhanced value for their investment. The company is
hence obliged to make timely disclosures on regular basis to all its shareholders
in order to maintain good investors relation. Good Corporate Governance
practices create the environment where Boards cannot ignore their
accountability to these stakeholders.

EXAMPLES
Definition and Purpose
ITC defines Corporate Governance as a systemic process by which companies
are directed and controlled to enhance their wealth generating capacity. Since
large corporations employ vast quantum of societal resources, we believe that
the governance process should ensure that these companies are managed in a
manner that meets stakeholders aspirations and societal expectations.
Core Principles
ITC's Corporate Governance initiative is based on two core principles. These
are:

Management must have the executive freedom to drive the enterprise

forward without undue restraints; and this freedom of management
should be exercised within a framework of effective accountability.
ITC believes that any meaningful policy on Corporate Governance must
provide empowerment to the executive management of the Company, and
simultaneously create a mechanism of checks and balances which ensures
that the decision making powers vested in the executive management is
not only not misused, but is used with care and responsibility to meet
stakeholder aspirations and societal expectations.

Cornerstones
From the above definition and core principles of Corporate Governance emerge
the cornerstones of ITC's governance philosophy, namely trusteeship,
transparency, empowerment and accountability, control and ethical corporate
citizenship. ITC believes that the practice of each of these leads to the creation
of the right corporate culture in which the company is managed in a manner that
fulfils the purpose of Corporate Governance.
Trusteeship:
ITC believes that large corporations like itself have both a social and economic
purpose. They represent a coalition of interests, namely those of the
shareholders, other providers of capital, business associates and employees.
This belief therefore casts a responsibility of trusteeship on the Company's
Board of Directors. They are to act as trustees to protect and enhance
shareholder value, as well as to ensure that the Company fulfils its obligations
and responsibilities to its other stakeholders. Inherent in the concept of
trusteeship is the responsibility to ensure equity, namely, that the rights of all
shareholders, large or small, are protected.
Transparency:
ITC believes that transparency means explaining Company's policies and
actions to those to whom it has responsibilities. Therefore transparency must
lead to maximum appropriate disclosures without jeopardising the Company's
strategic interests. Internally, transparency means openness in Company's
relationship with its employees, as well as the conduct of its business in a
manner that will bear scrutiny. We believe transparency enhances
accountability.

Empowerment and Accountability:

Empowerment is an essential concomitant of ITC's first core principle of
governance that management must have the freedom to drive the enterprise
forward. ITC believes that empowerment is a process of actualising the
potential of its employees. Empowerment unleashes creativity and innovation
throughout the organisation by truly vesting decision-making powers at the
most appropriate levels in the organisational hierarchy.
ITC believes that the Board of Directors are accountable to the shareholders,
and the management is accountable to the Board of Directors. We believe that
empowerment, combined with accountability, provides an impetus to
performance and improves effectiveness, thereby enhancing shareholder value.
Control:
ITC believes that control is a necessary concomitant of its second core principle
of governance that the freedom of management should be exercised within a
framework of appropriate checks and balances. Control should prevent misuse
of power, facilitate timely management response to change, and ensure that
business risks are pre-emptively and effectively managed.
Ethical Corporate Citizenship:
ITC believes that corporations like itself have a responsibility to set exemplary
standards of ethical behaviour, both internally within the organisation, as well
as in their external relationships. We believe that unethical behaviour corrupts
organisational culture and undermines stakeholder value.

ISSUES IN CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility (CSR) promotes a vision of business
accountability to a wide range of stakeholders, besides shareholders and
investors. Key areas of concern are environmental protection and the wellbeing
of employees, the community and civil society in general, both now and in the
future.
The concept of CSR is underpinned by the idea that corporations can no longer
act as isolated economic entities operating in detachment from broader society.
Traditional views about competitiveness, survival and profitability are being
swept away.
Some of the drivers pushing business towards CSR include:
1. 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. Shrinking
government resources, coupled with a distrust of regulations, has led to the
exploration of voluntary and non-regulatory initiatives instead.
2. Demands for greater disclosure
There is a growing demand for corporate disclosure from stakeholders,
including customers, suppliers, employees, communities, investors, and activist
organizations.
3. Increased customer interest
There is evidence that the ethical conduct of companies exerts a growing
influence on the purchasing decisions of customers. In a recent survey
by Environics International, more than one in five consumers reported having
either rewarded or punished companies based on their perceived social
performance.
4. Growing investor pressure
Investors are changing the way they assess companies' performance, and are
making decisions based on criteria that include ethical concerns. The Social
Investment Forum reports that in the US in 1999, there was more than $2
trillion worth of assets invested in portfolios that used screens linked to the
environment and social responsibility. A separate survey by Environics
International revealed that more than a quarter of share-owning Americans

took into account ethical considerations when buying and selling stocks. (More
on socially responsible investment can be found in the 'Banking and investment'
section of the site.)
5. Competitive labour markets
Employees are increasingly looking beyond pay checks 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.
6. Supplier relations
As stakeholders are becoming increasingly interested in business affairs, many
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 companies' policies or practices do not tarnish
their reputation.
Some of the positive outcomes that can arise when businesses adopt a policy of
social responsibility include:
1. Company benefits:

Improved financial performance;

Lower operating costs;
Enhanced brand image and reputation;
Increased sales and customer loyalty;
Greater productivity and quality;
More ability to attract and retain employees;
Reduced regulatory oversight;
Access to capital;
Workforce diversity;
Product safety and decreased liability.

2. Benefits to the community and the general public:

Charitable contributions;
Employee volunteer programmes;
Corporate involvement in community education, employment and
homelessness programmes;
Product safety and quality.

3. Environmental benefits:

Greater material recyclability;

Better product durability and functionality;
Greater use of renewable resources;
Integration of environmental management tools into business plans,
including life-cycle assessment and costing, environmental management
standards, and eco-labelling.

Nevertheless, many companies continue to overlook CSR in the supply chain for example by importing and retailing timber that has been illegally harvested.
While governments can impose embargos and penalties on offending
companies, the organizations themselves can make a commitment to
sustainability by being more discerning in their choice of suppliers.
The concept of corporate social responsibility is now firmly rooted on the global
business agenda. But in order to move from theory to concrete action, many
obstacles need to be overcome.
A key challenge facing business is the need for more reliable indicators of
progress in the field of CSR, along with the dissemination of CSR strategies.
Transparency and dialogue can help to make a business appear more
trustworthy, and push up the standards of other organizations at the same time.
The Global Reporting Initiative is an international, multi-stakeholder effort to
create a common framework for voluntary reporting of the economic,
environmental, and social impact of organization-level activity. Its mission is to
improve the comparability and credibility of sustainability reporting worldwide.
There is increasing recognition of the importance of public-private partnerships
in CSR. Private enterprise is beginning to reach out to other members of civil
society such as non-governmental organizations, the United Nations, and
national and regional governments.
An example of such a partnership is the 'Global Compact'. Launched in 1999
by the United Nations, the Global Compact is a coalition of large businesses,
trade unions and environmental and human rights groups, brought together to
share a dialogue on corporate social responsibility.
The 'Working with NGOs' section offers some insights into the way businesses
and lobby groups are working together to mutual benefit.

Management training plays an important role in implementation of CSR

strategies, and there is a growing number of conferences and courses available
on the subject. Organizations that provide such training include Global
Responsibility, Business for Social Responsibility and the Corporate Social
Responsibility Forum.
RECOMMENDATIONS
Business ethics is of outmost importance asEthics concern an individual's moral judgements about right and wrong.
Decisions taken within an organisation may be made by individuals or groups,
but whoever makes them will be influenced by the culture of the company. The
decision to behave ethically is a moral one; employees must decide what they
think is the right course of action.
This may involve rejecting the route that would lead to the biggest short-term
profit
customers to the firm's products, thereby boosting sales and profits
employees want to stay with the business, reduce labour turnover and
therefore increase productivity
more employees wanting to work for the business, reduce recruitment
costs and enable the company to get the most talented employees
investors and keep the company's share price high, thereby protecting
the business from takeover