Business ethics and corporate social responsibility

Business ethics and corporate social responsibility

Business Ethics

  • Business ethics refer to the moral principles that guide the behaviour of a business.
  • They are based on the values within a business, such as honesty, integrity, and fairness.
  • A business may have a code of ethics outlining acceptable behaviour and practices for employees.
  • The objective of business ethics is not just to make a profit, but to do so in a way that is ethical and sustainable.
  • Acceptable behaviour is not always defined by legal requirements. For example, a business may choose to pay above the minimum wage because it is the ethical thing to do.
  • Violations of business ethics can result in damage to a business’s reputation, and may involve legal penalties.

Corporate Social Responsibility

  • Corporate Social Responsibility (CSR) refers to a business’s obligations to act in the interests of society as a whole.
  • CSR includes ethical responsibilities, such as treating employees fairly and ethically.
  • It also includes legal responsibilities, like obeying the law and operating within the regulations of the industry.
  • Economic responsibilities are also a part of CSR, this means a business should aim to be profitable, which in turn benefits society by providing employment and contributing to the economy.
  • Finally, CSR also involves voluntary responsibilities. These extend beyond what is required by law or expected ethically. Voluntary responsibilities include things like making charitable donations or reducing carbon emissions beyond what regulations require.
  • Companies often have CSR policies outlining their commitments and goals.
  • Communicating CSR activities effectively can positively impact a company’s brand and reputation.

Ethics and CSR in Practice

  • Businesses could adopt ethical and CSR policies for a variety of reasons, including:
    • Competitive advantage
    • To meet the expectations of customers, employees, and investors
    • Avoiding legal penalties and damage to reputation
  • An ethical business culture promotes employee morale, which can lead to increased productivity and retention.
  • An effective CSR policy can enhance a company’s reputation and increase customer loyalty.
  • Ethical sourcing and sustainability practices can reduce costs and make a business more efficient in the long term.
  • Conversely, ethical breaches and failures in CSR can lead to lawsuits, negative publicity, and loss of customer and employee trust.

Always remember, business ethics and CSR are interlinked and both critical for a modern, successful business. The strategies adopted on these matters can make a significant impact not only on the business performance but also the society it operates within and serves.