BUSINESS ETHICS AS
FOUNDATION OF CSR
Learning Objectives:
In 2012, it was discovered that Yahoo’s CEO, Scott Thompson falsified his education
data- which is indeed a personal failure in ethics. Some authors says that in this case ethics
should be more important than a college degree (Enderle, R. 2012)
Business ethics is a form of applied ethics that examines moral rules, theories, and
principles in a business context. Generally speaking, business ethics is a normative discipline,
whereby particular ethical standards are advocated and then applied. It makes specific
judgment about what is right and wrong, as it teaches what ought to be done and what ought
not to be done (De George, 1999). Business ethics in this book is also known as ethical
management.
Business ethics pushes the practitioner to pause and ask the questions: It is true? Is it
deceitful? It is fair? Or is it unjust? Does it cause bodily or emotional harm to others and nature?
Executives and managers are caught in a balancing act between the ideal and the practical,
such as the need to produce a reasonable profit for the shareholders and at the same time to
maintain integrity by paying correct taxes to the government (Valor, 2005, Rothman & Scott,
2004; Maximiano, 2003; De George, 1999; Carroll, 1999)
The person who works for or manages business is not just an abstract being or mere
intelligent but a human person with dignity who is subject to socio-political, moral, and
economic issues. The social nature of man shows there is interdependence between his
personal betterment and the improvement of society
The human person, a businessman, the supplier, or a consumer, is a microcosmic
specie, as he is also a social being that “has been elevated to the supernatural order,”
emphatically pronounced by Pope John XXIII (cited in Maximiano, 2003).
The fact that we are not walking bellies alone; we are not only physical. There are
other things in the human person besides the material, financial bottom line, scorecard, key
result areas, and the belly.
A good business leader is convinced that business should be at the service of the
human person, and not human person at the service of business, that ethics is above
technology and spirit above matter (see Libertatis conscientiae, 72)
Ethical management in finance, accounting, and auditing. The best cases are Enron
and Worldcom, where the issues comprise executive compensation, (criminal) manipulation
of the financial markets, bribery, facilitation payments, fraud, and false reporting. Its practical
CSR application is corporate governance, accountability, and value-based management.
Of course, it is desirable that ethics should be also become a corporate affair and
the conviction if the rank-and-file employees as well.
References:
Enderle, R (2012). Yahoo CEO Scandal: Ethics Should Be More Important Than a College
Degree. Retrieved July 12, 2013 from
http://www.itbusinessedge.com/cm/blogs/enderle/yahoo-ceo-scandal-ethics-should-be-
more-important-than-a-college-degree/?cs=50361
Valor, C. (2005). Corporate social responsibility and corporate citizenship: Towards corporate
accountability. Business and Society Review. 110(2), 191-212. Retrieved November 19,
2005, from the Ebsco database.
Rothman, H. & Scott, M. (2004). Companies with a conscience. Denver, CO: MyersTempleton.
Maximiano, J. M. B. (2003). Corporate social responsibility: Basic principles and best practices:
Historico-philosophical issues in international business. Manila: DLSU University Press.
Learning Objectives:
The 2002 Asian Forum on CSR characterized business ethics and social responsibility
as follows:
Beyond profit- meaning that business learns to genuinely address the common public
good beyond that of corporate interests.
Beyond compliance- that business responds to higher standards and principles beyond
mere obedience to the law
Beyond form- that the company goes beyond public relations and image building
There are eight similarities and common characteristics existing between business ethics and
CSR, namely;
First phase- Company sees profit and only profit. No enterprise goes into business to be
altruistic or philanthropic, otherwise it is a non-profit organization. The overriding concern at this
initial stage is profit maximization.
Second phase- Company complies with laws and regulations, which is the minimum
requirement of being a corporate citizen.
Third phase- Company conforms to ethical requirements to build its image, as it reassess and
safeguards its reputational value. Pepsi Cola in Myanmar, HP and The Gap in El Salvador
established their ethical department and changed their corporate behavior to enhance their
corporate image.
Ultimate phase- Company institutionalizes CSR and ethical management because it is the right
thing to do. It is some kind of noblesse oblige. The enterprise truly become socially responsible
and relegate profit motive to secondary objective. Archie Carloll (1999) calls it the Four Part of
Definition of CSR.
Meralco has a chief CSR officer, who heads One Meralco Foundation, which was
launched in 2011 (onemeralcofoundation.org). It is advantageous if a company has its CSR
department that involves both leadership and the rank-and-file. Because it is primarily social,
CSR includes code of conduct, corporate citizenship, employee volunteerism, resource sharing
and management, social investment and sustainable development. CSR is interested in
broadening participation in social development. CSR is interested in broadening participation in
social development efforts by getting more people to participate in poverty alleviation programs
and community involvement. I believe that the more people are engaged in ethical management
and corporate citizenship the better.
Ethical management is a tool towards corporate excellence. While others are contented
with the minimal requirements of the moral norms and code of conduct, the goal of both
business ethics and CSR is the moral excellence of all players of business. The goal of
When addressing the growing charm between the elite and the masses, a progressive
business group in Venezuela set up the first CSR organization in 1964, known as Dividendo
Voluntario para la Communidad (DVC). Learning from DVS’s avant-garde move to assist in
grassroots development, our Filipino industrialists and prominent business leaders did one of
the firsts in Asia. In 1970, fifty leading corporations responded to the call and organized a
common foundation, herewith referred to as the Philippine Business for Social Progress or
PBSP, which today is one of the most successful NGOs in the whole world- in behalf of the
marginalized sector of society.
PBSP’s membership has grown to more than 160 companies, all of which have pledged
to set aside 1% of net income before taxes to bankroll and subsidize development programs. Of
this, 20% is managed by PBSP. This system of corporate responsibility is derived mainly from
the profits the companies generate. Corporate contributions are channeled through this
common foundation, where development programs are designed and implemented with the
most profound faith and contaminating zeal. Too many observers PBSP runs like a “conspiracy
in favor of social development,” and it is seen radically constructive to the Philippine society like
no other.
The new millennium saw company and private foundations sprouting like mushrooms to
share God’s blessings and help improve people’s quality of life. Ayala, Petron, San Miguel
Corporation, Gokongwei Group, Metro Pacific, Lopez Group, Aboitiz Group, Pfzer, Tan Yan
Kee, Sm and many other private institutions have established their own foundation to make a
difference in the life of Juan de la Cruz. An umbrella organization, called the League of
Corporate Foundations, is synergizing all foundation efforts to deliver a deeper impact to
society, grouping them into five sectors: Arts and culture, Education, Enterprise Development,
Environment and Health. In many companies today, employee involvement and volunteerism in
CSR events are prominent (Rimando, 2012).
It’s not all public relations for these enlightened corporations. It’s honest to goodness
public service and social accountability. Andres Soriano III once explains: “ The practice of
corporate social responsibility has evolved through the years from company philanthropy to
direct involvement. Today, corporate social responsibility has been institutionalized in many
References:
Maximiano, J. M. B. (2003). Corporate Social responsibility: Basic principles and best practices:
Historico-philosophical issues in international business. Manila: DLSU University Press.
Rimando, L. (2012). How CSR is evolving in the Philippines. Retrieved July 11, 2013 from
http://www. rappler.com/newsbreak/3421-how-csr-is-evolving-in-the-philippines.
Learning Objectives:
CSR cannot be forced from without. High ethical conduct is very personal. Other-
centeredness comes from within. It is inherent in the organization’s objective strategy,
simply to aid the well being of the bigger society. However, without bottomline concerns,
without profit, without good ROI (return of investment) and ROA (return of assets), CSR
is a non-issue- and corporate citizenship is an impossible dream.
You can’t give what you don’t have. If profit doesn’t exceed their overheard, small
and medium-scale enterprises wouldn’t have a chance with secondary concerns such
as monetary philanthropy, employee volunteerism, and community involvement.
Accordingly, Levi Strauss Chairman Robert Haas once said: “The organization needs to
be an ethical creature- an organism capable of both reaping profits and making the
world a better place to live.” When profit is maximized, Levi’s believes it can afford the
practice of ethical concerns and social responsibility (Maximiano, 2003).
In the United States, the Sarbanes-Oxley Act, signed into law in July 2002, is the
single most important piece of legislation affecting corporate governance, financial
disclosure, and the practice of public accounting since the US securities laws of the
early 1930s. By strengthening standards for auditors and forcing companies to report on
internal controls, the law has improved financial statements. In other words, legislative
standards are important to ensure the governance of profits.
These measures are easy enough to describe, but frequently difficult to practice.
There have been calls for the adoption of a set of generally accepted accounting
principles (Global GAAP) as well as a need to establish standards for measuring and
reporting information that are specific to respective industries, consistently applied, and
in understandable form. In practice, these measures may be difficult to implement.
Fortune Magazine has made a sketchy description of the new business leader for
the third millennium in some unconventional terms.
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The managers of the workplace 2000, according to the influential journal, must
be familiar with global politics and economic situation, must have vision, entrepreneurial
spirit and a capacity to innovate. Above all, Fortune states with gusto, the manager of
the new millennium must have a solid understanding of moral (and social) principles. It
reads: “The leader of the future should have a strong grasp of ethics, be sensitive to
other’s feeling, know how to negotiate, have polished business manners, speak and
write well, and understand the uses of technology.” A similar description of 21 st century
manager was delivered by Jeroen van den Veer, Group Managing Director, Royal
Dutch/Shell Group, in June 2000 (Royal Dutch/Shell Group, 2002).
A Us-based international group called The Ethisphere Institute makes a list of the
Most Ethical Companies in the world. That every year thousands if nominations came
from more than 100 countries and 40 countries and 40 industries the corporate desire to
be acknowledged for high ethical standards. At the heart of the selection of the most
ethical companies is an evaluation rating called Ethical Quotient TM, which includes
among other criteria the ethical compliance program, ethical leadership, and the
promotion of culture of ethics in the company (Ethisphere, 2013).
The 2013 list covers 138 organizations, which include Colgate Pamolive, eBay,
Intel, Microsoft, Accenture, Gap, Ford Motors, Kellog, and Pepsico, among others.
Several companies have made the list for seven consecutive years including: American
Express, General Electric, Milliken & Company, and Starbucks Coffee, inter alias.
References:
Maximiano, J. M. B. (2003). Corporate Social responsibility: Basic principles and best practices:
Historico-philosophical issues in international business. Manila: DLSU University Press.
Ethisphere. World’s Most Ethical Companies. Retrieved July 12, 2013 from
http://ethisphere.com/worlds-most-ethical/wme-honorees.
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Module 4
Learning Objectives:
Man, the human person, is above other M’s (material resources, machine,
methods, management, money, etc.). The human labor, the spiritual worker, the
intelligent capital, with God-given sublime dignity, is the real wealth creator (John Paul
II, 1981).
As differentiated from human capital (labor), material wealth includes money and
other financial resources, machines, gadgets, and state-of-the-art technology, methods
and other technical resources and the whole collection of means, which management
appropriates and transforms into products and services in order to obtain profit. All of
these are secondary to the dignity of the human labor.
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What business factors create wealth?
Kelly argues that material capital does not and cannot create wealth and that a pile of
physical capital (be it machine, a method, a management tool) sitting anywhere creates nothing.
Kelly underlines the importance of labor, otherwise known as the human capital or intellectual
capital, the intelligent entrepreneur, the strategic manager, the diligent worker. Human resource
(labor) is also called human capital, and human knowledge is known as intellectual capital.
The human persons is not the means to be used for economic development. The other
way is true, that is, the economic development is a means for the total development of the
human person (see Mehrotra & Jolly, 1998).
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developed countries. For example, many of the young Filipino women who work abroad, notably
in the Middle East, are sexually exploited, like the comfort women during World War II.
In 2003, a Malaysian employer burned the face of her Filipina maid with a red-hot flat
iron- a case that has been repeated a dozen times in other countries. Cases of brutality, abuse,
and mistreatment are even expected incidents when domestic helpers from the Philippines,
Pakistan, India, Indonesia, Vietnam, Cambodia, and Thailand work abroad- mainly in the Middle
East, Japan, Singapore, Taiwan and Malaysia.
There floats in the ocean of global exchange of ideas different worldviews, concepts,
and perspective about the human person and his human dignity. The human person is in every
face of the stakeholders of business (employees, customers, suppliers, etc). Human dignity is in
the laborer, as it is in the customer who has the right to be served beyond satisfaction. It is in
the community, the beneficiary of the CSR program, as it is in those in the bottom of the
pyramid.
The best concept must definitely ascribe to the human person a worth without an equal
and an assessment that is priceless. This is true as regards the human person’s individuality,
his originality, and his dignity; as regards the intangible richness arising from his fundamental
rights, his sacredness, his capacity for education, his aspirations to complete development, and
his immortality (Paul VI, 1968).
We are all created in the image and likeness of God, hence the expression in Latin
imago Dei. That image and likeness of God in us our spiritual nature, our intelligence, our
freewill.
The movie Elephant Man, based on 1923 book of the same title, was directed by David
Lynch, Dr. Frederick Treves (played by Sir Anthony Hopkins) rescues Merrick (John Hurt) from
a sleazy sideshow display in order to study him as a medical oddity. Despite Merrick’s horrific
exterior- for it was so difficult for anyone to see the image of God in John- the doctor discovers
that he is quite intelligent and charming, and works with him in an attempt to improve his life via
culture and appreciation of high society. Every person is imago Dei, including those with
disability.
As professed by the 1948 Universal Declaration of Human Rights: “All men are created
equal in dignity and rights,” that is every man, woman, and child possess intrinsic dignity,
regardless of race or color, religion, sex, party affiliation, or business connections.
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What should be the appropriate assessment of human labor in trade and
industry?
References:
Kelly, M. (2001). The divine right of capital. San Francisco, CA: Berrett-Koehler Publishers.
Mehrotram S. & Jolly, R. (1998). Development with a human face. Oxford: Oxford
University Press.
Foley, J. (2003). “Being is better than having.” Address to the World Federation of Advertisers.
Retrieved may 31, 2006, from http://www.catholicnewsagency.com/new.php?n=112
Maximiano, J. M. B. (2003). Corporate social responsibility: Basic principles and best practices:
Historico-philosophical issues in international business. Manila DLSU University Press.
Paul VI. (1968). Uniqueness of the Christian concept of the human person. L’osservatore
Romano (September 12, 1968). Vatican City: Vatican. Polyglot Press.
Concepcion, J. (1996) The agenda of the business. The Philippine Star (November 13), 8.
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Module 5
Learning Objectives:
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