www.RBIpk.

org

www.RBIpk.org

Pakistans foremost enabler of corporate citizenship

Pakistans foremost enabler of corporate citizenship

www.RBIpk.org

Ethics:
Stealing?

Right ? Wrong?

Objective
Amount
Perceived Benefit /gain - need
Perceived Cost/loss
Steal from whom?

If you could steal with no one knowing it the perceived cost is close is
nearly nothing. At that point the only cost stopping you is a moral cost.
Major cons are all about altering the cost of stealing so that its nearly zero.
www.RBIpk.org

Ethics:
Stealing?
Right ? Wrong?
If stealing is acceptable everyone will have the incentive
to steal
people won't trust each other, work with each other
most moral and legal codes weren't handed down from
the heavens.
We decided that some things are moral and some
things are immoral.
www.RBIpk.org

Why people steal

Perceived benefit is High

if need is large or benefit is large
(changes with changed situation)
Cost of stealing is Low
- circumstances (war as no legal cost)
(altered situation makes moral cost look insignificant)
Perceived Moral cost is zero ( robin hood)
(making it zero )
- people will know ( open, CCT Camera)
-Power
power to alter the cost of stealing, then again the
perceived cost of stealing would go down significantly.
www.RBIpk.org

Ethics

Ethics:
study of what is good or right for human beings.
goals people ought to pursue
actions people ought to perform.
Business ethics:
Relationship of what is good and right to business.
how do we know what is right or wrong or good or bad for
business?
www.RBIpk.org

What business ethics -can do

help people approach moral problems in business

-more systematically
-with better tools.
help see issues they might normally ignore.
drive people to make changes that they might otherwise not
be moved to make.
presupposes that those who study it are moral beings, and they
wish to be even better, more thoughtful, and more informed
moral beings.
www.RBIpk.org

What business ethics -cannot do

does not by itself make anyone moral.
presupposes that those who study it are moral beings, and wish
to be even better, more thoughtful, and more informed moral
beings.
To be profitable, each firm has to produce what the members
of society want and by the most efficient means available.
above argument assumes that any steps taken to increase profits
will necessarily be socially beneficial
when in Fact several ways of increasing profts actually injure
society:
(harm Ful pollution to go uncontrolled, deceptive advertising,
concealing product hazards,hazardous workplace)
www.RBIpk.org

Business Ethics:

Assumption is
by producing whatever the buying public wants (or values), firms are
producing what all the members of society want,

when in Fact the wants of large segments of society (the poor

and disadvantaged) are not necessarily met because they cannot
participate fully in the marketplace.
www.RBIpk.org

Business Ethics: Exploitation

A lot of people assume that if someone made a profit, someone

else must have necessarily been deprived of making that profit.
In this view, the pursuit of profit means you must be exploiting
people in some way in order to have got hold of their share of the
pie.

BP Deepwater Horizon Oil Spill (April 2010), Gulf Coast fishery and
tourism industries are incurring damages -- to no fault of their own.
It's fair to say that, with external forces in place to ensure BP would
have been financially responsible, they may have not been quite so
reckless.
www.RBIpk.org
DO MORAL STANDARDS APPLY TO
CORPORATIONS?
Velasquez as corporate citizens Business have moral standards to
live up to but at the same time they are mainly acted upon by
people. People are behind corporate decisions.

BE ordinary moral rules apply in business just as they do in all

other areas of life.

Business Roundtable** referred to Corporate Ethics as a prime

business asset, and corporations have begun to take significant
steps toward integrating ethical values into their corporate
cultures
** an association of chief executive officers of leading U.S. companies
working to promote sound public policy and a thriving U.S. economy
www.RBIpk.org
DO MORAL STANDARDS APPLY
CORPORATIONS?

Businesses are like you and me

because they
have similar rights & responsibilities
affect their neighbours and surrounding
gain or lose from happenings around
stand or fall with their communities

most importantly
make a difference by acting responsibly
www.RBIpk.org
Business Ethics:

can be studied at three levels:

Systemic :
issues deal with economic, political, legal and other related
systems within which production and distribution
activities are carried out.
Questions related to the morality of capitalism, regulation
of business etc. fall into this level.
Corporate:
issues deal with actions of corporate concerns
Individual :
issues deal with every individual working in a business
firm and it can include customers/consumers.
 Ethics and law:
www.RBIpk.org

law tends to reflect or embody the moral norms of society,

Hence it can be suggested that what is legal is also ethical.
Although ethics and the law often overlap, this may not always be the
case.
Some laws could be considered amoral ( driving on the right-hand or
left-hand side of the road)
- many legal acts might still considered to be unethical
( gifts from suppliers or invasions of privacy)
laws themselves may be determined to be unethical, (Apartheid
laws in South Africa,
it is important to realize that the law does not always equal ethics,
and in most cases merely sets out the minimum standards of
expected behavior.

www.RBIpk.org

Ethics and religion:

In a number of respects, ethics and religion are related to each other.

ethical prescriptions dont kill or steal, derive from religious doctrine)

The golden rule, or do unto others as you would want done to
yourself,
Although ethics and religion often overlap, this is also not always the
case.
Certain religious prescriptions have been considered by others to
be immoral ( such as religious decrees prohibiting abortion or
euthanasia (assisted suicide),
www.RBIpk.org

Individual Vs Business
Should the interests of the firm override personal convictions about the
right thing to do,
Should one always act on ones personal convictions despite the
consequences for the firm?
How should one go about deciding what to do?

decision from at least three distinct perspectives or points of view. They are:

1. Which is the better decision from a business point of view?

2. Which is the better decision from a legal point of view?
3. Which is the better decision from a moral point of view?
www.RBIpk.org

Business and ethics dont mix?

In business profit takes precedence.
Business has its own rules and objectives, and
ethical concepts, standards, and judgments are inappropriate in
the context of business. But this view is fundamentally mistaken.

Business is an economic institution, but like our economy as a whole, it

has a moral foundation.
The free-market system reflects our convictions about the nature of the
good life and the good society, about the fair distribution of goods and
services, and about what kinds of goods and services to distribute.
 www.RBIpk.org

Why Care About Stakeholdertheory ?

1.Descriptive approaches:
explain it by showing how it maps to the way business actually works today. most
management believes a sole focus on shareholder interests is unethical. growing
number of court cases and governmental regulations now give managers greater
leeway in taking factors aside shareholder interests into account in their
management decisions.
better describes the actual way business works.
2. Instrumental approaches:
essentially frame it as a means to increased efficiency, better business
performance and ultimately higher profits.
it will make more money for your business
Normative approaches:
see it as a moral or ethical issue. This frame usually rests on the idea that each
stakeholder group has intrinsic value, and that no groups interests are more or
less important than any other.
it is just and it is fair.
1
8
www.RBIpk.org Advertising : ??

Patagonia asking not to buy their products

not a recall or a come-on, but an acknowledgment that we are all consuming

more than the earth can comfortably provide, and that things need to
change.
Message: Dont buy what you dont need. Think twice before you buy
anything. Patagonia understands that its long-term sustainability depends
on a healthy environment, and the campaign urges buyers to think before
they buy. We use one and a half planets, but have only one the time has
come to live within our means.
do more with less, and pursue not what we vaguely want, but what
we deeply need.
www.RBIpk.org Ethical Business: Performance

Performance With Purpose

Patagonia s-

revenues grow about 30 % in 2012, followed by

another six percent growth in 2013.
doubled its scale of operations in the past six
years, and has opened forty new stores
worldwide.
www.RBIpk.org

Merc & Co: Core Values

Since 1987, Merck has manufactured and distributed over 700 million tablets of
Mectizan at no charge.
The company's decision was grounded in its core values:

1. Our business is preserving and improving human life.

2. We are committed to the highest standards of ethics and integrity.

3. We are dedicated to the highest level of scientific excellence and

commit our research to improving human and animal health and the
quality of life.
4. We expect profits, but only from work that satisfies customer needs and
benefits humanity.
5. We recognize that the ability to excelto most competitively meet
society's and customers' needsdepends on the integrity, knowledge,
imagination, skill, diversity, and teamwork of employees, and we value
these qualities most highly.
2

Business Ethics: what can I do?

1
www.RBIpk.org

My Responsibility
Individual: Though I cannot fix everything how can I maintain and extend
my own sense of ethics?
Organizational: How can I account for the negative externalities of my
firm's behavior and build responsibility and sustainability in my corporate
strategy and at all levels of its implementation?
Societal: Instead of privatizing gains and externalizing losses, how can I
ensure that my firm has a net-positive impact on society?
My Actions to
Individual: cultivate the strength of character that will inspire trust and
walk the talk?
Organizational: develop courage to give voice to my values, while
inspiring others in organization to do the same?
Societal: contribute to building a social environment where no one cops
out, passes the buck, or dreads the risk of action?
Rooted in ethics of care
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RESPONSIBILITY ??? Product

 Everyday Reality A Stakeholder conceptual
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framework (1997)

Pressure from Market Competition

Brand/Investor Business
Brand image
Consumer satisfaction Customer satisfaction
Financial profit Quality
Quality/Clean P

Consumer
Worker/Community
Influenced by Media NGOs
Responsible Business Initiative 1997
 Everyday Reality A Stakeholder conceptual
www.RBIpk.org

framework (2014)

Pressure from Market Media Investor Competition Customer

Supply Chain Communities

Brand/Customer Business
Brand image
Consumer satisfaction Customer satisfaction

Supplier
Financial profit Quality
Quality/Clean P
Environment
Law

Consumer Worker/Community
Influenced by Media Right Based Org
Multilateral NGOs/UN Initiatives Government laws/ Obligations (GSP+)

Collaborations /partners
Responsible Business Initiative
www.RBIpk.org

CSR is NOT

Simply giving to good causes, spending on

services, substituting government
OR
Meeting legal or regulatory minima
www.RBIpk.org

CSR is

When
businesses ensure they remain Profitable
BUT
that these profits do not come at an
Unsustainable Cost
to Government Society and the Environment
www.RBIpk.org

Ethics & Law

law tends to reflect the moral norms of society,-
suggests what is legal is also ethical.
Some laws could be considered amoral, - ( driving on the
right-hand or left-hand side of the road).
Acts which are legal might be considered unethical,
(receiving gifts from suppliers, conducting personal
business on company time, or invasions of privacy.)
laws themselves can be unethical,( such as the
(Apartheid laws)
law does not always equal ethics,
in most cases merely sets out the minimum standards of
expected behavior.
www.RBIpk.org

Ethics & Business

business and ethics dont mix. In business, some argue, profit takes
precedence. Business has its own rules and objectives, and ethical
concepts, standards, and judgments are inappropriate in the context
of business. But this view is fundamentally mistaken.

Business is an economic institution, but like our economy as a

whole, it has a moral foundation. It is true that the goal of business
has been profit, but profit-making is not a morally neutral activity.

Traditionally, we have encouraged business to pursue profits

because we believed rightly or wrongly that profit-seeking
violates no rights and is best for society as a whole. This conviction
has been the source of businesss legitimacy,
www.RBIpk.org

CSR An evolving concept

in a perpetually changing world, there is

a constant re-evaluation of what CSR means,
individually and collectively,
within business,
for government,
for societies in which business operates
and for the environment.
-Chris Perceval
Director CSR International