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What is the Relationship Between Corporate Responsibility and Ethics?

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  • Written By: Pablo Garcia
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  • Last Modified Date: 26 November 2016
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Ethics is an important component of the overall approach to corporate responsibility, sometimes called corporate social responsibility (CSR). CSR is a business model that began emerging in the late 1960s and early 1970s. Under the CSR model, corporate responsibility and ethics are considered intertwined.

The philosophy of CSR stresses compliance with the law and high ethical standards toward consumers and the public. It also envisions positive actions in the areas of the environment and the public interest. It promotes the active elimination of harmful corporate practices even when they are outside the realm of government regulation.

Other areas in which corporate responsibility and ethics overlap under the CSR model is the inclusion of the public interest and environmental concerns in corporate planning and decision making. Corporate responsibility includes creating voluntary ethical and environmental standards and developing projects for community growth. Companies that follow the CSR model adhere to the “triple bottom line” slogan of “People, Planet, Profit.”

Some commentators believe that corporate responsibility and ethics intersect with consumer ethics, as more people become aware of their individual impact on the environment and the world. As more consumers begin to make their choices based on social and environmental concerns, corporations strengthen their commitment to these issues. As a company practices social corporate responsibility, the result can become part of its corporate identity. Some observers point out that operating under a CSR model increases corporate profits in the long run.

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Some critics of the CSR model suggest that corporate social and environmental concerns are only superficial, and that the government should take the lead in addressing these concerns through regulation. They note that taxpayers already pay the government to ensure that businesses conduct themselves in a manner safe and beneficial to the public. Supporters of CSR respond that consumers and stakeholders bring a natural and healthy pressure to bear on corporations to act responsibly.

Stakeholders consist of more than just shareholders and investors. They include social and financial institutions, government regulators, and foreign governments. Professional institutions, labor organizations, and academic institutions also influence and have a stake in socially responsible corporate behavior.

Many corporations do appear to be invested in promoting corporate responsibility and ethics as they are understood in the CSR model. A great number of companies around the world file annual corporate sustainability reports with the international Global Report Initiative. Sustainability reports inform the public and stakeholders regarding a corporation’s efforts in enhancing environmental and social values and promoting the public interest. The reports usually contain information on how these efforts have maintained or enhanced profits.

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gravois
Post 3
@summing - I agree with you entirely. Any time you see a company doing something "ethical it is for PR reasons or selfish reasons. They are either trying to cover up some misdeed, look good in the eyes of the public, or save themselves money.

You think companies really care about going green? No way, they just want to save money on their electric bill. You think they really want to give school supplies to kids? Nope, they just want parents to like them. You think Wall St. really cares about ethics? Of course not, they care about regulators.

summing
Post 2

Can someone tell me what the definition of business ethics is? I have puzzled over this question for years. As someone who has both worked for major corporations and been very suspicious of their power and motives I would love to know what it means to be "good" and "right" in a business context.

To my mind, the whole idea of business ethics is a farce. Ethics relies on a willingness to self sacrifice. It means doing right or good regardless of the consequences to oneself. But a business, large or small, could never accept this weight. No business would go out of business in order to remain ethical. Most of them would not even accept a minor downturn

in profits to remain ethical. The bottom line will always trump any decision of right or wrong. For that reason, I believe that business ethics are like potty training a lion or teaching a chimp to type, useless effort wasted in the service of nothing.
Ivan83
Post 1

I don't think that anyone would deny that there is a link between corporate responsibility and ethics but the more relevant question is how deep is this link? What I mean is, what is the nature of responsibility?

Take the BP oil spill from a few years back. It was only ethical that BP took responsibility for the disaster and dedicated significant funds to clean up, relief and recovery. But how many funds are enough? We saw BP contribute billions of dollars and yet the damage far outpaced this sum. Should they have given more? Should they have given whatever it took to reverse all the damage even if it meant the bankruptcy of the company? This is where it gets tricky. I don't have the answers but I am putting in the time and energy to consider them.

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