NM 2219 Lectures

Ethics & Corporate Social Responsibility
Dr. Iccha Basnyat
September 5, 2008

Ethics
“Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws” – Plato
What is Ethics?
- Value system to determine what is right/wrong, fair/unfair, just/unjust
- Ethical activities >> are expected/prohibited by society not codified by law
  - e.g. Downloading software on your laptop that is maybe approved for you at work?
Ethics & Professionalism
- 1. You work for Exxon. We have just found out that there has been another major oil spill. Journalists are calling and as the PR person, you urgently need to provide a response. But you cannot find your CEO. What do you do? Do you make up a quote? You often write the CEO’s speeches so should you make up the quote as well?
- 2. Your job requires you to maintain good relations with the media. So you convince your boss to regularly have lunch with the editor of the local newspaper. What is an ethical practice?
- 3. Your organization is coming up with a new product. The management believes that from marketing point of view that it should be announced the product is available and its benefits. You are asked as a PR person is asked to write and distribute the new product release but the problem is that it will not be out in the market for another 4 months (but you cannot mention that). What should you do?
Ethics & Decision Making
- Ethical philosophy to place our moral compass
  - Utilitarianism (consequentalist)
  - Deontology (Non-consequentalist)
- What do you do when your own personal value/belief is conflicted with your organization or with the society as a whole?
Ethics & PR
- Ethical Obligations » Society to build & maintain trust
PR & Ethics:
- Inherent fiduciary relationship/trust
  - A person holds a privileged position of public trust due to the professional position
- Abuse of that trust >> Questioning of the organization & the profession
  - Manipulating opinion vs. Building Relationship
- Social Responsibility «--» Accountability
  - Organization + Personal + Profession
  - i.e. lack of = backlash
- Why do we have a fiduciary relationship with the public?
- What makes an occupation a profession?
  - Accreditation/Education
  - Licensing
  - Code of Ethics (PRSA, IPRS, IPRA)
- Still lacks a standardized requirement >> fall short of full public acceptance
- Definition of good/bad >> Societal Norms
- Symmetrical two-way model: assumes equal power sharing & ethical
  - Does representation mean equal status?
- Decision >> Majority Benefits
  - Where does that leave minority beliefs, understanding, thoughts, values?
- What does it really mean to be socially responsible?
  - >> Privilege, Power, Trust
  - >> PR WATCH
CSR
“There is only one and only one social responsibility of business – to use its resources and engage in activities designed to increase profits as long as it stays within the rules of the game which is to say, engages in open and free competition without deception”

-- Milton Friedman, 1970

What is CSR?
- Corporate Social Responsibility is a commitment to improve community well-being through ethical business practices and contributions of corporate resources
  - -- There is no law, voluntary
    - What is the motivation?
    - How do we agree? Who sets the standards?
  - -- Managing externalities
    - e.g. McDonalds
    - No clear cut answer: Does CSR increase the bottom dollars?
  - -- Beyond Community Projects
    - Aligning of social and economic responsibilities
    - Is it possible to balance the two
- PR function
  - Meeting the Public >> technique to establish relationship with the public through transparency and accountability
    - Moral agents >> public over personal
  - That is:
    - A business exists not only to generate profit but to serve a social cause as well
      - -- Should CSR be a practice or an organizational philosophy?
        
        -- Proactive vs. Reactive?
        e.g. Body Shop
Evolution of CSR
- Committee for Economic Development (1971):
  - Basic Economic Functions (growth, jobs)
  - Economic function >> Changing practices/values
  - Active responsibility to improving social environment
CSR Today
- If individuals have rights and responsibilities why not a corporation?
- Why shouldn’t corporations be “corporate citizens”?
  - -- 1990’s
  - -- Coke, Microsoft, Exxon
- PR function for corporate citizenship:
  - Not only for organizational benefit but also to fight for social causes
  - Balance between profit & public well-being
    - Globalization
      - “About 120 million children working worldwide are … employed under dangerous, unhealthy and inhumane conditions”
      -- International Labor Organization
      - “Snoopy, Winnie the Pooh and Hello Kitty toys sold with McDonald's meals in Hong Kong are made at a mainland Chinese sweatshop that illegally employs child laborers to package the toys”

– Sunday Morning Post

CSR in Asia
CSR in Singapore
Corporate Citizenship
Global 100
- “sustainable (corporations) in the sense that they have displayed a better ability than most of their industry peers to identify and effectively manage material environmental, social and governance factors impacting the opportunity and risk sides of their business”

CSR
- Can companies create a positive image through CSR?
CSR Overview
- Organizational behavior is under scrutiny and society is demanding accountability
- Transparency is becoming more and more important
- Organizations need to be good corporate citizens
- An organizations’ reputation dependent on being regarded as trustworthy
- The ‘license to operate’ obtained from society
CSR: Cost & Benefit
- Skeptical of Motives
- Relationship between CSR and business success but affect the image/reputation
- Continual understanding of societal norms/values
- Must balance between stakeholders & public
- Strong Brand position/Corporate image
- Increased ability to attract, motivate and retain employees
- Decrease in operating costs
- Increased appeal to investors