Business Ethics Ethical Advertising Fairtrade Dame Anita Roddick

Business Ethics

Ethical Advertising

Fairtrade

Dame Anita Roddick “The business of business should not be about money, it should be about responsibility. It should be about public good, not private greed”

What is CSR? • An obligation, beyond that required by the law, for a business to pursue long term goals that are good for society • About how a company manages its business to produce an overall positive impact on society

Is CSR the same as business ethics? • Ethics concerns actions which can be assessed as right or wrong by reference to moral principles • CSR is about the organisation’s obligations to all stakeholders, and not just shareholders

In practice. . . • What does this mean?

• Supermarkets hurting suppliers

Cash strapped consumers move away from ‘ethical’ shopping

Case against CSR • Only social responsibility of business is to create shareholder wealth • Efficient use of resources will be reduced if businesses are restricted in how they act • Businesses cannot decide what is in society’s interest • Extra costs will be incurred which must be passed on to consumers • Unwelcome extra responsibility for business

BUT • Businesses do not have an unquestioned right to operate in society • Those managing business should recognise that they depend on society • There is a social contract between business and society involving mutual obligations that society and business recognise that they have to each other

Arguments for CSR It is the ethical thing to do Improves a business’ image and reputation Necessary to avoid excessive regulation Improved social environment will be beneficial to business • It will be attractive to some investors • It can increase employee motivation • AND • •

It can be profitable

How cynical am I? • Starbucks

Warren Buffett “It takes 20 years to build a reputation and five minutes to ruin it. ”

Niall Fitzgerald, Former CEO, Unilever “Corporate social responsibility is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it. . . because it is good for our business”

Competitive Advantage • Sustainable in the long-run?