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Corporate Social Responsibility A New Standard

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... remember that 'society' is the ultimate arbiter of what is accepted as ethical ... C.f. Religion, where 'God' is the ultimate ethical arbiter, for the 'believer' ... – PowerPoint PPT presentation

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Title: Corporate Social Responsibility A New Standard


1
Corporate Social Responsibility A New Standard
  • Presentation to
  • Türkiye Kalite Dernegi
  • (Turkish Society for Quality)
  • Frank J. Navran
  • Principal Consultant

2
About the ERC
  • Founded in 1922
  • 501c3 Not for Profit
  • Research and educational organization
  • Engaged in
  • Research
  • Education
  • Advocacy
  • Global Reach
  • Ethics centers in Bogota (TPC), Dubai GCEE/
    DERC), Pretoria (EthicSA) and Istanbul (TEDMER)

3
Agenda
  • Role of ethics in corporate social responsibility
  • The globalization of ethics and CSR
  • The emerging global ethics expectation

4
  • Role of Ethics in Corporate Social Responsibility

5
The Question
  • Question
  • Has the Corporate Social Responsibility (CSR)
    agenda expanded to include Ethics?
  • Answer
  • It always included ethics
  • It has not always articulated that standard, but
    it clearly has been there all along

6
Defining Our Terms
  • To be totally clear let us define ethics
  • What does it means to be an ethical person?
  • What does it means to be an ethical organization?

7
Defining Our Terms
  • Values
  • The standards against which we measure what is
    right, fair and good
  • Ethics
  • Decisions and actions guided by and/or consistent
    with those standards of right, fair and good

8
Defining Our Terms
  • What does it means to be an ethical person /
    organization?
  • A person / organization is deemed ethical when
    their decisions and actions meet the standards
    set by the values that govern them
  • That begs two questions
  • What are the standards?
  • Who sets them?

9
Universal Values
  • There is general agreement that certain values
    are Universal
  • There is also agreement that the behaviors which
    address those values vary considerably across
    cultures

10
Example
  • Universal Values include
  • Citizenship, Compassion, Courage, Fairness,
    Honesty, Honor (Integrity), Respect,
    Responsibility
  • Consider
  • Kyoko Hayashibe (Be) honesty/face
  • Americans, Japanese and Inuits - compassion

11
The Ethics Trap
  • The preceding discussion could lead one to
    presume that ethical relativism is the
    applicable rule in business
  • Quite the contrary we are getting closer to
    ethical absolutism
  • The key is to remember that society is the
    ultimate arbiter of what is accepted as ethical
    in the general business case and that has come
    to be globally defined
  • C.f. Religion, where God is the ultimate
    ethical arbiter, for the believer.

12
Business and Philanthropy - 1
  • The American Business Ethics experience in the
    early Industrial Age
  • Business practices were patently unethical
  • Corporate Social Responsibility (CSR), on the
    other hand, was quite prevalent
  • The accrual of great wealth often brought with it
    a social responsibility (borne of elitism
    and/or guilt)

13
Business and Philanthropy - 2
  • Social Responsibility took three forms
  • Employing the unfortunate (often at miserly
    wages)
  • Charity alms for the poor
  • Building Monuments to Ones Compassion
  • Cultural institutions such as Museums. Theaters,
    Libraries, Universities, many of which carry the
    names of what in US history we now call the
    Great Robber Barons

14
Why For-Profit Business is Allowed
  • The question can be asked
  • Why does society tolerate for-profit business?
  • My response
  • Because society has deemed it to be in the
    collective best interest

15
Corporations and Society
  • The Deal
  • Corporations have an understanding with society
  • In exchange for
  • Access to resources
  • Natural
  • Human
  • Access to markets
  • Government protections
  • They will be Good Corporate Citizens

16
What is Good Corporate Citizenship?
  • Defined by compact
  • A social understanding that presumes good faith
    in both parts
  • Reinforced by law (with law understood as
    societys voice)
  • Today that includes
  • Workers right
  • Product safety
  • Environmental concerns
  • Transparency (most recently, in financial
    reporting e.g., Sarbanes-Oxley)
  • C.f., 1900s

17
Organizational Ethics
  • Minimum Standard
  • Compliance with applicable laws and regulations
  • Emerging Ethical Standard
  • Legal compliance plus fulfilling the expectations
    of the social compact

18
  • The Globalization of Ethics and CSR

19
Whats New?
  • What IS new is the ways in which the CSR agenda
    is changing
  • The agenda is
  • Expanding
  • Dynamic
  • Shifting in priority
  • Priority seems to be whatever aspect of the
    overall CSR agenda is not being met

20
The Global Imperative
  • More and more society is being defined in
    global terms
  • The influence of the global community
  • How the global community defines integrity
  • The relevance and immediacy of these issues from
    the participants perspectives
  • Global issues viewed through local culture

21
The Influence of the Global Community
  • Members of the global community with an overt
    integrity agenda
  • Media
  • Non-Governmental Organizations (NGOs)
  • Multilaterals
  • Multinationals

22
The Business Case
  • Today there is a business case being made for CSR
  • Base argument
  • CSR is a means of controlling special interests
    by giving them enough to ensure they will not
    disrupt business bite the hand that feeds them
  • Enlightened argument
  • Corporations need the trust of society and CSR
    builds trust

23
The Impact of the Global Community
  • The global community has defined the conditions
    for admission to the global economy
  • Technical Standards
  • Quality Standards
  • And now, Ethical Standards (starting with HSE
    standards)
  • Failure to meet these conditions can lead to
    being denied access to the worlds resources and
    markets e.g., application to the EU

24
The Shifting Balance of Power
  • Power is shifting from nation states to include
    other entities
  • If General Electric were a nation it would have
    the 25th largest GDP of any nation on Earth
  • When GE sits down to negotiate with a emerging
    market nation, who has the real power?
  • The European Union can effectively compete with
    the US, China and Japan
  • Individual European nations less so

25
Global Integrity
  • The agenda is constantly changing to bring those
    elements receiving the least attention to the
    forefront and to move those receiving
    satisfactory attention to the background
  • The ordering of priority / importance is
    determined by the events of the current news
    cycle and the significance of the most recent
    violation or abuse of someones agenda

26
  • The Emerging Global Ethics Expectation

27
The Current Global Integrity Agenda
Global Integrity includes at least these issues
(listed alphabetically) with priorities
varying daily
  • Good governance
  • Health, Safety and Environment
  • Human rights including child labor issues
  • Integration with national culture
  • Rule of law
  • Transparency, anti-bribery and anti-corruption
  • Acceptance by local communities
  • Compliance
  • Corporate social responsibility
  • Emerging free markets
  • Ethics and business conduct
  • Fair labor practices

28
Sustainable Development The Triple Bottom Line
  • Some organizations attempt to capture the global
    integrity agenda in what has come to be called
    sustainable development or the triple bottom line
  • Economic performance
  • Profit, growth and return to investor
  • Environmental performance
  • Health, safety and environment
  • Social performance
  • Diversity, equal opportunity, labor practices,
    security, anticorruption and contribution to
    community

29
The Ultimate Bottom Line
  • Commitment by multinational and multilateral
    organizations to functioning in such a way as to
    ensure that their presence does not contribute to
    the diminution and / or eventual elimination of
    scarce and / or finite resources
  • Simply stated, a multinational / multilateral
    leaves a country in which it has operated better
    off for having allowed the outside interest there
    in the first place

30
The Ethical Standard

Social Compact
Individual Values
Law and Regulation
Policy and Procedure
Organizational Values
31
Conclusion
  • So why is the broader ethics definition of CSR
    critical to Corporations?
  • Because it is the right thing to do
  • Corporations exist because society allows them to
    exist and the more broadly defined CSR is part of
    the deal
  • Because it is the smart thing to do
  • Societys long-term success hinges on all of its
    citizens accepting certain ethical standards
    and that success is necessary for Corporations
    long term viability

32
Recap
  • Role of ethics in corporate social responsibility
  • The globalization of ethics and CSR
  • The emerging global ethics expectation
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