Unit 4: Ethics & Social Responsibility

Question 1

what are some questions stakeholders would have for businesses?

Answer 1

• Why does a business exist? (How are they fulfilling the needs and wants of customers & support the communities around them?)
• How does the business operate? (What’s their impact on the community, or on the environment? How do they obtain their raw materials or select suppliers)
• Who do they associate with? (How are they connected to other businesses? Or influential figures like politicians & celebrities?)
• What do they believe in? (What’s their stance on social or political issues prevalent today?)

Question 2

how do businesses know what is ethical

Answer 2

• Much more difficult for businesses
• If something is unethical or illegal in one place, it might be acceptable in another
  Ex. employee safety, and labour standards
• Different countries have different values and standards to protect the environment
• Businesses should use law and regulations, as guidelines for what is acceptable or not, when making decisions
• Should also define core values they are willing to uphold

Question 3

what does it mean for a company to be socially responsible

Answer 3

• Consumers can now interact better with companies
• Businesses are in the position where they can stand up to different causes or issues; held to higher standards
• Expected to make responsible decisions and find ways to give back to the community
  Ex. what are they doing to help the environment, what do they have a proactive stance on

Question 4

what role can a government play in keeping businesses ethical & socially responsible

Answer 4

introduce regulations
ex. Canada banning harmful single-use plastics and hold companies responsible for plastic waste

Question 5

why is important for businesses to understand ethics

Answer 5

• Important to think over an ethical decision before making one because the repercussions could live on for years
• Impact of business decisions (how do customers feel about it, what happens to the brand of the business)
• Moral decisions build trust for consumers
• Trust is important for a loyal, growing consumer base
• If there are concerns about how a business is run, it could reduce trust
• If a business is running unethically, they can face legal considerations (ex. Violations, privacy laws)

Question 6

what are laws

Answer 6

Established rules and regulations within a jurisdiction that governs actions

Question 7

why are laws important

Answer 7

• Recognizes and protects basic right and freedoms
• Can protect citizens from fraud or harm
• Laws are used to maintain social order and punish those that break them
• Laws can be broken
• The use of ethics comes in

Question 8

what are ethics

Answer 8

• Guiding principles that can help us navigate decision-making (what is good/bad or right/wrong) in a given situation or context
• doing the right thing and holding everyone to a higher standard
• standard for moral behaviour
• Ultimately asking “how do we treat each other?”

Question 9

how can making ethical decisions in a global business environment be complex

Answer 9

• There are no global standards of what is right or wrong in society
• Cultures have different values and beliefs that impact what they think is right or wrong

Question 10

what examples of ethical values can transcend all cultural beliefs

Answer 10

respect, integrity, reliability & fairness

Question 11

how are personal core values (our moral compass) shaped?

Answer 11

from what we learn from those around us & our experiences

Question 12

what are things businesses can do that is legal but not ethical

Answer 12

• Raising the price of a product; Businesses have the power to price their goods/services however they want. If it was a necessity, is it ethical for them to charge such high prices (ex. medicine)
• Tax loopholes; Tax laws differ between countries. People find ways to avoid paying taxes through offshore companies
• The use of child labour; Are outsourced manufacturers using child labour? It isn’t illegal in the outsourced countries but it is in Canada. Is it ethical?

Question 13

what is something an individual might do that is ethical but not legal

Answer 13

• Speeding/running through a red light in an emergency
• Protests/social movements, which can obstruct the rights of people/groups
• Euthanasia

Question 14

what are some reasons why businesses make unethical decisions

Answer 14

when there’s limited time, incomplete information, or choice between equally good/bad options

Question 15

how can business prevent making unethical decisions

Answer 15

Having clear, shared values can help with making economically sound, ethical, and responsible decisions

Question 16

what are the benefits of keeping ethical practices

Answer 16

• Keep/attract customers
• Maintain a strong reputation
• Retain/attract employees
• Avoid government intervention
• Avoid legal action
• good ethics = good business
• Good behaviour can impact profitability in the long run

Question 17

what are ways businesses can support ethics

Answer 17

• tone at the top; management embraces & modelling actions and behaviours they want to see, be aware of pressures of employees & alleviate them
• support for a code of conduct; create, communicate, and adopt codes of conduct, provide compliance-based (penalties) or integrity based (values to folow) guidance
• training (& retraining); on ethical decision making
• adequate ethics resources; opportunities for people to communicate concerns
• inform stakeholders; about the code of conduct & values, less pressures from the outside

Question 18

how are whistleblowers protected

Answer 18

Are some legislation in Canada to protect whistleblowers
But not all are protected across all industries or jurisdictions
So what can companies do to build up protection for whistleblowers?
Whistleblower policies can hold employees accountable and allow they to express any concerns or feedback

Question 18

what is a whistleblower

Answer 18

Those who step up to report illegal or unethical behaviour

Question 19

are managers responsible for ethical behaviours of their employees

Answer 19

• Employee’s view on their ethical responsibilities are influenced by personal values and experiences
• Managers can also play a role in guiding ethical behaviour:
• Modelling ethical behaviours as employees watch from them to decide what is considered acceptable
• Influence the design of processes that support ethical decision

Question 20

what is an ethical dilemma

Answer 20

Problem where a difficult choice has to be made with potentially no desirable alternatives

Question 21

what is the ethical dilemma in the pharmaceutical industry

Answer 21

• Many ethical considerations when introducing a new drug to the market
• Drugs require huge investments of money, time, and expertise
• They have to go through tests to assess the effectiveness and potential side effects
• The stakes are high, and if they don’t pass the tests, there are large financial losses
• These can add pressure around business activities:
• Pressures to release the product early; Minimizing or hiding certain effects or accepting lower levels of safety to have an earlier release of the product to earn profit
• Testing practices; Is testing on animals humane? Is testing on willing participants (clinical trials) okay? How and when is it safe enough to test on humans when there are potential risks for injury or death?
• Pricing; Companies are investing in the creation of new drugs to make a profit. How much costs being passed on to consumers through the price is being fair? Should they make it more accessible to all that need it?

Question 22

what are the questions to ask when navigating ethical dilemmas

Answer 22

• Does it violate any laws/policies?
• Are the alternatives fair for all parties involved?
• How will you or others feel about the decision?

Question 23

why is ethics important in the accounting profession

Answer 23

• creates trust
• without trust, there is no credibility and no value to the public

Question 24

what is corporate social responsibility (CSR)

Answer 24

A positive role a company should play in the community towards environmental and social issues

Question 25

what do critics of CSR say about CSR

Answer 25

that businesses should focus on maximizing profits for shareholders, and following CSR takes that away (wasting money)

Question 26

what do supporters of CSR say about CSR

Answer 26

that following CSR actually benefit the business, providing more profits in the long run as CSR attracts more customers, investors, and retains employees

Question 27

how will being socially responsible be beneficial

Answer 27

- Investors and customers these days look for companies with good social/environmental records (ESG) - Being responsible has a competitive advantage - It builds an overall positive image of the company, attracting customers and employees, and increasing brand power in the market - Companies who are socially responsible and have high sustainability practices outperform those who don’t, by stock performance - Companies grow and find success when they create value for not just shareholders, but also society

Question 28

what are the benefits for investing in socially responsible behaviours

Answer 28

Financial - Increased market value (up to 6%) and shareholder value long term - Avoid market losses from crises Marketing & Sales - Increased revenue up to 20% - Increased price premium up to 20% Human Resources - Reduced turnover rate up to 50% - Increased employee productivity and engagement

Question 29

what is corporate philanthropy

Answer 29

- Donating money or time and skills to various causes - Can be one-time initiatives or ongoing support for certain causes

Question 30

how can businesses be socially responsible by revising policies or adapting their practices

Answer 30

- Hiring diverse workers to represent and understand perspectives of all customers - Gender-balanced leadership opportunities - Supporting safe work environments in all facilities (domestic or abroad) - The position taken on social or political issues Ex. Dove providing the message of positive body image through marketing campaigns that use models of all shapes and backgrounds

Question 31

how can businesses be socially responsible

Answer 31

- corporate philanthropy - Revise policies or adapt their practices - integrate social responsibility into their business strategy - evaluate employee experience - who a company associates with

Question 32

how can businesses be socially responsible by integrating social responsibility into their business strategy

Answer 32

Ex. tentree commits to planting ten trees for every article of clothing purchased

Question 33

how can businesses be socially responsible by evaluating employee experience

Answer 33

- Are employees getting the proper benefits they deserve? - How are they being treated at work?

Question 34

how can businesses be socially responsible by determining who they associate with

Answer 34

- are they using fair trade? - Businesses that use fair trade ingredients are supporting increased living standards and building stronger communities across the world - Those who actively seek out fair trade goods are willing to pay more to help society and support these objectives

Question 35

what is fair trade

Answer 35

Producers in developing countries are ensured to be paid a fair price for goods that are purchased from them

Question 36

what is sustainable development

Answer 36

Determining if business operations support needs for current and future generations without negative consequences ex. using wind & solar power instead of oil and gas

Question 37

what are SDGs

Answer 37

- the United Nations (UN) 17 sustainable development goals - for solving global problems like poverty, climate change, and tackle inequalities

Question 38

what is a circular economy

Answer 38

- Rethinking the linear economy of take, make, and dispose - Looks at how we can eliminate waste through the design of products and services, & influence business models to focus on better approaches for disposal by repurposing or reusing parts

Question 39

how can businesses support sustainability

Answer 39

- Sustainability within a business can be done through the actions of employees - Based on what they care about and do, businesses can reduce waste and/or save money

Question 40

what are examples of how businesses can support sustainability

Answer 40

- Planned spending in budgets - Dedicating funds to be used for sustainability purposes every year - Recognition and reward systems - Recognizing and rewarding employees that contribute to sustainable efforts - Regular accountability meetings - Employees regularly connect about sustainability - Regular reporting of progress and next steps - Voluntary reporting on a company’s social, environmental, and economic impact

Question 41

what are examples of internal & external stakeholders businesses have responsibility for

Answer 41

- employees - customers - investors - lending institutions - communities - governments

Question 42

why do businesses have responsibility to employees

Answer 42

- they keep the business running - Do they have meaningful jobs that have growth potential - Are they fairly compensated for their efforts - Is well-being and safety is prioritized

Question 43

why do businesses have responsibility to customers

Answer 43

- The reason companies exist - How are their needs and wants met - Provide safe and quality products and services

Question 44

why do businesses have responsibility to investors

Answer 44

- What does the company’s ESG look like - High rating drives shareholder wealth, driving profitability - Current rise of social conscious investors

Question 45

why do businesses have responsibility to lending institutions

Answer 45

- like banks, and credit unions - Are affected through the performance of companies - Give loans and lines of credit given to companies to operate or expand - New agreements to incentivize companies to be more socially responsible (ex. If they produce only x amount of production, there will be a deduction in interest fees)

Question 46

why do businesses have responsibility to communities

Answer 46

- Businesses of any size can impact local or global communities they are apart of - The success of a company considers how they can thrive in their communities & how they can make their communities thrive

Question 47

why do businesses have responsibility to governments

Answer 47

- Governments are tasked with driving positive change in the business environment - Actions companies take can affect various levels of government and assist them in navigating social and environmental issues that impact every stakeholder

Question 48

what is a social audit

Answer 48

Evaluating and reporting on how a company makes progress towards their social responsibility priorities

Question 49

what is triple bottom line (TBL) reporting

Answer 49

- Framework that can help with reporting progress on social, economic, and environmental results - “Bottom line” refers to net income - Triple bottom line is going beyond financial performance, and considering social, and environmental parameters - TBL improves transparency of business operations and impact on society

Question 50

what does triple bottom line reporting address

Answer 50

People - social issues Planet - environment issues Profit - economic issues

Question 51

what are the challenges associated with TBL

Answer 51

- Lack of consistency in reporting; No laws that companies should have a social audit. No widely agreed upon measurement standards. Can’t compare the reporting across companies - Subjective reporting; Some things can’t be measured in numbers/dollar value. Reporting can be self-serving - Time involved and expertise required

Question 52

what stakeholders would strongly advocate for companies to report on their social and environmental performance in addition to traditional financial reporting

Answer 52

- Socially conscious investors — Want to see that the company and those they associate with have responsible business practices. - Environmentalists — Want to see that companies don’t have a damaging impact on the environment. - Customers — If they don’t believe a company takes care of those around them, they can take their business elsewhere.