Business Ethics - Critical Assessment of CSR Concept

BUSINESS ETHICS

Contents
Introduction...........................................................................................................................................2
Critical assessment of CSR concept where the companies must start subscribing CSR codes..............2
Need of CSR......................................................................................................................................2
Pros and Cons while complying with CSR standards........................................................................3
Application of models.......................................................................................................................4
Carroll pyramid.................................................................................................................................4
Ethical theories..................................................................................................................................6
Stakeholder approach........................................................................................................................7
Solution to issues that creating non-compliance of Ethical theories..................................................8
Conclusion.............................................................................................................................................8
References...........................................................................................................................................10

Introduction
With the upsurging competition among the organisation, it is seen that every company makes
maximum effort to generate maximum profits. The competition was on the basis of profits,
which forced on the companies to exploit the resources such as exploiting workers, which
leads to several health issues among them. Shareholder`s interest was above every
stakeholder`s expectation. This series of exploitation of environment and workers induced the
government to regulate several initiatives in order to protect the interest of the stakeholders
associated with the business (Cuomo, Mallin, and Zattoni, 2016). Government introduced the
concept of being responsible towards society well known as corporate social responsibility.
Code of ethics include acting with integrity, fairness, complying with laws, trustworthy,
dealing with business and relationship, which affect business conduction. It promotes the
vision of organisational accountability with a wide range of the stakeholders other than
investors and shareholders. Areas of concerns will include wellbeing of the employees,
community services and environmental protection (Crowther, and Seifi, 2018).
Critical assessment of CSR concept where the companies must start subscribing CSR codes
Need of CSR
It has been seen that concept of CSR has underpinned the idea of corporation, which is no
longer associated with isolated economic entities, which has been operating in the
detachment from society (Maqbool, and Zameer, 2018). This uprising concept of corporate
social responsibility has wiped out the traditional views such as competitiveness,
profitability, and survival. Moreover, it has included other concepts in the code of ethics,
which are to be followed by the companies (Hammer, and Pivo, 2017).

Pros and Cons while complying with CSR standards
On the part of benefits, CSR avails advantage of profitability and corporate value. CSR
increases the organisational accountability and transparency with media, local communities,
and shareholders. This will enhance the transparency, which will finally integrate CSR with
the stock valuation. Furthermore, majority of better relationship with the customers is
estimated with the help of reputation as a part of good citizen corporate relationship. It is seen
that the consumers are even able to pay more than price, if they deemed to reflect socially
obliged (Laing, Upadhyay, Mohan, and Subramanian, 2019). For instance- Starbucks
replicate strong commitment towards to the accomplishment of CSR activities, which create
positive brand image. Starbucks is transparent when it deals with consumers for its ethical
conduct (Ehie, 2016). The company pays salary and compensation to the employees on hour
laws, which means it, has been benefiting Starbucks in an appropriate way (Svensson et al.,
2016). Starbucks believes that all the stakeholder partners have been treated well in such a
way that each person can maintain her/his self-esteem. On the environmental part, Starbucks
undertook recycling of the waste material especially cardboards and milk jugs. Starbucks
knows that the retail store constitutes 80 percent of the carbon print. Furthermore, when
understanding the social obligations, Starbucks include set of corporate initiatives to improve
the environment (Crowther, and Seifi, 2018).
On the other hand, the assessment says that if the organisation comply with CSR codes
regularly then it will cost high money to implement. The disadvantage of CSR is cost, which
becomes burden for the small organisations. Critics believe that social responsibility must be
exercised in such a way that it become at least affordable. Several companies afford to finally
allocate budget to the CSR reporting (Ehie, 2016). One can monitor exchanges and include
hiring extra personnel, which the organisation cannot even afford. Cost of CSR becomes
obstacle where organisation will have to responsibility regarding shareholders to maximise

profits. On the other hand, consumers have wished to go green washing. It is used to describe
the corporate practises, which appears to be responsible for environment. It is well
established when main aim objective of organisations when creating profits where it produces
several services to customers (Crowther, and Seifi, 2018). Keeping interest of people while
considering the cause conflicts in business goals to make important decision. For instance- it
is beneficial for needs to buy land for business operations where the people already been
living. Code of conduct reveals that company embedding CSR in operations tending to
increase shareholders facing disadvantageous as far as the CSR is embedded in the system. It
is established CSR for the company, which would incur costs to finish and the completion of
the tasks and operations.
Application of models
Carroll pyramid
After the application of Carroll pyramid of social responsibilities, it is seen that there are
several models, which is related to different duties that society expects regarding the
business. Friedman model and the corporate citizen model directly related to economy,
society, community support, and quality of life. As per the Friedman model, business
executives perform social activity as the moral duty. The pyramid includes economic
responsibilities, legal responsibilities, ethical responsibilities, ethical responsibility, and
philanthropic responsibility. This model includes that it refers to the obligations concerns for
business, which manufacture goods. Organizations have stockholders who demand particular
with considerable return for the investment. Here, employees want safe, and well paid jobs
where customers demand good quality products at fair value. For example- Starbucks treats
its employees at considerable level and it undertakes stock options, healthcare policies, and
compensation as an important part of one`s life. It is seen that when analysing the CSR of the
Starbucks where it differentiate CSR communication by addressing all the decision and

verdict of shareholders. Legal obligations says that company weights to comply with the
rules, which must abide by law. Organization often avoid legal obligations that cost to heavy
penalties on the company. For example- US software organisation indicates that Microsoft
faces long-term anti-trust cases and situation in Europe to abuse monopolistic positioning for
shortcoming of the competitors resulting into the tough settlements. Ethical responsibilities in
CSR pyramid, which consists of public and government companies. For instance- shell for
which the discussion was reversed to place the oil platform after disagreements. A business
has to address the social issues while becoming severe and expensive to correct the situation.
Another instance- Rio Tinto facing several issues where trade unions feel decline and
deterioration of the employee`s safety standards on the production sites. It is not much usual,
for which they are concerned with the top-level management who had announced increasing
production level. Meeting target level has been considered insufficient (Baden, 2016). Any
denial from the side of employees indicates that employees might have to compromise the
fear of safety. The truck collision is seen as there is a fatal potential injury, which is related to
environmental standards, safety standards, and global health concerns. The organisation act
lead to destruction of all the ethical theories. With the enhancement of production, it is seen
that workforce will remain unchanged for year because of unsafe health issues (Wang,
Sexton, and Lu, 2016). Improper health concerns affect personality behaviour demotivating
the nature of workplace, as employees will feel that they are feasible to paid and treated well.
Rio Tinto has a clear cut breaching of theories of corporate governance where health safety is
a threat of company. Stakeholder theory focus on creating the balance between obligations in
organisation where there is a direct relationship between balancing the activities and ethical
code of conduct. Philanthropic obligations in CSR pyramid is the foremost level of the
pyramid, which focuses on expensive actions, which includes the quality of life among the

employees, society, and communities. Some philanthropic obligations of business, which is
controversial and it needs separate study (Rogers, 2018).
Ethical theories
CSR implications become easier when it is evaluated through ethical theories such as egoism,
which defines the self-interest and acting of the organisation to benefit itself. For example-
famous Carillion Company was at the stage of insolvency when the high court appointed
liquidators to liquidate company (Rogers, 2018). It is seen that failure of ethical standards
lead to collapse of Carillion Company. In 2018, this failure included poor leadership and poor
financial management. This distraction of failure examined ethical leadership, honesty,
ineffective controls, compliance failures, poor risk management, and failure of the assurance
providers, lack of accountability, and lack of transparency. Furthermore, it was marked that
company was not able to comply with utilitarianism and deontological theories leading to the
collapse of Carillion (Carroll, 2016). Utilitarianism theory evaluates the act, which is based
on how far the act is either right or wrong. Morality demands performing the several actions,
which aim to maximum good and net happiness for the living community. This theory will
aim to use aggressive benefits, which will enforce the right course of action. As far the
utilitarianism is concerned, it is seen that company must follow greatest amount of goodness
in every aspect of the world, which is appropriate ethics (Flores, Gavronski, Nardi, and Haag,
2017). It is seen that accomplishing any of the aspect whether it is contributing to the CSR
code of conduct then company will not be able to divide it among shareholders. on the other
hand, distribution of profits for the shareholder`s interest then it will not be able to contribute
to the society. The rule is to make the decision based on isolated tasks that make decision on
the basis of trial and error. Furthermore, non-consequential ethics has been reported by the
determination of higher authority where there is a sense of duty, virtue included and intuition.
It says that every person has a sense of right/wrong, and impulse (Carroll, and Brown, 2018).

This intuition varies from individual to individual where it assumes that each person can
make sovereign decisions. For example- Ben Jerry has to but the milk, which creates raw
ingredients of the ice-creams starting from large supplier where most of the (CAFOs)
confined animal feeding operations. Furthermore, it is seen that it is condemned by the
animal rights activities, as it is harmful for the wellbeing of the animals (Malik, Lenzen, and
Geschke, 2016). Consumers can claim confined animal feeding operations contributing to the
pollution due to heavy concentration of the animal waste to the ground, and air. This act of
CAFO was unethical and the company has denied it in the long term, which is ethical.
Deontology is an ethical theory, which creates difference between right and wrong.
Deontology does not weight cost and benefits of the situation (Agrawal, Singh, and Murtaza,
2016).
Stakeholder approach
Another implication of stakeholder approach says that CSR has great potential in reshaping
the orientation of the multinational company to the stakeholder. With the positioning of
stakeholders in global community, it is seen that conscientious companies can become
exemplary company (Agrawal, Singh, and Murtaza, 2016). One can demonstrate impact and
influence on global scale and enhance the way of manufacturing, which serves delivery of
goods and services. One can return to the communities where it can extract and foster
automatic financial investments where a person is willing to work and afford not only for the
necessities. As far as the stakeholder approach is considered, global organisations can have
sustainable business canvas model, which look beyond short-term growth (Malik, Lenzen,
and Geschke, 2016). One will have the tool to operate with a framework to think regarding
sustained growth with the stakeholders. Ethical relationship will grow systematically in terms
of wealth and the opportunity in the dynamic fashion (Wu, Zhu, Chen, and Tseng, 2019).
Ethical relationship between stakeholders allow the company to grow in a systematic pattern.

Without these stakeholders, the global economy will fail. Furthermore, on alternate and
ethical way to prosperity, suppliers will be the next consumer and this chain of generation
will change due to continued global growth (Agrawal, Singh, and Murtaza, 2016).
Solution to issues that creating non-compliance of Ethical theories
To resolve all the issues related to unethical behaviour for employees, it is seen that applying
ethical code of conduct in CSR is quite important to opt for the decision related to health
safety (Svensson et al., 2018). The issue is identified where it is clearly mentioned that job
insecurity, negative environmental impact, and health issues (Hoejmose, Roehrich, and
Grosvold, 2014). Rio Tinto must have to identify the code of conduct, which can lead to
higher profitability but at the same time, it must comply with the health standards and
environmental management standards to improve the performance of CSR (Kiliç, Kuzey, and
Uyar, 2015). Organisation must establish ethical code of conduct in ethics as it has several
benefits and attract more investors. Under the light of ethical standards, it is seen that
organisation must strive to resolve issues. It will improve the employee`s health and it will
enhance productivity as being complied with the health regulation law in 1959 (Chadwick,
2016). Health fund approaches can address the ethical problems with the assurance of proper
attention. Although there is an increasing number of public private organisation who are
participating in CSR. It is an international and multi-stakeholder endeavour, which creates a
common framework for the voluntary reporting of environmental, social impact and
economic effect of organisation. The mission is to enhance comparability and credibility of
the sustainability reports. For instance- partnership “Global Compact” as being launched in
1999 where there is a coalition of big businesses, environmental, and the human rights
brought together in reaching and share dialogue regarding CSR (Hoejmose, Roehrich, and
Grosvold, 2014).

Conclusion
From the above discussion, it is seen that objectives relate to analyse how business has been
performing the CSR responsibilities. Currently, it is seen that organisation often consider
mission and vision in such a way that it reflects sustainability by taking several CSR
initiatives. Critical analysis of CSR code indicates that company gets several benefits if they
comply with CSR initiatives and sustainability. The other important thing to consider the
implication of CSR on profitability is crucial as non-compliance of CSR activities will
definitely lead to imposition of penalties by the government and destruction of brand image.
It is important to improve the compliance of CSR activities by improving code of conduct.
For example- Starbucks has collaborated with farmers in order to get higher quality of coffee
beans that can enhance farmer’s life. The triple bottom line places planet and people on the
same head so that they can maximise their profits in the company. Unlike greenwashing, it is
seen that it needs a commitment to additional stakeholders where it continues to healthy
existence, which is important to operate.

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