Social Responsibility of Business

This essay discusses the increasing number of corporate scandals and the role of the education system in teaching moral responsibilities. It focuses on the Royal Bank of Scotland as a case study and highlights the unethical practices followed by businesses. The essay also emphasizes the need for business schools to prioritize ethics and morality in their curricula.

Social Responsibility of Business

TABLE OF CONTENTS
PART 1.......................................................................................................................................3
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
CONCLUSION..........................................................................................................................5
PART 2.......................................................................................................................................6
Critical understanding of Whistle Blowing for the organization with the help of different
theoretical theory....................................................................................................................6
PART 3.......................................................................................................................................7
Reflection...............................................................................................................................7
REFERENCES...........................................................................................................................9

PART 1
INTRODUCTION
Currently now a days, there is an increase in the number of corporate scandals and
may are of the views that this all because of the failure in the education system.The corporate
scandals in US have stimulated a frenzy of activities in the business around the world.The
question has been put on the education system with respect to the moral responsibilities
taught to the students. Also, the role of social responsibility of business towards it.In this
essay, Royal Bank of Scotland is taken as a small company. This essay states about the
increasing number of corporate scandals which is the result of the failure of the education
system.
MAIN BODY
The social responsibility means taking the responsibility to achieve the accountability
and transparency in the work in order to achieve success in the business. But currently the
situation is all different (Harding, Hopkins and Barr,2017).For achieving success, businesses
are undertaking unethical and immoral practices which may be because of limited resources.
All the unethical practices followed by the people are actually harming it only. The success
might be for sometime but as and when it is revealed it will have an drastic impact over the
business and reputation which will not be an easy task to wind-up.
The Deans of business schools are extolling for how the curricula is focussing on
business ethics.There has been an increase in courses on corporate social responsibility but in
contrast the emerging cases like Enron and Tyco has asked the question what more is
required to be done (Jaffer and Morris, 2019). Faculties are in great stress in finding ways to
overcome such problems.But the main thing that the business schools need to understand is
that there is not need to add new courses in the curricula to prevent future Enron, the only
thing they need to stop doing is currently what they are doing.This can be understood with
the help some real life examples. The Royal Bank of Scotland (RBS) which is a partly owned
British banking and insurance company in Scotland. It operates variety of banking brands
such as business and private banking, insurance etc. The Royal Bank of Scotland (RBS) has
went wrong in many of its management decision. The scandal when the company was fined
£390 million nearly $610 million by UK and US authorities are its involvement in the
widespread misconduct in libor rate fixing scandal in 2010. The regulators found out about
the corrupt payment of over £100,000 which were made to those involved and the bailed out
banks had abetted Swiss bank UBS and were fined £940 million in case of manipulating the
rate in order to set the price on £300tn of the financial contracts ranging from ordinary
household mortgages to business loans. There also has been a circulation of eth joke by the
employee of the bank who is responsible for submitting the official libor rates (Demircioglu
and Norheim, 2019). The RBS condemned the behaviour of its 21 wrongdoers and few of
them already left before any action could be taken against them.This scandal seems to be
selfish and self-serving culture. In the year 2009, Barclays was also fined for similar offences
but it was less by 100 million. The individual wrongdoings on the part of small number of
individuals is unacceptable. This scandal has involved a large number of its employees over a
number of years.

Apart from the above scandal there is another scandal of The Royal Bank of Scotland
(RBS). The bank made many undoubtedly decisions which were very poor which has lead to
the collapse of RBS and it gave on investment banking. In 2008, the financial market turned
out to be sour and the Royal Bank of Scotland was having the balance sheet bigger than the
UK GDP at £2.2 trillion. This meant that when the mortgage market collapsed, the Royal
Bank of Scotland was not able to handle the situation as the large number of people were
defaulting on their loans and the value of the assets were becoming worthless (Micklethwait
and Dimond, 2017). In such situation, the RBS had to beg government for a bailout. In 2008
and 2009, the company owed £45.4 billion from the taxpayer which is required to be paid
back and the government still holds 81% of RBS. To meet up the challenges the company
came up with the plan to reduce its operation down to about 13 countries instead of 38. It also
focussed on its main home market in the UK and the Republic of Ireland.
The above both the scandals clearly states that the bank has been wrongful in each
and every aspect and the most important was the decision-making part. The employees and
the key personnel’s forgot about their ethical and moral responsibilities but were more
focussed on increasing their business through higher profits irrespective of whether the way
used for achieving it was right or wrong. It has highly affected the functioning of the business
and has also lead to the damage of its brand image (Hofstetter, Kraakman and Soltes, 2018).
After the scandal it become very expensive and bureaucratic which made difficult for the its
customers and employees to deal with itand because of this reason company decided to stop
chasing the global market share but focus more on strengthening its home market. It can
somewhat right to blame the education system. yes, education system also has a role to play
in. The education and knowledge provided in the business schools are based on some old
theories which are hundreds and thousands of years old and no one actually talks about the
actual theories. Even those who would have never attended the schools could have learned to
think in this way because these theories are the buzz. The management theories are
overwhelmingly functional and ethics and morality are mental phenomena. There has been
increase in scandal not only in corporates but also in the higher education world as well.
Admission bribery is the biggest reason for the current corporate situation. There two types of
students one who work hard to get admission and others are those not having required
credentials but are privileged. This is actually happening in the business schools and because
of such culture privileged students ae not focussing on their grades as they know they can
pass out the school easily. The hard-working students faces rejection and discrimination
which affects their area of focus.
The most thing that failed in all this scenario is the education system. the business
schools and governing bodies represents the worst caricature of board meetings as most of the
members are irregular in their attendance and others attend it like a social occasion. This all
lead to an irrelevant meeting were nothing is discussed about the school. Thus, the business
school governorsis required to get involved in the functioning of the school to ensure that
actual principles of the school is reflected which can be done through their internal decisions
and choices. The role of business school governors should be more like a stewardship
meaning involved, supporting and challenging instead of being detached and controlling.
Other than this, the companies and managers also have a large role to play in. the significant
amount of resources business schools havereceived from the corporates (Wymer and Rundle-
Thiele, 2017). Without the slack created by the endowments, business school academics

would not have been able to separate their research apart from the practical needs of the
students and society. If the managers of the corporates need to care more about the conduct of
their companies, in that case, they need to become more judicious about their giving. Also,
the business school alumni and corporate leaders needs t put in more pressure in order to
realign the perspectives and the priorities of the institution they support or belong to. This
will have a positive impact on the students, corporates and society as whole. People will start
understanding the value of moral responsibility and work in a more responsible manner.
CONCLUSION
It can be summed up from the above that being involved in the unethical and immoral
practices of the business is not only the fault of the individuals in there but also the education
system. the institutions should have more efforts in evaluating their course structure and
identifying the priorities which are very important in the life of the individual to achieve
success. To be successful in business or anything else it requires to have a sense of social
responsibility towards work and society as a whole. As eventually, everything is indirectly
connected to the society and any default in meeting up with the same have an inappropriate
impact on the business and oneself. Such situations also make it difficult for the people to
face it as in the case of the Royal Bank of Scotland. Thus, it is the responsibility of both
corporates and the education system to come together and do better for the society.

PART 2
Critical understanding of Whistle Blowing for the organization with the help of different
theoretical theory
Whistle blowing is the combination of the different activity which are performed in the
organization to attract the eye of the public in the market, to perceived wrongdoing,
misconduct, unethical activity which are generally used to take place between the public,
private and third sector organization in the market. There two different type of whistle
blowing in the organization. The first is the internal whistle blowing and the second one is the
external whistle blowing. Internal whistle blowing is generally used to be conducted to report
misconduct to another person within the organization. At the same time the external whistle
blowing is the activity in the organization in which organization used to conduct to report to
external public in the organization. Generally whistle blowing in the organization is known as
the process rather then the policy in the organization. Whistle blowing in the process in which
whistle blower in the organization used to get the information of fraud or immortal activity of
the company toward employer or other parties.
This generally used to bring the variety of the important for the organization as they used
to help the company in ethical practice and supports good sort of transparency and fair play
with in the organization. There is one policy of whistle blowing, the main aim behind making
these sort of the policy is to encourages employee and other who have serious concern about
the different issue faced by the employee in the organization. There are many different
theories which are drawn by the different author to explain the real phenomenon of Whistle
blowing. Some of the theory are as following:
D e Geaorge Theory of Whistle blowing: In the year 1968 Richard De George in the book
Business ethics. Richard De George in the book specify that there are three different position
of whistle blowing. whistle blowing in the organization should be morally prohibited in the
organization but notes that cultural resistance to whistle blowing. Richard De George used to
also define the different criteria for permissible whistle blowing. Some of them are as
follows:
 When the product of the company in doing the serious harm to the public interest,
whether in the person of the user of the user of its product.
 If employee in the organization used to indentify that there is a serious sort of the
threat to the user of the product or general public.
 When superior in the company do not respond to the different issue which is received
by the company in the organization, employee in the organization are permissible to
whistle blowing in the organization.
 When employee in the organization is having good sort of the believe that by going
public different changes can be brought that easily.

 Also, whistle blower in Royal bank of the Scotland has to make sure that they used to
have good sort of the evidence that would convince a reasonable number of the public
and can change the public interest in an organization.
Justice theory of Whistle blowing: It is another theory of Whistle blowing theory which used
to explain the phenomenon of Whistle blowing in the organization, this theory used to
explain that providing legal and policy action was expected to one of the successful step
which will help the government in attracting the eye of the different consumer toward the
concept of whistle blowing but this has not gone that well as expected by the government as
it proves as one of the failure for the organization.
Whistle Blowing at the same time used to cause the significant disruption within an
organization. As whistle Blowing generally used to create many issue. Some faced \ difficult
situations are subject to external enquiries and constraints. This external enquires and
constraints ultimate lead to loosen of control over organisational affairs . This lead to create
problems within organisation. Organisation find itself crippled within it and many innocent
bystander also suffer. For conducting whistle blowing within organizations some conditions
should be fulfil. Whistle blowing is second option available with the organization. It is only
applicable if the first method used for removing destruction within organisation was
ineffective and does not lead to any chance within organisation affair. Before ineffectiveness
of first method whistle blowing can not be conducted properly. Whistleblowers create good
faith but then also Martyrdom of whistleblowers cannot be demanded. Second , their should
be full evidence with the whistleblowers that organisation will take appropriate action
regarding the problem they face. Whistleblowers evidence will withstand public scrutiny.
Detrimental behaviour should be considered seriously by every whistleblower. Whistleblower
should lead to some benefits for the public so that it should not destruct any other value of
organisation while fulfil one value.
Whistle blowing suggest that legal sanction brought by the government is not shown that
short of the success for the organization but the legalistic responses by organization seems to
have been more successful as compare to legal sanction. Looking at the different parties who
are involved in the whistle blowing, employee are the one categories which has been studied,
it has been identified that legal change intended to encourages the whistle blowing in an
organization. Looking at the organization as a whole it has been find out that all the
organization are not that responsive towards the whistle blowing in the nation. As there are
many few cases of the same has been find out in the market. Reason behind the same is that it
used to impact the efficiency of organizational performance and that’s the reason all the
organization used to take and consider different option in the market.
PART 3
Reflection
Business social responsibilityimplies the responsibility of the business towards the
society in which it is operating. According to it, the objective of the managers in respect to
decision making is not just the merely profit maximization but to be able to serve and protect
the interest of the society. Even though the Royal Bank of Scotland has been involved in
number of scandals but it has taken care of its social responsibility towards society. I think

company has always made ways to encourage its employees (Sustainable Banking. 2019).
The company always aims at becoming more efficient and environmentally responsible. The
Royal Bank of Scotland has launched a scheme that engages the employees with its CSR
goals. The Royal Bank of Scotland and ranks high in terms of environmental measures but
poor on account of business ethics. The bank has received a lot of criticism after it received
bailed out money from UK government and after which many have sued Royal Bank of
Scotland for alleged improper disclosure of it in the financial statements. Also, the
controversies the company is facing in relation to customer are very minor in comparison to
its competitors.
As per the Freeman stakeholder theory, stakeholders are those who have invested and
involved in or is affected by the company which includes employees, environmentalists and
so forth. Instead of starting from the business and then looking out at the world, stakeholder’s
theory initiates from the world. Similarly, Royal Bank of Scotland has always be on top for
taking care of its obligation towards its stakeholders. It can be seen that Royal Bank of
Scotland rates high in management of environmental issues. In 2016, Royal Bank of Scotland
has run a pilot of the jump programme, with 1200 employeeswhich is provided by the Green
Rewards (Baumfield, 2016). In this programme, employees were challenged to see how they
can manage to save water, energy and waste and then were rewarded for their sustainable
efforts. Its efforts include policy that clearly addresses its operations along with its suppliers.
The company regularly monitors the environmental impact and also provides training to its
employees on the related issues. The Royal Bank of Scotland has also reported the energy
consumption reduction target with adeadline. It is also working on reducing the overall even
small controversies with customers in an effort to maintain a cordial relationship with
them.Thus, the Royal Bank of Scotland is very effective in managing its corporate social
responsibility and has passed from all the aspects except from its ethical business practices
parameter. But still it is working on its future leaving the past behind.
Therefore, based on my understanding, the business social responsibility is very
essential not just for the surroundings and the society but for the organization as well.
Fulfilling its responsibility will help in building a better and positive brand image and will
also build trust among its stakeholders which will be beneficial for the company. It will help
in assuring better and improved results of the business and will also help in achieving
success.

REFERENCES
Books and Journals
Harding, L., Hopkins, N. and Barr, C., 2017. British banks handled vast sums of laundered
Russian money. The Guardian. 20.
Jaffer, S. and Morris, N., 2019. Lessons from the Financial Crisis and Other Banking
Scandals. Law in Context. A Socio-legal Journal. 36(1). pp.47-63.
Demircioglu, E. and Norheim, K., 2019. Organizational façades and hypocrisy within
sustainability reports: A qualitative content analysis of Royal Bank of Scotland’s
sustainability reports between 2008-2013.
Micklethwait, A. and Dimond, P., 2017. Global Banking: Will the Scandals Never End?.
In Driven to the Brink (pp. 67-94). Palgrave Macmillan, London.
Hofstetter, K., Kraakman, R. and Soltes, E.F., 2018. Compliance, Compensation and
Corporate Wrongdoing. Conclusions from a Roundtable at Harvard Law School of May. 18.
Wymer, W. and Rundle-Thiele, S.R., 2017. Inclusion of ethics, social responsibility, and
sustainability in business school curricula: a benchmark study. International Review on
Public and Nonprofit Marketing. 14(1). pp.19-34.
Baumfield, V.S., 2016. Stakeholder theory from a management perspective: Bridging the
shareholder/stakeholder divide. Stakeholder Divide (September 1, 2016). 31.
Online
Sustainable Banking. 2019. [Online]. Available
Through:<https://www.rbs.com/rbs/sustainable-banking.html>.