Business Ethics, Sustainability and Corporate Social Responsibility

This study material covers the application of ethics in business contexts, sustainability in a business context, and three models of corporate social responsibility. It also provides practical recommendations for aligning strategies and sustainability. The subject is relevant to business and management courses.

<Title Page>
Page | 1

Table of Content
Question 01......................................................................................................................................4
1.0 Application of Ethics in Business Contexts..........................................................................4
1.1 Definition of Ethics...........................................................................................................4
1.2 What is Ethics of business?...............................................................................................4
1.3 Comprehension of Business Ethics...................................................................................5
1.4 Business ethics – Identified examples..............................................................................5
1.5 The Advantages of Business Ethics..................................................................................6
1.5.1 Construct customer loyalty........................................................................................6
1.5.2 Enhance the reputation of a company........................................................................6
1.5.3 Retain Good Workers................................................................................................6
1.5.4 Positive environment for job.....................................................................................6
1.5.5 Avoid legal issues......................................................................................................7
1.6 Issues in implementing Business Ethics...........................................................................7
1.6.1 Rudimentary Ethical Issues.......................................................................................7
1.6.2 Diversity and fair working practices..........................................................................7
1.6.3 Issues of decision-making..........................................................................................8
Question 02......................................................................................................................................9
2.0 The Concept of Sustainability in a Business Context...........................................................9
2.1 What does sustainability mean?........................................................................................9
2.2 Why Sustainability is important to a business..................................................................9
2.3 Why should all companies adopt sustainability?..............................................................9
2.4 Practical recommendations.............................................................................................10
2.4.1 Align strategies and sustainability...........................................................................10
2.4.2 In compliance with the comparative benefit............................................................10
2.4.3 Reactive to proactive...............................................................................................10
Question 03....................................................................................................................................12
3.0 Three Models of Corporate Social Responsibility..............................................................12
3.1 The Economic model of Corporate Social Responsibility..............................................12
3.2 The Philanthropic Model of corporate social responsibility...........................................12
Page | 2

3.3 The Stakeholder model of Corporate Social Responsibility...........................................13
Question 04....................................................................................................................................15
4.0 Code of Conduct – Google Corporation.............................................................................15
4.1 Who is through to obey our code?..................................................................................15
4.2 What if I have a concerns or questions about code?.......................................................15
4.2.1 Assist our customers................................................................................................16
4.2.2 Discourage Conflicts of Interest..............................................................................16
4.2.3 Preserve Confidentiality..........................................................................................16
4.2.4 Protecting Google’s Assets......................................................................................17
4.2.5 Ensuring financial integrity and responsibility........................................................17
4.2.6 Obey the Laws.........................................................................................................17
4.3 Conclusion......................................................................................................................17
5.0 References...........................................................................................................................18
Page | 3

Question 01
1.0 Application of Ethics in Business Contexts
1.1 Definition of Ethics
The area of ethics (or moral philosophy) includes the systematization, protection and suggestion
of principles of good and bad behavior. Ethical theories are now commonly divided into three
areas by the philosophers: meta-ethics, regulatory ethics and moral philosophy. Meta-ethics
explores the origin and meaning of our ethical principles. Are they just social innovations? Do
they provide more than our emotional responses? The questions of the absolute principles, the
will of God, the role of purpose in the ethical judgments and the significance of ethical terms, are
the focus of the meta-ethical answers. Normative ethics tends to take on a more practical job of
achieving ethical code that govern right and wrong behavior. This may entail the articulation of
good habits, duties and consequences of our behavior and attitude for others that we should
acquire. Finally, the application of applied ethics involves the study of specific issues of
controversy, like abortion, female genital mutilation, animal rights, environmental consideration,
homosexuality, death penalty or nuclear war.
1.2 What is Ethics of business?
Business ethics is an analysis of suitable business policies, procedures and practices in
potentially sensitive areas, including financial regulation, insider trading, corruption,
discrimination, social liability and trust. Business ethics are often guided by law, but business
ethics are often a basic rule that companies choose to implement in order to gain public
authorization.
1.3 Comprehension of Business Ethics
Business ethics ensures a certain rudimentary level of confidence among consumers and different
forms of market players with companies. For instance, a portfolio manager must take into
account the portfolios of family and friends and small individual investors equally. Such an
approach ensures that the public is fairly treated.
Page | 4

The concept of ethics in business have started in the 1960s when companies became more
conscious of a growing consumer society that started showing concern about the environment,
social factors and corporate social responsibility. The focus through so-called social justice
issues was an outstanding feature of the decade.
The notion of business ethics has progressed since then. Business ethics goes far beyond a moral
code of wrong and right; it tries to incorporate what companies have to do legally and keep their
competitive edge in relation to other companies. Companies display business ethics in many
ways.
1.4 Business ethics – Identified examples
The advertisements of certain competitors contain high fiber cereals, which may reduce the risk
of certain types of cancer. A cereal company concerned seeks to acquire more share of the
market but without the risk of litigation and penalties, the marketing team cannot make
questionable health claims on cereal boxes. Although rivals with larger cereal market shares use
shady labelling, that does not mean that every manufacturing company has to be morally
unethical.
For example, considering quality assurance for a company, which produces electrical parts for
computer servers. These elements must be shipped on time or the parts manufacturer risks losing
profit. The department of quality assurance detects a potential flaw and tests every item in one
shipment.
1.5 The Advantages of Business Ethics
1.5.1 Construct customer loyalty
Consumers can let a company reap the benefits of them once, but they will not repeat customers
if they assume they have been unfairly treated, for example by overloading. A strong client base
is one of the keys to business growth, since servicing a current customer does not require
promotion expenses when attracting a new client.
Page | 5

1.5.2 Enhance the reputation of a company
An ethical company's reputation can help create a more positive image on the market that can
bring new clients through word-of-mouth referrals. In contrast, an unethical reputation hurts the
chances that the company will get new customers, especially in this age of social networking
when unfamiliar customers can rapidly disseminate information about their bad experiences.
1.5.3 Retain Good Workers
Talented people at all organizational levels want their work and commitment fairly compensated.
They want to see career progress within the company depending on the merits of their work and
not on preferential treatment. People want to be part of an organization whose management team
tells them the truth about what is going on, such as layoffs or restructuring.
Fair and open companies with staff have a better opportunity of keeping the most brilliant
individuals. For example, employees who do not believe that the compensation methodology is
reasonable often do not work as hard as possible.
1.5.4 Positive environment for job
Staff members have an ethical obligation from the time they are approached for their first job.
They must be frank with your expertise. Ethical staff are viewed as team players instead of as
people. They encourage better relationships with their colleagues. Their managers trust them
with classified material, which results in regular expanded autonomy.
Employees caught in lies by their senior managers damage their opportunities of progress in the
company and may risk being fired. Employee theft is an extreme case of poor moral values. This
can cost the company a considerable amount of money in some industries such as restaurants
whose staff steal food from storage lockers or freezers. One path, which ethical organizations
take in order to prevent this form of behavior, is to take the time to educate every employee of
the organization.
Page | 6

1.5.5 Avoid legal issues
Management can sometimes be tempted to cut corners in the pursuit of profit, for example by
failing to fully adhere to environmental or labor legislation, by ignoring safety risks for workers
or by using sub-standard materials in their product lines. Caught penalties can be severe, such as
legal fees or penalties imposed by governmental authorities. The subsequent misleading ads will
hurt the image of the business in the long run much more costly than court costs or fines.
In such circumstances, the benefits of corporate ethics become apparent, because businesses,
which uphold the highest ethical principles, are very unlikely to face these circumstances.
1.6 Issues in implementing Business Ethics
1.6.1 Rudimentary Ethical Issues
Integrity and honesty are the most important or critical ethics problems faced by corporations.
The principle of performing the business with fairness and a determination to handle each
customer equally constitutes a simple definition of ethics. When customers feel that a company
has a firm commitment to ethical business strategy, high trust between the company and the
people it wants to serve can develop. A trust relationship between the firm and the clients can be
a key factor in the success of a corporation.
1.6.2 Diversity and fair working practices
The current and potential staff members of a firm are usually a diverse group of people who
deserve to be respected when they decide to work in your business. An ethical reaction to
diversity begins with the recruitment of a diverse workforce, creates equal opportunities across
all training programmes, and is achieved when every employee can enjoy a respectful working
environment that values his contributions. Maximizing the valuation of the contribution of each
employee is an important element in the success of the business.
Page | 7

1.6.3 Issues of decision-making
A useful way to explore ethical dilemmas as well as identify ethical action courses involves
collecting facts, evaluating any appropriate actions, taking a decision, evaluating the fairness
decision and reflecting on the result. Ethical decision-making processes should focus on
protecting customer and employee rights, ensuring fair and fair business operations, protecting
the common good, and safeguarding employee individual values and beliefs.
Page | 8

Question 02
2.0 The Concept of Sustainability in a Business Context
2.1 What does sustainability mean?
Sustainability seeks to address existing needs without jeopardizing the ability of future
generations to fulfill their needs. The concept of sustainable development is made up of three
pillars: economic, environmental and social — also informally known as profits, world and
human beings.
2.2 Why Sustainability is important to a business
In addition to helping to address these global challenges, sustainability can drive success in
business. Several investors now use the ESG to analyze the ethical influence and sustainability
practices of an organization. Investors examine factors such as the carbon footprint of a
company, the use of water, community ongoing development and board diversity.
Data indicates that businesses with high ESG scores have lower equity and debt costs and those
sustainable practices will help improve financial efficiency while attracting interest from the
public. As per McKinsey, almost 3,000 employees said that the key motivating factors for a
sustainable approach are;
1) Identification with the aims objectives or principles of a company.
2) Establishing, sustaining, or enhancing credibility.
3) Meeting customer expectations and generating new growth opportunities.
Instead, "doing well" can directly affect the ability of the company to do well. Here are four steps
that a business can take to harmonize its business strategy with the mission and vision of the
business and to create shared value.
Page | 9

2.3 Why should all companies adopt sustainability?
As corporate accountability standards increasing and transparency rises, businesses understand
the need for sustainability. Good intentions and professional communications are no longer
sufficient.
2.4 Practical recommendations
As with the overall strategy, sustainable development is not a "right solution." The ideal option
depends on each company's aspirations and stakes. These are some useful steps to improve
sustainable development practices for all management teams in any scale of Business
Corporation.
2.4.1 Align strategies and sustainability
Management must ensure alignment between the company strategy and sustainability efforts. We
often see differences, which naturally fragilize sustainability efforts, lack strong commitment and
priority. Many great examples exist. The goal of Unilever's Sustainable Living is to decouple
development and production, as well as to decrease its resource base by concentrating on waste
management, resource quality, creativity in sustainability and ecological sourcing (such as
organic palm oil). Likewise, Toyota is known for hybrid engine innovation, but not so much for
reducing its dependence on rare minerals. For hybrid and electric motors, these minerals were
needed. Nevertheless, Toyota decreased its dependence on imports and operational risk by
developing alternative engine technologies and thereby reduced financial risks in case of price
increases.
2.4.2 In compliance with the comparative benefit
Compliance needs to be addressed primarily by companies, which often relates to waste disposal,
pollution, energy efficiency, human rights and labour. Regulation is also a concern for creditors.
Recent BCG / MIT data demonstrate that investors are shy of compliance risks more and more.
44% of investors say they are divesting from businesses with poor sustainability.
Page | 10

2.4.3 Reactive to proactive
Many of the leading sustainability companies such as Nike, Coca-Cola, and Nestlé have grown
largely because of a crisis. Nike, for instance, confronted boycotts and public outrage over
abusive employment conditions in locations like Indonesia during the 1990s but turned the tide.
In 2005 she pioneered the disclosure movement by releasing a comprehensive list of the factories
with which she contracts and a lengthy 108-page study detailing the terms and conditions of
payment in her plants. It also recognized widespread problems, especially in its factories in
South Asia. These corporations have all established more constructive sustainability strategies by
identifying the impact of sustainability in a catastrophic situation.
Page | 11

Question 03
3.0 Three Models of Corporate Social Responsibility
3.1 The Economic model of Corporate Social Responsibility
Tradition indicates that a firm exists solely to meet market demand, create demand-based quality
products and generate profit. This traditional view was the foundation of the corporate social
responsibility economic model. This line of thought therefore believes that society will end up
benefiting the success of a corporate organization. It also notes that full social benefit will only
exist if companies are free to fabricate and produce goods desired by society.
In his 1962 work on "Capitalism and Freedom," and in a seminal paper appeared in the New
York Times in 1970, Nobel Prize winning economist Milton Friedman presented the Friedman
social responsibility ideology. He claimed that a corporation's only moral duty is to protect the
welfare of stakeholders by raising income while being loyal to the rules of its jurisdictions.
According to Friedman, responsibility that extends to the community defeats the whole purpose
of a free market economy. He said totalitarianism happens when businesses negotiate with the
society and not productivity.
Nevertheless, the economic model claims that social responsibility is the responsibility of others,
especially the government, NGOs and other social bodies. Shareholders would be greedy if their
investment capital were channeled to investments that did not produce dividends. In addition,
this model argues that enterprises already pay taxes and the government uses them to meet
society's needs. Successful companies fulfill their social responsibility indirectly by means of
taxation.
3.2 The Philanthropic Model of corporate social responsibility
A company which is responsible for its actions and, via its operations, has positive impacts on
the environment, social system, consumers , employees, community groups and other
stakeholders. Philanthropic donation is one form of CSR. The origins of corporate philanthropy
in the western hemisphere date back to the rise of manufacturing in the 19th and early 20th
century where a number of philanthropic frameworks were set down by prominent business men
Page | 12

such as Henry Ford and John D. Rockefeller. Corporate philanthropy may now involve donation
to another organization or cause of funds, goods or services. For example, a banking local branch
could donate money to finance the purchase of uniforms for a sports school team or to donate to
the city opera from a health care company.
Even when independent philanthropists have their own reserves to alter the world in a better
way, corporate philanthropy directs corporate resources to promote a worthwhile cause or to deal
with a social need. The process is not without criticism; some grumble that philanthropic CSR
does not have a direct connection with the core business of an organization. For example, many
major arts organizations, merely because their managers enjoy music and wish to help a local
symphony, are sponsored by corporations with completely different business areas. While
philanthropic CSR can provide a business with public affairs or branding benefits, they are hard
to measure and monitor.
A philanthropic activity should not take place without oversight. Since about the early 2000s,
companies have been seeking to hold charities responsible for their use of donations. Many non-
profit organizations have thus adopted business practices to measure their own performance.
This indicates that the recipients of philanthropy use both the funds they earn and their success in
support of their role wisely. The results can then be used by companies involved in the
philanthropic CSR to assess the impact of their own initiatives to enhance social causes.
3.3 The Stakeholder model of Corporate Social Responsibility
The shareholder (stakeholder) framework developed by Friedman is the less appropriate model
amongst the three of them, firstly because of reliance on an unspeakable premise and secondly
because of moral laxity, which is sufficient to articulate anything of moral value as an assertion
for the specificity of maximizing profits. While Friedman provides numerous theoretical claims
against corporate social responsibility focused upon the similarities between a business boss that
does so and a public servant – it is better left to the political sphere to implement such a practice
– this study does not consider the consequences of these theories. Alternatively, Friedman’s case
about why corporate social responsibility has no role in industry is based on this paper: the claim
for property rights. Friedman asserts that responsibility is an unfair exercise of the property by
Page | 13

another person entrusted with the property of the former. While the concept holds that
shareholders are the owners of societies in which they invested money is prevalent, this seldom
behaves with the interpretation of ownership (at least in the case of public companies).
The position of stakeholders can be better understood as a similar positon to that of a lender or an
investor – someone who financed the company in the expectation that such funds will be fully
returned, plus an undisclosed amount of interest, for the duration of their share(s). If the stance of
shareholders is relegated to that of creditors, it can be argued that the management of such funds
has a moral obligation, because 1) stockholders in the company's borrowing risked to some
extent their own benefit in order to improve the firm, and 2) during a transaction, the company
made an implicit or explicit attempt to deliver such funds. In this situation, though, management
still has a legal duty to return the deposited funds (perhaps plus an undisclosed amount of
interest) – but by no means probable. Such a moral imperative does not cover the whole of the
corporate business objective.
Page | 14

Question 04
Here, the candidate has taken the Alphabet Inc.’s Google Corporation as the preferred business
entity, and assuming the role of the creator of the Code of Conduct for the entity, the candidate
has used an approachable language pattern towards the board of directors of the entity, in
presenting the brief summary of the fabricated code of conduct.
4.0 Code of Conduct – Google Corporation
The Google Code of Conducts is one of the respects in which we apply Google principles. It is
founded on an understanding that everything we do with respect to our job at Google can and
should be evaluated against the maximum possible ethical expectations. Our dedication to the
highest quality helps us recruit great people, create strong products and attract loyal customers.
We are committed to maintaining the highest. Value and respect for our customers, resources and
each other are crucial to our progress and must be promoted every day.
4.1 Who is through to obey our code?
We expect all our staff and members of the board to know and follow the Code. Failure to do so
can lead to disciplinary action, including termination of work. Besides that, whereas the Code is
clearly written for Google employees and members of the board, we expect Google contractors,
consultants, and many others who might have been transiently assigned to execute work for
Google to comply with the code in linkage with their work for us. If a Google contractor, vendor,
or other provider of covered services fails to comply with the Code, its partnership with Google
may end.
4.2 What if I have a concerns or questions about code?
Do not just sit here whether you have a problem or worry. You can notify your manager, your
employee or Ethics & adherence representative. You can also question or pose questions about
alleged violations of our code or some other Google regulation through the ethics and
Page | 15

compliance hotline. Eventually, if you believe that there has been a violation of the law, you can
raise that with the Ethics & Compliance hotline or a state agency.
4.2.1 Assist our customers
Our users appreciate Google not only because we offer excellent goods and services, but also
because we uphold a better level of care and general management for customers. Taking into
consideration the following principles will help us maintain this high standard:
 Integrity
 Usefulness
 Privacy, Security, and Freedom of Expression
 Responsiveness
 Assist Each Other
We are dedicated to a positive work environment in which employees have a chance to
maximize their potential. Googlers should do all they can to build a work environment free from
harassment, threats of violence, prejudice and unfair treatment.
4.2.2 Discourage Conflicts of Interest
If you are in a position to benefit yourself, your colleagues, or your family at the detriment of
Google or our customers by corporate loyalties, you may be faced with a dilemma of interest.
We all should avoid conflict and circumstances, which are reasonably conflict-like.
4.2.3 Preserve Confidentiality
We generate a great deal of media attention about our technologies and society and generally,
that is cool. However, other types of business information can harm our launch of products by
leaking preemptively into the press or rivals, destroy our competitive edge and otherwise prove
costly. Our obligations go beyond disclosing Google confidential material.
Page | 16

4.2.4 Protecting Google’s Assets
Google is well known for fairness in the rewards and transparency of our staff by mutual
sensitive knowledge within the company. Our ability to pursue these practices relies on how well
we preserve business resources and protect business information and assets.
4.2.5 Ensuring financial integrity and responsibility
Key elements of organizational governance are moral transparency and fiscal discipline. This is
more than precise financial reporting, but that is crucially helpful. The money we expend on
Google's behalf is not ours; it is the company and our shareholders' money eventually. Everyone
in Google – not just those in finance – has a part to play in maintaining that money is spent
adequately, that our financial records are full and accurate and that internal controls are
respected. This is important every time we hire a new supplier, spend on Google, sign a new
business arrangement or enter into any agreements on behalf of Google.
4.2.6 Obey the Laws
Google takes its responsibilities seriously in complying with legislation and regulations and we
are expected to comply with the applicable regulatory obligations and restrictions. While it is
difficult to learn all facets of all relevant rules, you can understand the key laws and regulations
specific to your job. Make use of Legal and Ethics & adherence to help you.
4.3 Conclusion
Google needs to be another form of organization. Any ethical situation we may face cannot be
spelled out. Rather, we depend on the good judgement of each other in order to maintain a high
degree of dignity about our business and ourselves. We expect that the letter and the essence of
this code will guide all Googlers. Often it is not easy to find the best thing to do. If you are not
certain, do not be afraid to ask your management team, Legal or Ethics & Compliance questions.
Page | 17

5.0 References
1. BIBLIOGRAPHY Freeman, E. R., & Dmytriyev, S. (2017). Corporate Social Responsibility and
Stakeholder Theory: Learning From Each Other. SYMPHONYA Emerging Issues in
Management(1), 7-15.
2. Geva, A. (2008). Three Models of Corporate Social Responsibility: Interrelationships
between Theory, Research, and Practice. Business and Society Review, 113(1), 1-41.
3. Muhammad, N., Scrimgeour, F., Reddy, K., & Abidin, S. (2014). The Impact of
Corporate Environmental Performance on Market Risk:. Journal of Business Ethics, 1-
38. doi:10.1007/s10551-014-2324-3
4. Pineda, M. E. (2015, December 10). Two competing models of corporate social
responsibility. Retrieved from Version Daily: https://www.versiondaily.com/two-
competing-models-of-corporate-social-responsibility/#:~:text=The%20economic
%20model%20of%20corporate,model%20of%20corporate%20social%20responsibility.
5. Virginia Community College. (2020, June). Google Code of Ethics. Retrieved from
Virginia Community College - BUS100MAwan:
https://sites.google.com/a/email.vccs.edu/bus100mawan/google-code-of-ethics
Page | 18