UGB264 Business Ethics, Responsibility and Sustainability

BUSINESS ETHICS,
RESPONSIBILITY AND
SUSTAINABILITY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Key challenges relating to corporate social responsibility..........................................................3
Best practice of CSR within industry..........................................................................................6
Recommendations for energy supply industry............................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................14

INTRODUCTION
The study is on corporate social ethics and responsibility. Corporate social responsibility means
organisation taking up moral duty to serve the society in ways which can benefit the society in
form of taking up environmental causes and helping the under privileged sections of the society.
The industry being taken for case study is energy supply industry. The challenges related to
corporate social responsibility and sustainability has been discussed. The best practice for
corporate responsibility regarding ethical and moral issues have been discussed. The
recommendations for the business and the sector have been given by considering global arena
has been given.
Key challenges relating to corporate social responsibility
The key challenges related to corporate social responsibility are as follows:
a) Inefficiency of the administration
In past, governments have focused on legislation and regulation for delivering objectives
which are social and environmental in the business sector which has led to failed
initiatives. In such cases, any new ideas being put up also remain behind which can be
innovative and can bring up change in environment (Fortis, Maon, Frooman and Reiner,
2018).
b) Demands for greater disclosure
Growing demand for corporate disclosure from stakeholders external or internal such as
customers, suppliers, employees, communities, and activists is also a challenge which the
company has to face.
The customers would like to see that the company they buy products from follow
sustainability measures and is active on taking up environmental and social issues or not.
c) Increase in pressure from investor

Investors are changing their perspective from profits to profits by sustainable measures.
They would not like to be with a firm which uses unethical measures to gain profit or by
harm to the natural resources.
d) Change in employee behaviour: Employees have been looking beyond the payment
benefits and looking forward for better employee policies and working conditions. In
order to retain employees who are skilled, organisations have to improve working
conditions. Better employment policies, leave policies and medical allowances and
benefits are being added up by corporate to make their employees continue for longer
term (Fortis, Maon, Frooman and Reiner, 2018).
e) Firm specific barriers
Lack of Resources
The lack of resources including finance, human capital, knowledge and expertise has
been reported to be a barrier to Corporate Social Responsibility. For effective
implementation of resources, large amount of resources are required. Budgets are found
inadequate and also out competed by projects which promise higher return on
investments. Many organisations do not have a dedicated department for managing CSR.
In many places, it has been seen the responsibility of managing CSR gets assigned to
other departments where performances are done based on original scope of duties.
The CSR is comparatively new in this industry and will take some time to establish it.
Lack of Strategic Vision
This is often related to top management not able to provide committed vision towards
social responsible activities. It has been suggested that the organisation chart of mission
and objectives has to include the CSR as one of the missions with a time line to achieve.
It is necessary to make the addressal of the issue in operational level activities as well as
integrating in vision and objectives (Jamali and Karam, 2018).
The cause for lack of strategic vision in the sector is orientation towards short term goals
and profits. The CSR activities entails short term costs and pays off in long run. Thus, top
management which sees short term profits can ignore the corporate social responsibilities
not paying in short-term.

Also, the cause for lack of vision can be weak support of facts that CSR helps boosting
business performance financially. Thus, interpretation can be done by some management
executives that CSR is relevant for success of business.
Lack of measurement systems
These systems are required to quantify benefits for implementation of CSR. They serve
as a tool for evaluation and help monitor control over performances of CSR. If proper
measurement systems are there, it will help management realise the benefits it has over a
period of time. Talking of present, there are limited indicators of social and environment
which are accepted universally and are endorsed by the business organisations. The
indicators lack standardisation and can not be compares much on various factors and thus
can show less relevance in financial reports (Jamali and Karam, 2018).
Industry specific barriers
Low willingness for payment to CSR activities
It can be seen that customers have been checking on the sustainability note of the
company. However, when it comes for paying the CSR premium, they may be little
hesitant but willing to punish if CSR is lacking. It is necessary that customers realise that
payment of these activities will benefit them in the long term as well as the society.
Increased participation from customers will increase motivation of the company to
implement CSR measures.
High regulatory standards
Energy supply is one of the highly regulated industry which implies stakeholders
concerns on environment, safety and employees well being addressed. The environmental
and safety performances are raised by additions and amendments to the regulations which
forces the industry for adjusting with the new standards.
Complying with standards offers benefits from the government on reduction in
carbon gas emissions and achieving the targets of government too of reducing pollution
and thus increase in carbon points for the company.

The specificity is more on explaining the financial benefits which a firm can obtain from
CSR. This refers to firm’s ability to capture or internalising the benefits of CSR besides
creation of collective goods which can be shared by other people in industry.
The regulations being institutionalised and also ratification done by authorities with
intention of reducing the externalities’ negatives.
Energy supply industry is one which focuses on trying to use renewable sources of
energy and helping the government in the initiative. Renewable sources of energy will
help in reduction of pollution and also sustaining the use of natural resources which are
limited in nature. The energy supply industry is highly regulated and thus is complying
with government regulations.
Best practice of CSR within industry
Corporates use many practices of corporate social responsibility such as:
a) Reduction in carbon foot prints: Corporates in energy sector have been trying to reduce
carbon footprints by moving to renewable measures and going for eco-friendly way of
production. Energy supply industry has been doing the same to comply with regulations
and do its bit in conserving nature. British Gas is an example of the same.
b) Improving labour policies: The labour standards have to be met according to the law in
the country. Labour have to be provided safety equipment, food and medicines at
subsidised rates, working hours have to be followed with overtime compensation if any.
Wages have to be as per guidance of law. Energy supply sector employs a number of
workers and follow the law.
c) Participation in fair trade: Companies have to follow ethical policies which constitute the
operational framework as well as dealing with clients and providing of services to the
customers. Investors also look for companies who are ethical in their framework and can
have faith in their investments in the right direction. Energy supply sector too follows the
ethical principles and is reliable for investors because of its highly regulated framework
(Galant and Cadez, 2017).
d) Charity giving: Corporations in energy sector have been donating a part of their revenues
to charity and sponsoring the causes of under privileged and education for all. Donations
are being given to help upgrade the sections of the society. Energy supply industry also