CHAPTER 1: Business Ethics

as Foundation of Corporate
Social Responsibility

“We sincerely believe that a greater portion of the

earnings accrued from business should be returned to
the people whether this in the form of foundation,
grants, scholarships, hospitals or any form of social
development benefits…”
Don Eugenio Lopez, Founder, Lopez Group
1. Is the term “business ethics” an
oxymoron?
Oxymoron
▫ a phraseology that produces an effect by
self-contradiction.

Examples:
silent scream, friendly fire, virtual
reality, working vacation, living dead,
educated guess, business.
1. Is the term “business ethics” an
oxymoron?
• In traditional sense, people get into business
to maximize profit (huge profit, that is).

• Ethics, in the field of philosophy, is a

specialized study of what is right and
wrong.
2. What is business ethics?
Business ethics
▫ Is a form of applied ethics that examines
moral rules, theories and principles, in a
business context.

▫ Generally, it a normative discipline,

whereby particular ethical standards are
advocated and then applied.
2. What is business ethics?
Business ethics

• It makes specific judgments about what is

right or wrong, as it teaches what ought to be
done and what ought not to be done. (De
George, 1999)
• Business ethics is also know as ethical
management.
2. What is business ethics?
Business ethics

• It pushes the practitioner to pause and ask

the questions:
▫ Is it true?
▫ Is it deceitful?
▫ Is it fair? Or is it unjust?
▫ Does it cause bodily or emotional harm to others
and nature?
2. What is business ethics?
Business ethics

• For executives and managers, this is about

balancing the ideal and practical, such as the
need to produce a reasonable profit for
shareholders and at the same time to
maintain integrity by paying correct taxes to
the government.
3. What is the anthropology and
spirituality of business ethics?
• The person who works for or manages
business is not just an abstract being or mere
intelligent being but a human person with
dignity to socio-political, moral, and
economic issues.
• As emphatically pronounced by Pope John
XXIII, “The human person, a businessman,
the supplier, or a consumer is a microscomic
specie as he is also a social being that “has
been elevated to the supernatural order”
3. What is the anthropology and
spirituality of business ethics?
• A good business leader is convinced that
business should be at the service of the
human person, and not human person at the
service of business, that ethics is above
technology and spirit above matter.
4. What is the role of ethics in the
management?
• “The need for ethics in economic life” covers
a myriad of both practical and moral
problems that arise out of specific functional
areas of management.
a. Workplace
b. Intellectual property rights
c. Sales, advertising, and marketing
d. Production
e. Finance, accounting, and auditing.
4. What is the role of ethics in the
management?
a. Ethical Management in the
workplace
• Ethical management, is the foundation of
CSR in the workplace, covers those ethical
issues arising from the employer-employee
relationship, such as the rights and
obligations justly owed between them.
4. What is the role of ethics in the
management?
a. Ethical Management in the
workplace
• The role of ethical management in the
workplace covers the prevention of
discrimination in the workplace, elimination
of child labor and biased practices on the
bases of age, gender, race, religion, and
physical attributes
• It include good working conditions and
occupational safety.
4. What is the role of ethics in the
management?
b. Ethical management regarding
intellectual property rights.
• Taking into account the issues regarding
copyright, patent, and trademark
infringement, business intelligence,
employee trading, leaking information or
industrial espionage.
4. What is the role of ethics in the
management?
c. Ethical management in sales,
advertising, and marketing.
• Business ethics and CSR deal with the
issues on price fixing, moral dimension of
antitrust law or competition law, bait and
switch, viral marketing, pyramid scandal
and others.
4. What is the role of ethics in the
management?
d. Ethical management in production.
• Deals on issues about products and
production process that causes harm. For as
far as law and ethics is concerned, it
ensures safety of stakeholders and
consumers, general public and the
environment.
4. What is the role of ethics in the
management?
e. Ethical management in finance,
accounting and auditing.
• Deals with corporate governance,
accountability, and value based
management.
• Enron and Worldcom.
5. How can business ethics become
a philosophy of management?
• Indeed, business ethics can become a
philosophy of management – if the
practitioner chooses to do so.
• Whereas ethics is personal, CSR is social and
corporate.
6. What is the biggest challenge?
• The biggest challenge is share resources to
all, particularly those in dire needs, and
sustain the SCR program.
• Revenues are not meant to fill up the pockets
of those who run the business; they are
meant to be shared to all – in accordance
with distributive justice.
7. What does it mean to be ethically
accountable in a globalizing society?
• Recognizing of fundamental international
rights and corresponding duties, codified into
what referred to as codes of conduct. The
usual codes of conduct cover four major
business areas: basic human rights, employee
practices and policies, consumer protection
and environmental stewardship (Forbes,
2012)
7. What does it mean to be ethically
accountable in a globalizing society?
• These are usually grounded on solid moral
doctrine found in the United Nations
Universal Declaration of Human Rights
(1948), European Convention on Human
Rights (1950), United Nations Code of
Conduct on Transnational Corporations and
the International Labor Office Tripartite
Declaration of Principles Concerning
Multinational Enterprises and Social Policies
(1977)
7. What does it mean to be ethically
accountable in a globalizing society?
• League of Corporate Foundation
CHAPTER 2 Business Ethics
and CSR Compared
8. What do authors/experts say
about business ethics and CSR?
• Herbert Simon, in is book Administrative
Behavior (1945), noted that business have
been affected by the growing public interest.
• According to him, leaders are increasingly
becoming involved with “responsibilities
toward the community beyond the legal
limits imposed on them, hence, CSR is
beyond regulatory and legal compliance.
• He gave more attention to the ethical
dimensions of individual behavior in
organization.
8. What do authors/experts say
about business ethics and CSR?
• Peter Drucker (1993) in his book The
Practice of Management, was among the first
authors to explicitly address the “social
responsibilities of business.”
• He gave more attention to the ethical
dimensions on CSR.
8. What do authors/experts say
about business ethics and CSR?
• Philips directly links organizational ethics
a.k.a business ethics, with CSR via
stakeholder theory.
8. What do authors/experts say
about business ethics and CSR?
• The Center for Corporate Citizenship at
Boston College (2003) speaks of corporate
citizenship as “continuing commitment by
business to behave ethically and contribute to
economic development while improving the
quality of life of the workforce and their
families as well as of the local community
and society at large.
8. What do authors/experts say
about business ethics and CSR?
• For Griffin, the moral reasoning in business
ethics is related to CSR at the very least as the
moral basis of the corporate citizenship
because they believe they are ethically
accountable to society.
• In other words, business ethics is the basis of
the practice of CSR.
9. Should a company become a
corporate citizen without being
ethical?
• NO!
• Business ethics seeks to determine whether a
particular behavior, decision, or action of an
individual or organization is morally right or
wrong.
• It is not subjective, rather, objective and the
basis for doing what is right or wrong is a
universal standard common to all.
9. Should a company become a
corporate citizen without being
ethical?
• Business ethics is related to CSR although the
former is primarily personal and CSR is
mainly social.
• The wisest thing to do, it seems, is to
practice business ethics first and then
engage in CSR activities.
9. Should a company become a
corporate citizen without being
ethical?
• One measurement included in the selection
of the most ethical companies in the world
using Ethical Quotient is the practice of CSR.
• Jaime Zobel de Ayala, a Filipino industrialist
10. What are the similarities
between CSR and Business Ethics?
• The 2002 Asian Forum on CSR characterized
business ethics and social responsibility as
follows:
1. Beyond profit
2. Beyond compliance
3. Beyond form
10. What are the similarities
between CSR and Business Ethics?
• The author thought of 8 similarities and
common characteristics existing between
business ethics and CSR namely;
a. Both are beyond compliance with the law;
b. Both are not tantamount to relativism
c. Both are born with universal values
d. Both are not utilitarian
e. Both are pragmatic and universal
10. What are the similarities
between CSR and Business Ethics?
• The author thought of 8 similarities and
common characteristics existing between
business ethics and CSR namely;
f. Both are about convictions
g. Both are beyond public relations
h. Both are centered .on total human
development
a. CSR and Business Ethics beyond
compliance
• At times, CSR and ethical management
coincide with the law and local regulation.
• But the observance of what is legal, we stress,
is only the minimum requirement of ethics
and CSR.
• It means that something more is required of
business.
• Ethical Standard has to be higher than legal
compliance
b. Business Ethics and CSR not
tantamount to relativism
• Relativism professes that all beliefs are
equally valid, and that the truth is relative-
depending on the situation, level of
modernization, and individual preference.
• Business ethics is not relativism because the
former accepts moral values that objective,
permanent, and universal.
b. Business Ethics and CSR not
tantamount to relativism
• Marco Landi, President of Texas Instrument
(TI) Asia, has put it: “The question of ethics
cannot be separated from any other aspect of
our business. This concept of ethical behavior
remains constant regardless of the culture.
Indeed, business ethics is global. Its
fundamental concerns are applicable to all
people who do business anywhere in the
world regardless of the culture”
c. Business ethics and CSR born with
universal values.
• When we talk of business ethics and CSR, we
talk of values (corporate and personal ones).
• It is undeniable that there are things
everyone holds valuable like honesty, telling
the truth, providing assistance to the needy,
patience, protecting the environment,
business integrity and keeping one’s word.
• On the other hand fooling a client, verbally
abusing a working, sexual harassment in the
workplace and price fixing are morally
wrong.
c. Business ethics and CSR born with
universal values.
• It goes without saying there are values that
are universally valid, which means
recognized by all and everywhere.
• In other words, there is only one universal
language for all business practitioners and
professionals everywhere – the true, the just,
the fair and the good.
d. Business ethics and CSR not
utilitarian
• Utilitarianism focuses on the results of an
action rather than the motive behind the
action.
• Since it entails a benefit-cost analysis, it
seeks to establish two things, namely;
1. The greatest good
2. The greatest number to whom it will be
distributed
d. Business ethics and CSR not
utilitarian
• The greatest good implies ‘an action is right if
it produces the most usefulness for all
persons affected by the act (including the
agent performing the act).
• Business ethics and CSR not utilitarian as
business and the government are duty-bound
to solemnly respect human dignity and basic
human rights.
d. Business ethics and CSR not
utilitarian
• Needless to say, human dignity is the most
central issue in ethical decision making.
e. Business ethics and CSR is
pragmatic and practical
• Business ethics and CSR are not just code of
right conduct formulated by the Public
Relations Officer or the legal department.
• Both are concerned with orthodoxy (correct
policy) and orthopraxis (best practice)
• We do not simply plan our corporate social
involvement; we apply it to day-to-day
operations as part of our core business.
• Since they do not end in memorized codes
and principles, business ethics and CSR are
practical, pragmatic and laive.
e. Business ethics and CSR is
pragmatic and practical
• Universal values and timeless truth are
nothing without praxis, since fine words can
never actually substitute for a meaning living.
• CSR is the result of deep conviction that
there is something more superior than the
truth, and that is social involvement.
• A good theory without daily living is
deceased, just as faith without deed is dead,
according to the Letter of James.
e. Business ethics and CSR is
pragmatic and practical
• For this reason, it is always harder and far
more challenging to live the truth and get
involved than to memorize some business
code of conduct.
f. Business ethics and CSR about
firm conviction
• Corporate involvement is not always about
feelings, since ethical standards are not just
emotional or sentimental issues.
• CSR constitutes a firm decision and solid
conviction.
• Ethics, is a fixed standard, objective,
permanent and grounded on the strongest
convictions about what is right and wrong.
g. Business ethics and CSR go
beyond public relation and
profitability
• You practice ethics because it is your
philosophy of management; you benchmark
because it is the right thing to do.
h. Business ethics and CSR centered
on total human development
• I need to stress that business for every man
and woman, and all business activities
(including CSR) are only a means for total
and wholesome development of the human
person (Paul VI, 1968)
• The total
How did business ethics and CSR
evolve?
• Corporations practice CSR and ethical
management differently according to how
enlightened they have become.
• CSR and ethical management are evolving
continuously, following several phases or
periods of realization.
How did business ethics and CSR
evolve?
1st Phase – Company sees profit and only
profit. The overriding concern at this initial
stage is profit maximization.
2nd Stage - Company complies with laws and
regulations, which is the minimum
requirement of being a corporate citizen.
3rd Stage – Company conforms to ethical
requirements to build its image, as it reassess
and safeguards its reputational value.
How did business ethics and CSR
evolve?
Ultimate Phase – Company institutionalizes
CSR and ethical management because it is
the right thing to do.
- it is some kind of noblesse oblige.
- the enterprise truly becomes socially
responsible and relegate profit motive to
secondary objective.
 How did business ethics and CSR
evolve?
Arche Carloll (1999) calls it the Four Part
Definition of CSR.
Responsibility Social Examples
Expectation
Economic Required Be profitable, maximize
sales, minimize costs, etc.
Legal Required Obey laws and regulations.
Ethical Expected Do what is right, fair and
just
Discretionary Desired/expected Be a good corporate citizen
(Philanthropic)
Should there be a CSR Department?

• It is advantageous if a company has its CSR

department that involves both the leadership
and the rank-and-file.
• It includes code of conduct, corporate
citizenship, employee volunteerism, resource
sharing and management, social investment,
and sustainable development.
• It is interested in broadening participation in
social development efforts by getting more
people to participate in poverty alleviation
programs and community involvement.
Should there be a CSR Department?

• It is advantageous if a company has its CSR

department that involves both the leadership
and the rank-and-file.
• It includes code of conduct, corporate
citizenship, employee volunteerism, resource
sharing and management, social investment,
and sustainable development.
• It is interested in broadening participation in
social development efforts by getting more
people to participate in poverty alleviation
programs and community involvement.
Are global corporation committed ot
CSR?
• In response to society’s changing
expectations, a growing number companies
are now taking pride in corporate citizenship,
committing themselves to ethical
accountability and social responsibility.
Are global corporation committed ot
CSR?
• Social Accountability 8000 (SA 8000)
▫ Is a notable evolution of a global standard
providing framework for the independent
verification of ethical practice, principally in the
manufacturing industry.
How did CSR begin in the
Philippines?
• A progressive business group in Venezuela
set up the very first CSR organization in
1964, known as Dividendo Voluntario para la
Communidad (DVC)
• In 1970, fifty leading corporations responded
to the call and organized a common
foundation, herewith referred to as
Philippine Business for Social Progress or
PBSP, which today is one of the most
successful NGOs in the whole world.