Business Ethics and

Corporate Social
Responsibility
Management of Business Unit 1 – Module 1
What is Business Ethics

Business ethics refer to the set of moral principles that

guides a company's conduct. These principles govern
every aspect of the company's operations, including its
interaction with the government and other businesses,
its treatment of its employees and its relationship with
its customers.
 • Business ethics play a vital role
in a company's long-term
success. Good ethics can earn a
Why is company a positive reputation
and encourage brand loyalty.

business Consumers and stakeholders

increasingly expect corporations
to have strong values.

ethics • Ethics is important in business

because it regulates the

important
behavior of people. Ethics
provide guidelines for people to
avoid mistakes, while they are
thinking that they are doing the
right thing.
 Benefit of Business Ethics

PROVIDE A IMPROVE EMPLOYEE ATTRACT MORE BETTER FOR SOCIETY

COMPETITIVE WELLBEING INVESTORS
ADVANTAGE IN
TERMS OF
CUSTOMERS
Possible Disadvantages

LIMITED ABILITY TO TIME CONSUMING TO

MAXIMISE PROFIT IMPLEMENT THE
PRACTICES
Core Business Ethic Principles

There are seven principles of business ethics including:

1. accountability,
2. care and respect,
3. honesty,
4. healthy competition,
5. loyalty,
6. transparency, and
7. respect for the rule of law.
What is Corporate Social Responsibility (CSR)

• Corporate Social Responsibility (CSR) is commonly defined as a business

model in which companies integrate social and environmental concerns in
their business operations and interactions with their stakeholders instead of
only considering economic profits.
• CSR is based on the belief that businesses have a greater duty to society
than just providing jobs and making profits. It asks business leaders to
consider their decisions' environmental and social impacts in order to
reduce harm where possible.
• CSR includes four categories:
• environmental impacts,
• ethical responsibility,
• philanthropic endeavors,
• and financial responsibilities.
TYPES OF CSR

• ENVIRONMENTAL RESPONSIBILITY: Corporate social responsibility is rooted in preserving the

environment. A company can pursue environmental stewardship by reducing pollution and
emissions in manufacturing, recycling materials, replenishing natural resources like trees, or
creating product lines consistent with CSR.
• ETHICAL RESPONSIBILITY: Corporate social responsibility includes acting fairly and ethically.
Instances of ethical responsibility include fair treatment of all customers regardless of age, race,
culture, or sexual orientation, favorable pay and benefits for employees, vendor use across
demographics, full disclosures, and transparency for investors.
• PHILANTHROPIC RESPONSIBILITY: CSR requires a company to contribute to society, whether a
company donates profit to charities, enters into transactions only with suppliers or vendors that
align with the company philanthropically, supports employee philanthropic endeavors, or sponsors
fundraising events.
• FINANCIAL RESPONSIBILITY: A company might make plans to be more environmentally,
ethically, and philanthropically focused, however, it must back these plans through financial
investments in programs, donations, or product research including research and development for
products that encourage sustainability, creating a diverse workforce, or implementing DEI, social
awareness, or environmental initiatives.
WHY IS CSR IMPORTANT

As a company engages in CSR, it is

more likely to receive favorable brand
Through corporate social responsibility
recognition. Additionally, workers are
programs, philanthropy, and volunteer
more likely to stay with a company
efforts, businesses can benefit society
they believe in. This reduces employee
while boosting their brands.
turnover, disgruntled workers, and the
total cost of a new employee.

CSR practices help companies mitigate

risk by avoiding troubling situations.
This includes preventing adverse
CSR strategies may improve how activities such as discrimination
investors view the company's value. against employee groups, disregard
for natural resources, unethical use of
company funds, and activity that leads
to lawsuits, and litigation.
WHY IS CSR IMPORTANT

Many companies view CSR as an integral

part of their brand image, believing
customers will be more likely to do
business with brands they perceive to be
more ethical. In this sense, CSR activities
can be an important component of
corporate public relations. At the same
time, some company founders are also
motivated to engage in CSR due to their
EXAMPLE OF
CSR IN
JAMAICA
GOOD GOVERNANCE IN
BUSINESS
 Governance includes all the
practices, processes and
WHAT IS policies that help guide
GOVERNANCE businesses in the right
direction. Any task that
focuses on the ‘big picture’ is
part of governance — tasks
like checking your finances
are stable, creating long-term
strategies, planning your risk
management and keeping an
eye on your wider industry.
What is Good Corporate Governance

• Corporate Governance refers to the way in which companies are

governed and to what purpose. It identifies who has power and
accountability, and who makes decisions. It is, in essence, a
toolkit that enables management and the board to deal more
effectively with the challenges of running a company.
• The purpose of good corporate governance is to ensure that
businesses have the appropriate decision-making processes and
controls to ensure that all stakeholders' interests (shareholders,
employees, suppliers, customers and the community) are
balanced.
• A company which applies the core principles of good corporate
governance; fairness, accountability, responsibility, disclosure,
and transparency, will usually outperform other companies and
will be able to attract investors, whose support can help to
finance further growth.
WHY IS CORPORATE GOVERNANCE IMPORTANT

• Good corporate governance is the key to

transparency and accountability. It has the
power to prevent corporate scandals, fraud,
and corporate liability issues,
• t can reduce risks, and enable faster and safer
growth. It can also improve reputation and
foster trust. All these benefits mean your
business is more likely to last in the long term.
BENEFITS OF GOOD CORPORATE GOVERNANCE

Grow your Stay ahead of

business
create a clear vision of the future and
aim for it
risks
better understand current risks and get
insights about possible future risks
improve performance and get better create strategies for reducing or
financial results avoiding risks
get a competitive advantage remove opportunities for fraud,
discover and act on the right new corruption, or mismanagement
opportunities learn from other people’s experience
attract investment more easily. and mistakes.
BENEFITS OF GOOD CORPORATE GOVERNANCE

Improve compliance Improve trust and

reputation
better understand your legal help manage conflict, especially in
responsibilities, especially when they family businesses or if you share
change ownership
reduce time, money and effort on show customers that your business is
compliance responsible and ethical
ensure accountability for what’s prove to investors that you’re doing
happening at an operational level. things sensibly and safely.
 Role of the Board in Corporate Governance

Governance refers to the set of rules, controls, policies, and resolutions put in place to direct
corporate behavior. A board of directors is pivotal in governance, while proxy advisors and
shareholders are important stakeholders who can affect governance.

The board of directors is the primary direct stakeholder influencing corporate governance.
Directors are elected by shareholders or appointed by other board members and charged
with representing the interests of the company's shareholders.

The board is tasked with making important decisions, such as:

Corporate officer
Executive compensation Dividend policy
appointments
Role of the Board in Corporate Governance

• Boards are often made up of a mix of insiders and independent

members. Insiders are generally major shareholders, founders,
and executives. Independent directors do not share the ties to
the company that insiders have. They are typically chosen for
their experience managing or directing other large companies.
Independents are considered helpful for governance because
they dilute the concentration of power and help align
shareholder interests with those of the insiders.
• In some instances, board obligations stretch beyond financial
optimization, as when shareholder resolutions call for certain
social or environmental concerns to be prioritized.
 Sustainable Business Practices

Sustainability in
business refers to a
Sustainable Practice
company's strategy For instance,
refers to the
and actions to reduce sustainability in
implementation of
adverse business can mean:
environmentally
environmental and Using sustainable
friendly strategies by
social impacts materials in the
businesses to reduce
resulting from manufacturing
their dependence on
business operations process. Optimizing
fossil fuels, lower
in a particular market. supply chains to
carbon emissions,
An organization's reduce greenhouse
and promote the use
sustainability gas emissions.
of renewable energy
practices are typically Relying on renewable
sources like solar
analyzed against energy sources to
panels and wind
environmental, social power facilities
turbines.
and governance
(ESG) standards.
Examples of
Sustainable
Business Practices
in Jamaica