Social Responsibility Social Responsibility and Ethics in and Ethics in

BusinessBusiness

RIMRIM

►Blackberry loss of service. Is this a Blackberry loss of service. Is this a dilemma or an ethical dilemma?dilemma or an ethical dilemma?

►What is social responsibility in What is social responsibility in business?business?

►What are ethics and why is it What are ethics and why is it important?important?

►Ethics –Ethics – the rules that help us tell the the rules that help us tell the difference between right and wrong and difference between right and wrong and encourage us to do the right thing.encourage us to do the right thing.

►Values – Values – tell us whattell us what wewe think is think is importantimportant

►Morals – Morals – are the rules are the rules wewe use or believe use or believe to decide what’s right and wrong.to decide what’s right and wrong.

►Individual Ethics-Individual Ethics- personal beliefs personal beliefs about what is good and badabout what is good and bad

►Business Ethics-Business Ethics- tied to both tied to both society’s ethics and the ethics of the society’s ethics and the ethics of the individuals who work for, and buy individuals who work for, and buy products from the companyproducts from the company

►Example:Example:

You own a large corporation that that You own a large corporation that that produces millions of bottles of over the produces millions of bottles of over the counter headache and cold medication. An counter headache and cold medication. An employee in one of your processing plants employee in one of your processing plants intentionally put poison into some of your intentionally put poison into some of your pill bottles leading to the deaths of 7 pill bottles leading to the deaths of 7 peoplepeople

What would you do?What would you do?

►Establishing a Establishing a code of ethicscode of ethics helps helps different people approach problems in different people approach problems in the same way. the same way.

►Code of ethics-Code of ethics- a document that a document that explains specifically how employees explains specifically how employees should respond in different situations. should respond in different situations.

►Dilemma Dilemma – a situation where there is – a situation where there is a difficult choice between two or more a difficult choice between two or more options. Dilemmas have good points options. Dilemmas have good points and bad points.and bad points.

►Ethical Dilemma – Ethical Dilemma – a moral problem a moral problem with right or wrong answers with right or wrong answers

►Which example below is an example of Which example below is an example of a dilemmaa dilemma

►A business decision about where to A business decision about where to locate a factorylocate a factory

►A friend asks you to write down that he A friend asks you to write down that he worked 2 hours more than he actually did worked 2 hours more than he actually did on his time sheet.on his time sheet.

Whistle-blowingWhistle-blowing

►Whistle-blowing – Whistle-blowing – is the decision of an is the decision of an employee to inform officials or the public about employee to inform officials or the public about legal or ethical violationlegal or ethical violation

► Examples of issues that a whistle-blower might Examples of issues that a whistle-blower might report are;report are;

►Someone submitting false information on an expense reportSomeone submitting false information on an expense report►A business that is ignoring hiring procedures for minoritiesA business that is ignoring hiring procedures for minorities►A business that’s knowingly ignoring workplace safety codesA business that’s knowingly ignoring workplace safety codes►A business that’s not observing mandated health codesA business that’s not observing mandated health codes

Bre-XBre-X

► Canadian mining companyCanadian mining company► Reported that they were sitting on an Reported that they were sitting on an

enormous gold mineenormous gold mine► Shares went from under $1/share to Shares went from under $1/share to

$286/share. A $1000 investment would have $286/share. A $1000 investment would have made you $286,000.made you $286,000.

► It was massive It was massive fraudfraud because there was no because there was no gold. gold.

► Bre-X was bankrupt less than 7 years laterBre-X was bankrupt less than 7 years later

EnronEnron► Biggest accounting scandal of all timeBiggest accounting scandal of all time► Was one of the worlds largest electricity, natural gas, Was one of the worlds largest electricity, natural gas,

and communications companies. and communications companies.

► In 2001 Enron went bankrupt because an audit In 2001 Enron went bankrupt because an audit revealed that the assets and the profits of Enron had revealed that the assets and the profits of Enron had been grossly inflated and in some cases non-existent.been grossly inflated and in some cases non-existent.

► Accused of inflating income by over $586 million in a Accused of inflating income by over $586 million in a 4 yr. period.4 yr. period.

► Over 20,000 people lost their jobsOver 20,000 people lost their jobs► Millions of investors lost $60 billion dollars!!Millions of investors lost $60 billion dollars!!► Senior executives faced criminal charges and jail Senior executives faced criminal charges and jail

sentencessentences► The auditors Arthur Anderson Inc. also went bankrupt.The auditors Arthur Anderson Inc. also went bankrupt.

ScenarioScenario

►Lets say that you are an executive for Lets say that you are an executive for McDonalds (mmmmm….Mc Donalds) McDonalds (mmmmm….Mc Donalds) and you learned in a meeting that an and you learned in a meeting that an accounting scandal about your accounting scandal about your company is about to hit the newspapers company is about to hit the newspapers tomorrow. As a result share prices of tomorrow. As a result share prices of your company are going to drop, so you your company are going to drop, so you decide to sell your shares immediately. decide to sell your shares immediately. Is this legal? What do we call this? Is this legal? What do we call this?

► Insider trading-Insider trading- buying or selling buying or selling shares in a company based on shares in a company based on confidential information. It is confidential information. It is illegal!illegal!

►How do we catch insider trading?How do we catch insider trading?►Sophisticated computer systems that Sophisticated computer systems that

look at abnormal trading patternslook at abnormal trading patterns

►Repercussions for insider tradingRepercussions for insider trading►Fines of up to $1 million dollarsFines of up to $1 million dollars►Forced to turn over profitsForced to turn over profits►2 year jail sentence2 year jail sentence►Banned from future tradingBanned from future trading

Corporate Social Corporate Social ResponsibilityResponsibility

►What do you think makes a business What do you think makes a business socially responsible?socially responsible?

► A A socially responsible socially responsible business provides business provides goods and services in line with society’s goods and services in line with society’s values.values.

► CSR Principles CSR Principles Provide a safe and healthy work environmentProvide a safe and healthy work environment Adopt fair labour policiesAdopt fair labour policies Donate to charityDonate to charity Protect the environmentProtect the environment Avoid price discriminationAvoid price discrimination Truthful advertisingTruthful advertising

►Duty to reportDuty to report – – corporations must corporations must disclose all important information to disclose all important information to shareholders, business partners, shareholders, business partners, lenders, insurers, communities, lenders, insurers, communities, regulators, consumers and employeesregulators, consumers and employees

►Why is it necessary for businesses to Why is it necessary for businesses to report their true financial situation?report their true financial situation?

Laws that Govern Corporate Laws that Govern Corporate EthicsEthics

► In Canada there are many laws that In Canada there are many laws that guide ethical behavior. guide ethical behavior.

►Workplace safetyWorkplace safety►Antidiscrimination issuesAntidiscrimination issues►Accessibility issues for people with disabilitiesAccessibility issues for people with disabilities►Environmental responsibilityEnvironmental responsibility►Labour practicesLabour practices

Laws that Govern Corporate Laws that Govern Corporate EthicsEthics

►1)Workplace Safety1)Workplace Safety►Occupational Health and Safety Act Occupational Health and Safety Act

(OHSA)(OHSA)--Gives rights and responsibilities to workersGives rights and responsibilities to workers

►3 rights3 rights The right to refuse unsafe workThe right to refuse unsafe work The right to participate in the workplace health and The right to participate in the workplace health and

safety activitiessafety activities The right to know about the actual hazards in the The right to know about the actual hazards in the

work placework place

►2). 2). AntidiscriminationAntidiscrimination an employee cannot be singled out or an employee cannot be singled out or

treated differently because of his or her treated differently because of his or her race, religion, gender, or sexual race, religion, gender, or sexual orientationorientation

Glass ceilingGlass ceiling – invisible barriers to senior – invisible barriers to senior leadership positionsleadership positions

Antidiscrimination ContinuedAntidiscrimination Continued

►HarassmentHarassment- refers to those - refers to those behaviors that are found to be behaviors that are found to be threatening or disturbing.threatening or disturbing. ExamplesExamples

►BullyingBullying►Stalking Stalking ►Sexual harassment (verbal or physical)Sexual harassment (verbal or physical)►Threats Threats ►Insults Insults ►Abusive comments Abusive comments

►3. Accessibility Issues –3. Accessibility Issues – this law this law helps identify how much they need to helps identify how much they need to do for disabled workers.do for disabled workers.

►Duty To AccommodateDuty To Accommodate_- employers _- employers obligation to meet the needs of obligation to meet the needs of disabled employees in the workplacedisabled employees in the workplace

►4. Environmental Responsibility4. Environmental Responsibility- - ►Environmental acts in CanadaEnvironmental acts in Canada

Environmental Protection actEnvironmental Protection act►Established in 1999 after Exxon oil spill off Established in 1999 after Exxon oil spill off

west coast of Canadawest coast of Canada►Whistle-blower protectionWhistle-blower protection►Give citizens the right to sue where CEOA Give citizens the right to sue where CEOA

violation results in harm to the environmentviolation results in harm to the environment►Contribute to sustainable development Contribute to sustainable development

through pollution preventionthrough pollution prevention

Environmental Responsibility Environmental Responsibility Cont.Cont.

►Kyoto Protocol (Kyoto Accord)Kyoto Protocol (Kyoto Accord) Agreement formed in 1990Agreement formed in 1990 Carbon emissions are to be reduced 5% Carbon emissions are to be reduced 5%

by 2012by 2012 Canada may not reach this goal due to Canada may not reach this goal due to

the cost of businesses to reduce their the cost of businesses to reduce their emissionsemissions

►Why do you think there is such slow Why do you think there is such slow progress in businesses reducing progress in businesses reducing carbon emissions?carbon emissions?

Labour PracticesLabour Practices

► 5. Labour Practices5. Labour Practices – –

Employment Standards ActEmployment Standards Act►Sets out certain mandatory minimum conditions of Sets out certain mandatory minimum conditions of

employment (ex. hours of work, overtime, minimum employment (ex. hours of work, overtime, minimum wage, holidays, benefit plans, pregnancy and parental wage, holidays, benefit plans, pregnancy and parental leave etc.leave etc.

Pay Equity LegislationPay Equity Legislation► designed to prohibit gender pay discriminationdesigned to prohibit gender pay discrimination► research shows that women make 20%-30% less than research shows that women make 20%-30% less than

menmen

Labour Practices Cont.Labour Practices Cont.

► Privacy LawsPrivacy Laws Personal Information Protection and Electronic Personal Information Protection and Electronic

Documents Act – January 1, 2004Documents Act – January 1, 2004

This law requires businesses to explain what This law requires businesses to explain what personal information is required from employees personal information is required from employees or customers and why the need it.or customers and why the need it.

Businesses are accountable for all information Businesses are accountable for all information that they obtain. that they obtain.

What does this mean?What does this mean?

► Fair TradeFair Trade the practice of helping producers in developing the practice of helping producers in developing

countries bypass expensive middlemen so they countries bypass expensive middlemen so they can sell their goods in other countries for a fair can sell their goods in other countries for a fair profit.profit.

► TransFair CanadaTransFair Canada Non-profit organization that ensures companies Non-profit organization that ensures companies

claiming to be fair trade are properly certified claiming to be fair trade are properly certified and that the purchases are benefiting the and that the purchases are benefiting the producers and workers. producers and workers.