Importance of CSR and Business Ethics

As recently as a decade ago, many companies viewed business ethics only in terms of administrative compliance with legal standards
and adherence to internal rules and regulations. Today the situation is different. Attention to business ethics is on the rise across the
world and many companies realize that in order to succeed, they must earn the respect and confidence of their customers. Like never
before, corporations are being asked, encouraged and prodded to improve their business practices to emphasize legal and ethical
behavior. Companies, professional firms and individuals alike are being held increasingly accountable for their actions, as demand
grows for higher standards of corporate social responsibility.
Corporate Social Responsibility along with business ethics plays significant roles in the success and failure of the business. CSR plays
an important role in forecasting and decisions making. Kitzmueller (2008) focus on the CSR as an essential building block of the
firm's strategy.
CSR and Business Ethics
Corporate social responsibility (CSR), also known as corporate conscience, corporate citizenship, responsible business, sustainable
responsible business (SRB), or corporate social performance, is a form of corporate self-regulation integrated into a business model.
CSR is the continuing commitment by business to behave ethically and contribute to economic development while improving the
quality of life of workforce and their families as well as the local community and the society at large.
Business ethics (also known as Corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and
moral or ethical problems that arise in a business environment.
Business Ethics
Ethics are rules that help us tell the difference between right and wrong. They encourage us to do the right thing.
Ethical behavior is conduct that conforms to ethics—individual beliefs and social standards about what is right and good.
Values tell us what is important. They help us make decisions about right and wrong.
Morals are rules we use to decide what is good or bad.
Role of Ethics: Business ethics are based on society’s ethics and those of the people who work for and buy from them.
Some companies write a code of ethics, a document that explains specifically how employees should respond in certain situations.
Whistle-blowing happens when an employee informs officials or the public about an illegal or ethical violation.
Fraud is a crime of lying or pretending. Some businesses mislead consumers and trick them to buy their products or services. The
Competition Act 2002 bans such fraud and deceptive business practices and defines these as
• false or misleading advertising
• “bait and switch” selling
• double ticketing items for sale
Insider trading is buying or selling shares of a company based on confidential information. This type of trading is illegal.
Prosecution for insider trading falls under the provincial securities commissions. Punishment includes
• fining the individual(s) for up to $1 million
• turning over all profits from trading
• incarcerating the person(s) for up to two years
• being banned from future trading in securities
Why CSR?
 It improves financial performance
 Reduces operating cost
 Enhances brand image and reputation
 Increases customer loyalty and brand differentiation
 Helps in risk management
 To increase competitive advantage and profit
Activities of CSR
 Go Green
 Customization of products and consumer protection
 Clean environment
 Women empowerment
 Establishment of Foundations
 Pure and Safe water
 Corporate Philanthropy and supporting social causes
 Organize awareness campaigns
 Development of infrastructure
 Imparting education and building schools
 Building hospitals and providing medical care
 Right to workers
 Eradicate hunger and poverty

Arguments for CSR

 Changed public expectations of business
 Public image
 Addresses issues by using business resources and expertise
 Addresses social issues and allows business to be a part of solution
 Protects business’ self interest
ARGUMENTS AGAINST CSR
 Restricts the free market goal of profit maximization
 Business is not equipped to handle social activities
 Dilutes the primary aim of business
 Limits the ability to compete in global market
ISO 26000 – Social responsibility
 The International Standard ISO 26000, Guidance on social responsibility, provides harmonized, globally relevant guidance for
private and public sector organizations of all types based on international consensus among expert representatives of the main
stakeholder groups and so encourage the implementation of best practice in social responsibility worldwide.
 ISO 26000 will both add value to existing work on social responsibility (SR) and extend the understanding and implementation of SR
by:
 Developing an international consensus on what SR means and the SR issues that organizations need to address
 Providing guidance on translating principles into effective actions
 Refining best practices that have already evolved and disseminating the information worldwide for the good of the
international community.
 ISO 26000 will be published on 1November, 2010.
 It is intended for use by organizations of all types, in both public and private sectors, in developed and developing countries, as well as
in economies in transition.
 Will assist them in their efforts to operate in the socially responsible manner that society increasingly demands.
 It contains voluntary guidance, not requirements, and therefore is not for use as a certification standard like ISO 9001:2008 and ISO
14001:2004.
 It will help all types of organization – regardless of their size, activity or location – to operate in a socially responsible manner.
 It will be a powerful SR tool to assist organizations to move from good intentions to good actions.

CSR and Business Ethics are very closely related to each other, they complement each other, the existence of CSR cannot be imagined
without the existence of business ethics and similarly, we cannot imagine the existence of business ethics if the resources or something
that needs to be done by the government, then they will hardly take any heed of it.
“A corporate unit is not just a site where profits are made, and jobs are performed, it is also a culture-producing unit.”