ETHICS PROFESSION

“BUSINESS ETHICS, MORAL STANDARD, AND CORPORATE SOCIAL

RESPONSIBILTY”

Submitted By:
Kelvin Dharmawan 1642167
Wafa Eka 1642156
Tri Yana Sari 1642207
Suriani 1642142
Melvin Tantioso 1642170
Ora Chintya 1642038
Sakinah 1642166
Noviana 1642054

UNIVERSITAS INTERNATIONAL BATAM

BATAM

2019
 PREFACE

We would like thanks to God the almighty with his love and mercy we can
finish well a paper with entitled “BUSINESS ETHICS, MORAL STANDARD,
AND CORPORATE SOCIAL RESPONBILITY”. This paper was prepared to
fulfill one of the task from Ethics Profession.

We would like to take this opportunity to express our deepest gratitude to

all those who helped us complete the writing of this paper especially Mr. Kaelan,
SE.,BBA.,AK.,CA.,MBA as a professional ethics lecturer for the support and
motivation and also to our beloved friend who have contributed their ideas and
time to complete this paper.

Last but not least we hope that this paper can be useful for the future and
although this paper has advantages and disadvantage. We would like to hear any
suggestion and criticism from reader to further refine the writing of this paper so
that this paper will become a good paper in the future. Thank you.

Batam, 4th March 2019

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 TABLE OF CONTENTS

PREFACE ............................................................................................................... i

TABLE OF CONTENTS ...................................................................................... ii

CHAPTER I PRELEMINARY ........................................................................... 1

CHAPTER II THEORETICAL BASIS .............................................................. 2

2.1 Definition ................................................................................................. 2

2.1.2 Standard Moral ................................................................................... 3

2.1.3 Corporate Social Responsibility ........................................................ 4

CHAPTER III OBJECT OF DISCUSSION ...................................................... 6

3.1 Coca-cola profile .......................................................................................... 6

2.2. Coca-Cola’s CSR policies and reporting .................................................. 6

CHAPTER IV DISCUSSION AND ANALYSIS ............................................... 8

CHAPTER V CONCLUSIONS ......................................................................... 11

5.1 Conclusions ................................................................................................ 11

5.2 Solution ....................................................................................................... 12

BIBLIOGRAPHY ............................................................................................... 14

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 CHAPTER I

PRELIMINARY

Business ethics being part of the larger social ethics, always been affected
by the ethics of the era. At dissimlar times of the world, people, particulary
leaders of the world, were blind to ethics and morality which wew clearly
unethical to the suceeding period.

Importance of ethics in the business world is superlative and global. New

trends and issues arise on a daily basis which may create an important burden to
organizations and end customers. Nowadays, the need for proper ethical
behaviour within organizations has become crucial to avoid possible lawsuit. The
public scandals of corporate malfeasance and misleading practises, have affected
the public preception of many organizations (e.g., Enron, Arthur Andersen,
WorldCom etc.) It is widely known that advertising does not promote the
advancement of human moral sensibilty

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 CHAPTER II

THEORETICAL BASIS

2.1 Definition

2.1.1 Ethics Business

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 can arise in a business environment. It applies to all aspects of
business conduct and is relevant to the conduct of individuals and entire
organizations. These ethics originate from individuals, organizational statements
or from the legal system. These norms, values, ethical, and unethical practices are
the principles that guide a business. They help those businesses maintain a better
connection with their stakeholders.

Business ethics refers to contemporary organizational standards,

principles, sets of values and norms that govern the actions and behavior of an
individual in the business organization. Business ethics have two
dimensions, normative business ethics or descriptive business ethics. As a
corporate practice and a career specialization, the field is primarily normative.
Academics attempting to understand business behavior employ descriptive
methods. The range and quantity of business ethical issues reflects the interaction
of profit-maximizing behavior with non-economic concerns.

Interest in business ethics accelerated dramatically during the 1980s and

1990s, both within major corporations and within academia. For example, most
major corporations today promote their commitment to non-economic values
under headings such as ethics codes and social responsibility charters.

What is the important of ethics business?

The system of moral and ethical beliefs that guides the values, behaviors
and decisions of a business organization and the individuals within that
organization is known as business ethics. Some ethical requirements for

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businesses are codified into law; environmental regulations, the minimum wage,
and restrictions against insider trading and collusion are all examples of the
government setting forth minimum standards for business ethics.

The importance of business ethics reaches far beyond employee loyalty

and morale or the strength of a management team bond. As with all business
initiatives, the ethical operation of a company is directly related to profitabilityin
both the short and long term. The reputation of a business in the surrounding
community, other businesses and individual investors is paramount in determining
whether a company is a worthwhile investment. If a company is perceived to not
operate ethically, investors are less inclined to buy stock or otherwise support its
operations.

Companies have more and more of an incentive to be ethical as the area

of socially responsible and ethical investing keeps growing. The increasing
number of investors seeking out ethically operating companies to invest in is
driving more firms to take this issue more seriously.

With consistent ethical behavior comes an increasingly positive public

image, and there are few other considerations as important to potential investors
and current shareholders. To retain a positive image, businesses must be
committed to operating on an ethical foundation as it relates to treatment of
employees, respecting the surrounding environment and fair market practices in
terms of price and consumer treatment

2.1.2 Standard Moral

Moral standards are norms that individuals or groups have about the kinds
of actions believed to be morally right or wrong, as well as the values placed on
what we believed to be morally good or morally bad. Moral standards normally
promote “the good”, that is, the welfare and well-being of humans as well as
animals and the environment. Moral standards, therefore, prescribe what humans
ought to do in terms of rights and obligations.

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 According to some scholars, moral standards are the sum of combined
norms and values. In other words, norms plus values equal moral standards. On
the one hand, norms are understood as general rules about our actions or
behaviors. For example, we may say “We are always under the obligation to
fulfill our promises” or “It is always believed that killing innocent people is
absolutely wrong”. On the other hand, values are understood as enduring beliefs
or statements about what is good and desirable or not. For example, we may say
“Helping the poor is good” or “Cheating during exams is bad”

According to many scholars, moral standards have the following

characteristics, namely: 1) moral standards deal with matters we think can
seriously injure or benefit humans, animals, and the environment, such as child
abuse, rape, and murder; 2) moral standards are not established or changed by the
decisions of authoritative individuals or bodies. Indeed, moral standards rest on
the adequacy of the reasons that are taken to support and justify them. For sure,
we don’t need a law to back up our moral conviction that killing innocent people
is absolutely wrong; 3) moral standards are overriding, that is, they take
precedence over other standards and considerations, especially of self-interest; 4)
moral standards are based on impartial considerations. Hence, moral standards are
fair and just; and 5) moral standards are associated with special emotions (such as
guilt and shame) and vocabulary (such as right, wrong, good, and bad).

2.1.3 Corporate Social Responsibility

Corporate social responsibility (CSR, also called corporate sustainability,

sustainable business, corporate conscience, corporate citizenship, conscious
capitalism, or responsible business) is a type of international private business self-
regulation. While once it was possible to describe CSR as an internal
organisational policy or a corporate ethic strategy, that time has passed as various
international laws have been developed and various organisations have used their
authority to push it beyond individual or even industry-wide initiatives. While it
has been considered a form of corporate self-regulation for some time, over the
last decade or so it has moved considerably from voluntary decisions at the level

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of individual organisations, to mandatory schemes at regional, national and even
transnational levels.

Considered at the organisational level, CSR is generally understood as a

private firm policy. As such, it must align with and be integrated into a business
model to be successful. With some models, a firm's implementation of CSR goes
beyond compliance with regulatory requirements and engages in "actions that
appear to further some social good, beyond the interests of the firm and that which
is required by law". The choices of 'complying' with the law, failing to comply,
and 'going beyond' are three distinct strategic organisational choices. While in
many areas such as environmental or labor regulations, employers may choose to
comply with the law, or go beyond the law, other organisations may choose to
flout the law. These organisations are taking on clear legal risks. The nature of the
legal risk, however, changes when attention is paid to soft law. Soft law may incur
legal liability particularly when businesses make misleading claims about their
sustainability or other ethical credentials and practices. Overall, businesses may
engage in CSR for strategic or ethical purposes. From a strategic perspective, the
aim is to increase long-term profits and shareholder trust through positive public
relations and high ethical standards to reduce business and legal risk by taking
responsibility for corporate actions. CSR strategies encourage the company to
make a positive impact on the environment and stakeholders including consumers,
employees, investors, communities, and others. From an ethical perspective, some
businesses will adopt CSR policies and practices because of ethical beliefs of
senior management. For example, a CEO may believe that harming the
environment is ethically objectionable.

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 CHAPTER III
OBJECT OF DISCUSSION

3.1 Coca-cola profile

Coca-Cola started its business in 1886 as a local soda producer in Atlanta,

Georgia (US) selling about nine beverages per day. By the 1920s, the company
had begun expanding internationally, selling its products first in the Caribbean
and Canadian markets and then moving in consecutive decades to Asia, Europe,

South America and the Soviet Union. By the end of the 20thcentury, the company
was selling its products in almost every country in the world. In 2005 it became
the largest manufacturer, distributor and marketer of non-alcoholic beverages and
syrups in the world.Coca-Cola is a publicly-held company listed on the New York
Stock Exchange (NYSE).

2.2. Coca-Cola’s CSR policies and reporting

In 2007 Coca-Cola launched its sustainability framework Live Positively

embedded in the system at all levels, from production and packaging to
distribution. The company’s CSR policy Live Positively establishes seven core
areas where the company sets itself measurable goals to improve the business’
sustainability practices. The core areas are beverage benefits, active healthy
living, the community, energy and climate, sustainable packaging, water
stewardship and the workplace.

Coca-Cola has a Code of Business Conduct which aims at providing guidelines to

its employees on – amongst other things – competition issues and anti-
corruption.The company has adopted international CSR guidelines such as Global
Compactand Ruggie’s Protect, Respect and Remedy Framework (Ruggie’s
Framework),but these guidelines do not seem to be integrated into the Code of
Business. However, these CSR initiatives are included in other activities or
policies of the company. For instance, the UN Global Compact principles are
cross-referenced in the company’s annual Sustainability Reviewsand Ruggie’s

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Framework is partly adopted in the company’s ‘Human Right Statement’.After
the conflict in India, in 2007 Coca-Cola formed a partnership with the World
Wildlife Fund (WWF)and became a member of the CEO Water Mandate, as water
is one of the company’s main concerns.

Every year Coca-Cola publishes a directors’ report denominated ‘The Coca-Cola

Company Annual Report’; the last one was published in March 2011 and
comprises the company’s activities during 2010.In this report there is a small
section dedicated to CSR and it includes a brief description of the initiatives in
community development and water preservation that the company has developed.
Since 2001, Coca-Cola also annually publishes a separate report devoted to CSR
called ‘The Coca-Cola Company Sustainability Review’. These reviews, which
are published every two years, are verified and assured by a third party, the
sustainability rating firm FIRA Sustainability Ltd.This verification provides
‘moderate assurance’ on the reliability of the information reported by Coca-Cola.
Both reports – the annual company review and the sustainability reports – are
elaborated based on the GRI G3 guidelines, which were adopted by the company
in 2001.Due to its relevance to Coca-Cola’s business, the company also annually
reports on the progress of the water stewardship programme’s targets.

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 CHAPTER IV
DISCUSSION AND ANALYSIS

Two years before the water conflict in India in 2003, Coca-Cola adopted
the GRI Guidelines and started reporting on sustainability. By 2003, the company
had already experienced a few CSR-related conflicts in other parts of the
world.However, none of them had the grave consequence of a loss of trust in the
company and its products by consumers and the public in general.

According to Pirson and Malhotra, the main reason why this controversy
ended so badly for Coca- Cola lies in its response to the problem.Coca-Cola
denied having produced beverages containing elevated levels of pesticides, as
well as having over-exploited and polluted water resources.By denying all claims
and trying to prove its integrity, instead of demonstrating concern towards the
situation, Coca- Cola failed to regain consumers’ trust.The Indian population
viewed Coca-Cola as a corporate villain who cared more about profits than public
health.In comparison, previous conflicts experienced by the company in the US
and Belgium were better handled because it included stakeholder engagement in
its strategy.

It appears that the company became aware of its mistake after the
controversy had been ongoing for a couple of years. In 2008 Jeff Seabright, Coca-
Cola’s vice president of environment and water resources, recognized that the
company had not adequately handled the controversy. He acknowledged that local
communities’ perception of their operation matters, and that for the company ‘(...)
having goodwill in the community is an important thing’.

Although Coca-Cola still denies most of the allegations, the reputational

damage experienced after the controversy in India pushed Coca-Cola to take
damage-control measures. Those measures at first consisted of statements to
confirm Coca-Cola’s integrity. For example, Coca-Cola dedicated a page in the
Corporate Responsibility Review of 2006 to address the controversy. The

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statement consisted mainly of providing information supporting its good practices
and water management of its operations in India.But this statement did little to
combat the declining sales and increasing losses exceeding investments.

Coca-Cola gradually changed its strategy to include damage-control

measures that addressed the Indian communities’ grievances. In 2008 the
company published its first environmental performance report on operations in
India, which covered activities from 2004 to 2007.It also created the Coca-Cola
India Foundation, Anandana, which works with local communities and NGOs to
address local water problems.But perhaps the most outstanding change of strategy
by Coca-Cola consisted of launching various community water projects in India.
An example is the rainwater harvesting project, where Coca- Cola’s operations
partnered with the Central Ground Water Authority, the State Ground Water
Boards, NGOs and communities to address water scarcity and depleting
groundwater levels through rainwater harvesting techniques across 17 states in
India. These techniques consist mainly of collecting and storing rainwater while
preventing its evaporation and runoff for its efficient utilisation and conservation.
The idea behind this is to capture large quantities of good quality water that could
otherwise go to waste. By returning to the ecosystem the water used in its
operations in India through water harvesting, the company expected that this
project could eventually turn the company into a ‘net zero’ user of groundwater
by 2009.In the 2012 Water Stewardship and Replenish Report, Coca-Cola stated
that its operations in India have ‘achieved full balance between groundwater used
in beverage production and that replenished to nature and communities – ahead of
the global target’.

It appears that the controversy in India was a learning experience for the
company, and that it motivated the company to adopt a more proactive CSR
policy on a global scale that focuses on water management. In June 2007, Coca-
Cola implemented a water stewardship programme and committed itself to reduce
its operational water footprint and to offset the water used in the Company’s

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products through locally relevant projects.To achieve those commitments Coca-
Cola established three measurable objectives:

1. (1) Reducing water use by improving water efficiency by 20% over 2004
levels by 2012. The latest data available from 2010 shows a 16%
improvement over the 2004 baseline.
2. (2) Recycling water through wastewater treatment and returning all water
used in manufacturing processes to the environment at a level that
supports aquatic life and agriculture by the end of 2010. By September
2011, the progress observed concerning this target was 96%.
3. (3) Replenishing water used by offsetting the litres of water used in
finished beverages by 2020 through local projects that support
communities and nature (i.e. watershed protection and rainwater
harvesting).Currently, Coca-Cola reports that it holds a global portfolio of
386 community water partnerships or community-based replenish
projects.By 2011, about 35% of the water used in finished beverages was
replenished.

It is noteworthy that Coca-Cola publishes, in addition and separate to the

sustainability reports, an annual water report. In these reports the company
publishes assessments of and the progress in its water initiatives. Some of the
assessments are made by the Global Environment & Technology Foundation, an
American NGO experienced in facilitating the creation of public-private
partnerships.

Also in 2007, Coca-Cola entered into a partnership with WWF. Its core
objectives are increasing understanding on watersheds and water cycles to
improve Coca-Cola’s water usage, working with local communities in various
locations worldwide, and developing a common framework to preserve
watersources.Finally, and also in the same year, the company became a member
of the public-private initiative CEO Water Mandate, which is a public-private

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initiative that assists companies in the development, implementation and
disclosure of water sustainability policies and practices.

CHAPTER V
CONCLUSIONS

5.1 Conclusions

In conclusion, corporate social responsibility initiatives can mainly enhance its

global brand reputation in Coca-Cola. After experiencing some conflicts and
dilemma in India and US, Coca-Cola began to implement corporate social
responsibility to maintain its reputation and customers. Although the conflicts
affect the corporation image to some extent, the company finally improves its
brand image and reputation through a series of CSR initiatives. Moreover, the
company devoted to the global environment, it reflects the positive attitude toward
the society and world. Coming with these corporate social responsibility
initiatives, Coca-Cola not only makes contribution to the society, but also
enhances its corporation reputation and image.

If Coca-Cola has successfully applies its corporate social responsibility, it would

attract a great number of consumers to accept its brand. Therefore, after the
experience of some conflict, the CSR initiatives of the company increase rapidly,
facilitating to improve brand reputation, which would raise sales volume and
benefit. In a long term period, Coca-Cola believed that the corporate social
responsibility initiatives would make a significant role in business success. Also,
there still some drawbacks by using CSR strategies, for instant, the expenses of
CSR initiatives would damage the benefit of shareholders. However, the
advantage of CSR initiatives would overweight the disadvantage toward society
and company.

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5.2 Solution

The first recommendation is related about Coca-Cola and customer relationships

in all segmentations and corporate future it depends on this stakeholder part.
Before every organizational step, Coca-Cola must examine it carefully
movements considering the potential behaviors of customers.Ethical behaviors are
coming first in this case because a company has unethical acts in a particular area,
the results may be too harmful to the social and physical environment.The main
purpose in this part must be creating and restructuring the ethical understanding
and objectives to show customers, the company is staying in the line of ethics and
its global rules.

Considering the financial power and 5$ billion dollar investment plan to India
until 2020, changing their ethical structure and creating the new brand image with
ethical concerns will be more effective than old ethical and strategic plans when
considering the current environmental issues about Coca-Cola.If these types of
global companies confront with communities and government, consequences will
be crucial for them. In this case to minimize the harmful effects of unethical
behaviors re-analyzing and re-building the ethical understanding of Coca-Cola
will be the game changer for themselves and world.

An ethical company doesn’t control itself only. It's also trying to manage the
other participants of a company like suppliers because corporate ethics is a
collective theory that needs all internal and external participant to serve
company.In example controlling and setting some valid rules against external
stakeholders of Coca-Cola is a necessary application.Controlling the bottle
producers and setting some rules that have perlocution power will be too effective
for completing ethical theory.Suppliers part can be a small step for Coca-Cola
because it's required to spread all of the external resources of the company.

Governments are the protector of society and enforcer of the law.A global
company has a problem with community governments needs to do its protective
duty.In this situation, the company must prepare the necessary applications

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because struggling with society and government devastates corporate image and
ethical structure in specific regions and if this unethical behavior continues the
results spread over the world and situations became a crucial problem for the
company.Coca-Cola must re-prepare the all of the required regulations for not
having this problem again.

Likewise, research and develop ethical practices in this country, working with
independent NGO’s which doesn’t have close relationships with some political or
private foundations, can help to Coca-Cola build new and respectful reputation
against to the complainants. Also, it can create a chance to help examine itself for
ethical mistakes of Coca-Cola objectively.To sum up being ethical and respectful
to the ethical lines won’t be enough for firms, showing this to the society will help
to create the link between society and company, if it can happen this situation will
reach to the main purpose of ethics to happiness.

Making legal actions against to the NGO’s like CSE won’t help to solve this
ethical issue for Coca-Cola.Instead, of this movement, cooperation with CSE will
be more effective for solving this argument.Making partnerships with these
NGO’s with the purpose of restructuring the ethical applications of the company
will create a new image and help to recover these problems.

As a result, our world resources are decreasing dramatically and controlling this
issue became the most important factor in our world. At this point, global
companies have an important role in controlling this problem because they have a
significant effect on the environment.At this point ethics and it’s applicable
theories are the most influential factors to create this understanding. As stated
previously ethics became and obligation for our world and application of ethics
will increase the understanding of moral theories in world.

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 BIBLIOGRAPHY
https://philonotes.com/index.php/2018/06/08/moral-standards/
https://www.investopedia.com/ask/answers/040815/why-are-business-ethics-
important.asp
https://en.wikipedia.org/wiki/Business_ethics
https://en.wikipedia.org/wiki/Corporate_social_responsibility
coca cola ethical analysis india journal

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