3.4.4 Business Ethics

Corporate Social Responsibility (CSR)

🔗 Where businesses address social and environmental considerations as part of their normal business activities.

Social and environmental audits

• Employment indicators – How well a country treats its staff
• Human right indicators – How well the company performs on human rights issues
• The communities in which the business operates and the impact it has on the lives in the community
• Business integrity – How ethical the business is and its political contributions
• Product responsibility – Social impact of the product (E.G Health and safety issues)
• The environment – Energy, raw materials, waste produced, recycling.

📝 Examples

• Ethical sourcing of materials
• Paying workers, the Real Living Wage rather than the Minimum Wage
• Investing in renewable and sustainable energy
• Donating to or fundraising for charities aiding humanitarian causes

📌 Pros and Cons

• Good PR tool for business -> Portrays business as considerate and in touch with needs of local community -> Strengthens brand -> Increased customer retention
• Staff and management will be motivated knowing they are part of a greater cause -> Higher productivity/customer service and commitment
• Business will incur higher costs as a result (higher cost of ethically sourced materials, higher cost per unit with higher wages) -> May put upward pressure on prices -> Deters sales
• May be viewed as cynical marketing by the public -> May not result in positive PR considering how common CSR is in modern day society