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Corporate Social Responsibility &

Prof. Dr. Mohammad Majid Mahmood
CSR & Ethics

In the business world, ethics is the study of
morally appropriate behaviors and decisions,
examining what "should be done

CSR & Ethics

Corporate Social Responsibility (CSR) is the
process by which businesses negotiate their role
in society

Corporate Social Responsibility

Organizations have obligations to society beyond their
economic obligations to owners or stockholders.

Social responsibility relates to an organizations
impact on society

Recent Evidence of CSR Interest
An Internet search turns up 100,000 plus
responses to CSR

Research Journals increasingly rate businesses
(and NGOs) on socially responsive criteria:
Best place to work
Most admired
Best (and worst) corporate reputation
Reasons for CSR Activities
CSR activities are important to and even
expected by the public
And they are easily monitored worldwide

CSR activities help organizations hire and retain
the people they want

CSR activities contribute to business
Businesses CSR Activities
give money or time or in kind to charity
Integrative philanthropyselect beneficiaries
aligned with company interests
Philanthropy will not enhance corporate
reputation if a company:
fails to live up to its philanthropic image or
if consumers perceive philanthropy to be
Corporate Social Responsibility (CSR)
CSR is the Sum of:

Economic Responsibilities (Make a profit)
Legal Responsibilities (Obey the law)
Ethical Responsibilities (Be ethical)
Discretional Responsibilities (Good corporate citizen)

CSR- two viewpoints
CSR is Inevitable
CSR is a Burden
Arguments for CSR
Not just profits!

Power vs. Responsibility

Stake holder relations
Arguments against CSR
From the shareholder point of view

Hindrance in maximizing profits

Choosing moderate strategy
Businesses need to balance economic, legal, and
social responsibilities in order to achieve long-
run success.

More generally, there is a relationship between
good social and good financial performance.
The word ethics is derived from the Greek word ethos
meaning character and Latin word mores meaning

Ethics defines what is good for the individual and for
society and establishes the nature of duties that people
owe to oneself and others in society

The principle of conduct professional ethics

A set of moral principles or values.

Why be ethical ?
Expectation of stakeholders
To prevent harm to general public
It pays to organization
A sense of trust among partners
Personal reason
Purpose of Ethics
Ethics are the guiding principles.
Ethics help make relationships mutually
pleasant and productive.
Ethics Create a sense of community and a sense
of belongingness to society.
Are Ethics Limited to Humans?
Are ethics limited to humans only or do they
extend to animals too?
pure vegetarianism
Likewise, issues of responsibility to the
environment have also been raised.
In other words, philosophy is not far from the
religious view of total non-violence
The Evolving Context for Ethics
Ethical absolutism - they adapt to us

Ethical relativism - we adapt to them

Emergence of a Global Business
Growing business need for integrative mechanisms such
Ethics reduce operating uncertainties
Voluntary guidelines avoid government impositions

Ethical conduct is needed in an increasingly
interdependent worldeveryone in the same game

Companies wish to avoid problems and/or be good
public citizens
Reasons for Businesses to Engage in
Development of a
Global Code of Business Ethics
Create the same opportunity for all businesses

Level the playing field

They are needed in an interconnected world
Ways Companies Integrate Ethics
Top management commitment in word and deed
Company codes of ethics
Develop, monitor, enforce ethical behavior
Seek external assistance
No discrimination should be done on the basis of caste,
color, and religion
The polices should be fair and transparent
Proper provision of safety should be provided by the
company to the employees.
There should be honesty, loyalty, and integrity in the
The companys resources should not be utilized by the
employees for their personal usage.
Ethical Principles
Information about employees personal lives, health, and work
evaluations should be kept confidential.

To neither give nor take any illegal payment, remuneration, gift,
donation, or benefits to obtain business or favors.

To comply with all regulations regarding preservation of the
Ethical Principles
Ethical Principles
Rights and equitable treatment of shareholders
Interests of stakeholders
Role and responsibilities of the Board
Integrity and ethical behavior
Disclosure and transparency
Advantages of Ethical Behavior
Brand image
Greater loyalty
Greater commitment of employees
Employees become more creative
Why have a Code of Ethics?
To define acceptable behavior
To promote high standards of practice
To provide a benchmark for self-evaluation
To establish a framework for professional behavior
and responsibilities










Are Ethics and Business
Are Ethics & Business Compatible?
In an extreme, business and ethics may seem

Earning profits may also be unethical
In Islamic finance, earning interest is unethical
Possession itself may be unethical in extreme sense

Lots of businesses may need violence of some degree:
E.g., Medical research

Where do we draw the line between business and
If the approach is subjective, then ethics lose their meaning as
everyone defines ethics to suit ones convenience
Ethics and Society
In fact, ethics serve society

Societies are built on support

All societies, whether those of humans or non-
humans, need mutual support, patience and care.
All religions, all ethics and morals spring from the
basic conflict between short term and long term:
If we limit ourselves to the short term:
Pleasures today, even at the cost of pains
tomorrow, sound like a good bargain
If we take long term into account:
Every such pleasure which is not lasting, should
be avoidable
Long term is how long:
Do we look at our lifetime?
Do we look at the lives of our children?
Issues of corporate ethics have taken the form of short-
termism vs. long-termism

If businesses are focused on long term stability and growth,
they are ethical:
Short term strategies compromise on longer interests

Warren Buffet has stressed on long term strategies

McKinsey survey shows that companies are focused on short
term strategies due to market pressures
No act is wrong or
right in itself, only in
terms of its
Acts are wrong or
right irrespective of
their consequences
Acts are wrong or
right depending on
what the morally
good person would
Do the best thing Do the right thing Be the most honest
Do what produces
the better outcome
The right thing may
not produce the best
Being good is a
matter of character
Ethical Theories
Why ethical problems occur in
1) Personal gains and selfish interests
2) Competitive pressure on profits
3) Business goals vs. personal values
4) Cross cultural contradiction
Typical issues of ethics in business
Bribery and kickbacks
Corporate crime, e.g. Price fixing
Employee issues
Product issues, e.g.. Patent and copyright violation,
product defects
Warren Buffets
Rule of Thumb for Ethical Conduct
I want employees to ask themselves (when
they are in doubt about whether a particular
conduct is ethical or not), whether they are willing
that their act appear the next day on the front
page of local paper to be read by their spouses,
children and friends.

[Berkshire, code of ethics]

To refresh the world in body, mind and spirit
To inspire moments of optimism through our
brands and our action
To create value and make a difference everywhere
we engage







Worlds largest liquid non-alcoholic
refreshments producer.

Headquarter in Georgia Atlanta, USA

Interbrands 2011 ranked coca cola the no.1
brand in the world and estimated its brand
value at $150 billions.

Established in 1964

Coca-colas top priority for the
employees are:
Health and safety

Training and development

Respect and rights protection
Employees Must:
Avoid conflicts of interest
Safeguard the company nonpublic information
Never attempt to accept bribe
Fairly deal with customer and suppliers
Protect the company asset
Must report violations

Establish objectives and targets
Work with local communities
Use recycle able packaging
Comply with local environmental laws

Providing education to youth in
underdeveloped areas of China

Improving their infrastructure



Encourage more active

physical and nutrition
education programs
Environmental Performance
Aspire to environmental excellence
Focus on environmental efforts on three area:
1. water use;
2. packaging; and
3. energy use & climate protection.

Tooth decay

Heat and light convert calcium benzoate

into benzene
Water use

9 liters of water to produce one liter of coke

water contamination

decreasing water level
More then 70 years in business
Employs more than 2000 Colombians.
5000 retailers.

Internal conflicts in Colombia
Despite the unstable environment ,coca cola provide
safe and stable economic opportunities.

Cola Cola provides its employees with:
Emergency cell phones
Transportation services
Secure Housing
Additional security for union leaders
24 hour hot line

Coca Cola Company is a killer
Hires agents to kill union leaders
Is Against the Unions
Case of Isidro Segundo Gil

The court ruled out that there was no solid
evidence that would prove that the Coca Cola
Company and the Colombian bottlers were
involved in the murders of the union members.

Still the company is facing a lot of issues

in third world countries
Those who can see the deepest into
the past can also see farthest into
the future
Thank you
for your kind attention!
Prof. Dr. Mohammad Majid Mahmood