The task of this paper is to construct an argument that is in support of Business Ethics and Corporate Social Responsibility in support

with the following statement: Corporate Social Responsibility is an expression used to describe what some see as a companys obligation to be sensitive to the needs of all its stakeholders in its business operations. The principle is closely linked with the imperative of ensuring that these operations are sustainable i.e. that it is necessary to take account not only of the financial and economic dimensions in decision making but also of the social and environmental consequences that is Sustainable Development
Source: Ethics and Governance Assignment

The Business for Social Responsibility1 has defined Corporate Social Responsibility (CSR) as, achieving commercial success in ways that honour ethical values and respect people, communities, and the natural environment. CSR also means identifying and addressing legal and ethical expectations society has for businesses, and making decisions that would balance the needs and claims of all stakeholders involved. Another definition of CSR found in Johson, Scholes and Whittington stated that, Corporate Social Responsibility is concerned with the ways in which an organisation exceeds the minimum obligations to stakeholders specified through regulation and corporate governance. (Johnson, Scholes and Whittington 2006, p.191) Stakeholders are defined in Johson, Scholes and Whittington as, those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn, the organisation depends. (Johnson, Scholes and Whittington 2006, p.179)

When dealing with stakeholders it is essential to differentiate between contractual stakeholders, such as customers, employees and suppliers who have a legal relationship with an organisation, and community stakeholders, such as local communities, consumers and pressure groups. This group does not have protection via the law, therefore the CSR policies of organisations would be predominantly important to these stakeholders. CSR (See Appendix 1) is viewed as a set of policies, practices and programs that are integrated into business operations and decision-making processes throughout the company and includes responsibility for current and past actions as well as future impacts. The issues that represent a companys CSR focus vary by business, by size, by sector and even by geographic region. In its broadest categories, CSR typically includes issues related to business ethics, community investment, environment, governance, human rights, marketplace and workplace. CSR is an effective and growing process that can generate unlimited benefits, by publicising your CSR activities, you ensure that your customers, suppliers and local community are aware of the good that you are doing. In this way, the good news would lend to itself. It is an effective tool for long term success, your CSR actions should encourage your contractual and community stakeholders to be involved with your organisation. Therefore, effective CSR could enable differentiation from your competitors, new products and services and a strong brand that everyone would prefer to be a part of. CSR has two dimensions, the first is concerned with the internal policies of companies, internal dimension2 and the second is concerned with the external environment in which companies operate, that is, the external dimension3. As with all other business functions, CSR too has business ethics which it has to follow, these business ethics issues are going to be discussed next in this paper.

In the increasingly changing marketplaces of the 21st century, the demand for more ethical business processes and actions is increasing. Simultaneously, pressure is applied on the industry to improve business ethics through new public initiatives and laws. In some cases, corporations have redefined their core values in the light of business ethical considerations (e.g. BP's beyond petroleum environmental tilt). The paper now moves on to discuss some approaches to business ethics and ethical decision making.

The utilitarian approach to ethical decision making, focuses on taking the action that will result in the greatest good for the greatest number of people. Considering our example of employing low-wage workers, under the utilitarian approach you would try to determine whether using lowwage foreign workers would result in the greatest good.

(http://www.poznaklaw.com/articles/bizethics.htm)

For example, if you use low wage foreign workers in response to price competition, you might retain your market share, enabling you to avoid laying off your U.S. employees, and perhaps even allowing you to pay your U.S. employees higher wages. If you refuse to use low wage foreign workers regardless of the competition, you may be unable to compete. This could result in layoffs of your U.S. workers and even your foreign workers, for whom the relatively low wages may be essential income. On the other hand, using low wage workers may tend to depress the wages of most workers, thus reducing almost everyones standard of living and depressing their ability to purchase the very goods you and others are trying to sell.
Source: http://www.poznaklaw.com/articles/bizethics.htm

The moral rights approach concerns itself with, moral principles, regardless of the consequences. Under this view, some actions are simply considered to be right or wrong. (http://www.poznaklaw.com/articles/bizethics.htm)

The Universalist approach to ethical decision making has two steps. First, you determine whether a particular action should apply to all people under all circumstances. Next, you determine whether you would be willing to have someone else apply the rule to you. Under this approach, for example, you would ask yourself whether paying extremely low wages in response to competition would be right for you and everyone else. If so, you then would ask yourself whether someone would be justified in paying you those low wages if you, as a worker, had no alternative except starvation. (http://www.poznaklaw.com/articles/bizethics.htm)

Having talked about CSR and Business Ethics, the paper now moves on to identify functional distinctions between the two. Corporate ethics has over time, been developing into two separate, but perhaps not exclusive fields. These fields were mentioned previously, Corporate Social Responsibility (Section 2.0) and Business Ethics (Section 3.0). While it may be a possibility that BE and CSR programs differ from one organisation to another the primary goal of BE programs is to prevent harm while the objective of CSR initiatives is to do well. In order to facilitate an analysis, the following tables would help in facilitating an analysis of how BE and CSR function differently:

Reactive or Proactive Strategy Another distinction between BE and CSR can be drawn from the strategies that each approach deploys. For example, ethics officers focus on responding to hotline calls: employee questions and concerns. Therefore, they become involved in resolving a problem only after it has been identified. While this reactive strategy does little to prevent a problem, it can succeed in minimizing the risk of more serious problems. Resolving a problem can, however, lead to the development and implementation of processes and procedures to help avoid the problems reoccurrence. CSRs approach involves the use of proactive strategies, like creating new business practices to initiate change. Ironically, by sticking its neck out in the support of certain causes or values, a CSR company may actually increase rather than minimize its risk, depending upon which causes or values it elects to support. Many companies, like the Body Shop and Ben & Jerrys, have also used CSR as an effective marketing tool to enhance their reputations. Several critics have reported that companies, including the examples cited above, have used CSR programs as a means to effectively deflect criticism or public outcry when they do err.
Source: www.business-ethics.org

Identification of Stakeholders Most business ethics programs are focused internally by making employees responsible for their behaviour with regard to other employees, as well as with respect to the companys other primary stakeholders. Codes, therefore, often identify areas of potential harm in the immediate relationship a company has with shareholders, suppliers and customers. For example, a code might espouse the principles of honesty and fairness in contract negotiations because their absence would increase the possibility of harm to the relationship. The CSR approach typically defines stakeholders more broadly and is more concerned with the companys responsibility to the community. Such an approach recognizes a contractual bond between business and society, whereby society provides essential resources to businesses in exchange for social benefits.
Source: www.business-ethics.org

Extent of Responsibility Once a company has identified its stakeholders, the extent of responsibility it assumes for these stakeholders varies according to whether a BE or CSR strategy is employed. A company might implement a BE program to prevent such employee problems as abuse by managers, sexual harassment and discrimination. Few companies develop ethics programs with elements that take responsibility for doing good on behalf of their employees, like reviewing family benefits or addressing unfair pay scales. Nikes dealings with its international vendors provide an example of corporate action with regard to the different levels of responsibility that BE and CSR provide. When problems surfaced regarding the abuse of employees and unfair wages in the factories producing Nike athletic shoes, human rights activists pressured Nike to assume responsibility for the employees of its independent contractors. At that time, Nikes contractors agreed upon a code of conduct and the monitoring of health and safety standards. Auditing firms were then brought on board to monitor such issues as unfair wages, work schedules and child labour. Hence, Nike essentially accepted responsibility for preventing harm to any worker associated with manufacturing its products. As pressure and publicity increased through the mid-1990s, Nike extended its activities. For example, the code, itself, was tightened to surpass local laws to promote better working conditions with restricted working hours. As part of its monitoring and improvement program, the company undertook cultural sensitivity training for its contractors expatriate supervisors. And in Pakistan, Nike took a creative approach to the problem of child labour in factories producing soccer balls by paying to educate those children rather than letting them work. Nike thereby broadened its level of responsibility beyond merely preventing harm to promote child education and better working conditions in the international communities in which it operates.
Source: www.business-ethics.org

Having seen the BE and CSR functions, the paper now goes on to briefly highlight the business and moral case for CSR. The business case for corporate social responsibility, it is about building and retaining trust with customers, attracting and retaining talented staff, and establishing a good corporate reputation that supports positive relationships with suppliers, government and regulators (See Appendix 2). It would rest on issues such as Human Resources, Risk Management, Brand Differentiation and Licenses to operate. The moral case of CSR can be linked with the business case in that the moral case seeks to add value whilst making profits. The moral

case is co-dependent with the business case in that it needs the infrastructure that society provides, source of consumer base and also its consumer base. The paper, having spoken on BE and CSR, and the co-dependency of the business and moral case, now moves on to identify some ethical theories that would be applicable to the case of an argument for CSR. Hobbes' political theory is best understood if taken in two parts: his theory of human motivation, Psychological Egoism, and his theory of the social contract, founded on the hypothetical State of Nature. According to Hobbes, Human macro behaviour can be aptly described as the effect of certain kinds of micro behaviour, even though some of this latter behaviour is invisible to us. So, such behaviours as walking, talking, and the like are themselves produced by other actions inside of us. And these other actions are themselves caused by the interaction of our bodies with other bodies, human or otherwise, which create in us certain chains of causes and effects, and which eventually give rise to the human behaviour that we can plainly observe. From Hobbes point of view, we are essentially very complicated organic machines, responding to the stimuli of the world mechanistically and in accordance with universal laws of human nature.
Source: http://www.iep.utm.edu/s/soccont.htm

According to this argument, morality, politics, society, and everything that comes along with it, all of which Hobbes calls commodious living are purely conventional. Prior to the establishment of the basic social contract, according to which men agree to live together and the contract to embody a Sovereign with absolute authority, nothing is immoral or unjust - anything goes. After these contracts are established, however, then society becomes possible, and people can be expected to keep their promises, cooperate with one another, and so on. The Social Contract is the most fundamental source of all that is good and that which we depend upon to live well. Our choice 7 is

either to abide by the terms of the contract, or return to the State of Nature, which Hobbes argues no reasonable person could possibly prefer.

Kant was a great philosopher who believed in the power of reason. He applied reason to many areas of philosophy, including the philosophy of art, maths and ethics. He is renowned for his incredible theory of morality. Kant believes that we can only have morality based on reason because morality based on experience is inconsistent and based on desires. He presses that we should act only according to that maxim by which you can at the same time will that it should become a universal law. By this, he meant that we could discover what was morally good and bad by taking an action, repeating it over and over again, and then observing the repercussions.

For example, take the action of lying. If everyone was to lie all the time in society, no one would ever trust anyone, and society would not function well at all. So, Kant says that a lie is an offence to mankind generally because it erodes the contract of truthfulness in society. On the other hand, telling the truth must be morally good because if everyone told the truth, then everything could be believed, and this makes things MUCH easier. Therefore, according to Kant, "truthfulness...is the formal duty of an individual to everyone, however great may be the disadvantage accruing to himself or another".
Source: http://platosheaven.blogspot.com/2006/01/kants-ethics-of-duty.html

Every theory in philosophy has a problem and the problem with this one is this. Suppose that a murderer was after your mother and he appears at your door one day with a large shiny kitchen knife. He asks you if your mother is home. You have read Kant's Ethics of duty and remember that truth telling is morally good. So you tell the murderer that your mother is in... Is this right? Kant would have led the murderer to his mother! But there are other things to consider. What if Kant did decides to lie about the whereabouts of his mother: "She's out right now come back later". Meanwhile his mother escapes out the back window and runs into the robber outside. We can guess what happens after this. So maybe Kant should have told the murderer the truth because then his mother would have known that he would, and then crept outside the window.

Source: http://platosheaven.blogspot.com/2006/01/kants-ethics-of-duty.html

Kant's view sides with deontic moral philosophy, rather than Consequentialist. Consequentialist theories dictate that we should act in ways that will produce the best consequences. So, a Consequentialist would not lead the murderer to his or her mother, because this would probably lead to an undesired result.

The aim of Aristotle's logical treatises (known collectively as the Organon) was to develop a universal method of reasoning by means of which it would be possible to learn everything there is to know about reality. Thus the categories proposes a scheme for the description of particular things in terms of their properties states and activities. On interpretation Prior Analytics and Posterior Analytics examine the nature of deductive inference outlining the system of syllogistic reasoning from true propositions that later came to be known as categorical logic. Though not strictly one of the logical works the physics contributes to the universal method by distinguishing amount the four causes which may be used to explain everything with special concern for why things are the way they are and the apparent role of chance in the operation of the world. In other treatises Aristotle applied this method with its characteristic emphasis on teleological explanation to astronomical and biological explorations of the natural world.
Source: http://www.philosophypages.com/hy/2n.htm#demo

The social contract can be tracked back to Plato and Aristotle. However recent arguments and research on the social contract argue that organisations have to earn and maintain a lisence to operate. This lisence to operate reflects more than a commitment to economic essentials. However the approach does not ignore these economic issues. Now that the paper has identified BE, CSR and Theorists, in order to back what was said by the speaker, this argument now moves on to talk about sustainable development. Sustainability can be defined as, development that meets the needs of the present without compromising the ability of future generations to meet their own needs (Brundtland Commission, 1987)

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Another definition is, aligning an organisations products and services with stakeholders expectation, thereby adding economic, environmental and social value. (Pricewaterhouse Coopers, 2003) Sustainable development involves dimensions, one that this paper is going to discuss is Triple Bottom Line. Triple Bottom Line can be defined as, Creating measures and reporting on how a business impacts economic, environmental and social issues. (Andrew W. Savitz, What U.S. Environmental Lawyers need to know about Sustainability.) The bottom line of most organisations lies as profits, the triple bottom line encompasses economic, social, and environmental concerns. This however has been problematic in implementation over time. This is so because, Explanations of what is meant by triple bottom line do not suggest an equal weighting being given to the three elements. (Birch, 2001) For a major oil company, the following statement followed under the heading of sustainable development, BP is committed to socially, environmentally and economically responsible business. This means maximising profits in order to create wealth and sustainable jobs, always intending to have a positive social and environmental impact. (Birch, 2001: 62) Within the charter by BP, no attempt is made elsewhere to address the tension of issues between profits and social and environment commitments. The majority of this argument has centred around BE and CSR, and also the ethics and theorists involved in CSR. There are however, some who are against CSR, one such individual is Milton Friedman. He advocated that the only social responsibility of businesses is to increase economic profits and not the other aspects of the triple bottom line approach, which are social and environmental interventions. Friedman argued against CSR on three fronts these are:

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The first is an economic criticism with ethical undertones. if corporations are required to engage in corporate philanthropy e.g. making a donation to a charity school or hospital these acts will distort allocative efficiency. Friedman argued that corporations are responsible for using shareholders funds in profitable ways in legally acceptable ways nothing more. Thus the only form of corporate philanthropy that Friedmans argument would accept is where it could be shown that a donation or good deed would improve a companys profitability in ways superior to alternative investment opportunities.
Source: Business Ethics and Values, 2006 p.311

The second of Friedmans criticisms draws upon both ethics and political philosophy. It is that it is undemocratic for corporations to use shareholders funds to support charities or other good causes. Any such donation can only come at the expense of lower individuals higher prices or lower wages or a combination of all three.
Source: Business Ethics and Values, 2006 p.311

The third and final criticism by Friedman was a philosophical one. It was that corporations cannot possess responsibilities because corporations are social constructs brought into existence by societies and passing of laws. Without legal and social devices corporations could not and would not exist. In Friedmans terms only individuals can have responsibilities not corporations.
Source: Business Ethics and Values, 2006 p.312

In conclusion, this paper has dealt with CSR, BE, the theorists and theories involved in CSR. This paper has lent itself to the argument that was made by the speaker which was identified at the beginning of the paper. It has identified norms of 12

CSR, the different ways in which the construct of CSR has changed over time. This paper has also made reference to and of the business and moral case that are involved in CSR. To promote a significant level of argument for CSR, the paper introduced Milton Friedman and showed his views on CSR.

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Business for Social Responsibility (BSR) is a global organisation that helps member companies achieve commercial success in ways that respect for, ethical values, people, communities and the environment. Through socially responsible business policies and practices, companies can achieve viable, sustainable growth that benefits stakeholders as well as stockholders.
2

Internal dimension comprises human capital, health and safety and restructuring. Internal CSR strategies need to be based on an integrated and balanced approach incorporating a comprehensive set of policies, practices with regard to economic and social factors.
3

The external dimension of CSR involves: local communities, business partners, suppliers and consumers, human rights and environmental concerns.