BY : NORAIDA RINA BT SALLEHUDDIN SITI HAZWANI BT AMAT YEDON NORIMA NURULAIN BT JAMALUDDIN

2010178815 2010390057 2010965609

 Definition = the branch of moral philosophy that

enquires into the principles that should morally guide choice in circumstances where the outcome of some possible course of action is not known. To understand how to identify, assess and manage ethics risks and opportunity effectively, there consists of:Ethics risk & opportunity within traditional enterprise risk management Ethics risk & opportunity identification & assessment

 This risk focused on issues from the perspective of their

financial impacts on shareholders and not on non financial impacts on stakeholders.

E.g Financial institutions have tended to focus on

financial risks, such as the bankruptcy of borrowers, or the risk of loss on loans and derivative investment.
However, this risk is not been as broad as now appears

appropriate because it focus on what important from shareholder perspective rather than a stakeholder perspective.

 Besides that, traditional risk management does

not go far enough to prevent loss of reputation and stakeholder support. By having that reason, The Sarbanes-Oxley Act of 2002 (SOX) effectively made risk management an integral part of good governance which is aimed at: Risk assessment and prevention
Requires companies to examine the effectiveness of their

ICS with regard to financial reporting CEO and auditors must report on and certify that effectiveness.

 This can be undertaken in 3 phase approach

(Figure 7.1, Pg 466). Phase 1.

Begin with the identification of the corporations major

stakeholders and their interests. Then, investigators should have a projected understanding of which stakeholder interest issues are sensitive & important, & why. Next, the investigators should confirm these projections by interacting with a representative stakeholder panel & important stakeholder groups.

 Phase 2: Investigators should consider their corporations activities & assess the risks of not meeting / the opportunities of exceeding expectations. Then, make comparisons of relevant input, output, quality, & other performance variables. Finally, the comparison should be reassessed from the perspective of potential impacts on the corporations reputation. Phase 3: Involves preparation of the reports generated by the process It should be given by: Stakeholder group Product / objectives Corporate objective Hypernorm value Reputation driver

 Once the organizations ethics risks & opportunities have

been identified, strategies need to be developed in order to reduce problems & to align activities with stakeholder interest. The tools & techniques are: Workplace ethics Employee Right Privacy & dignity Fair Treatment Healthy & Safe Work Environment Ability to Exercise Ones Conscience Trust & Its Important

Overall Benefit
International Operations Corporate Social Responsibility & Corporate Citizenship

 Since early 1907s, the rights of individual workers were

worthy of more respect relative to the rights of the employer. Some of the changed rights have become protected by new legislation, while others have been influenced by common law cases, union contracts and corporate practices that have been sensitive to stakeholder pressures. Table 7.5 Employee Right Themes in North America.

 The right of an employer : To search an employee To access any personal has become significantly information desired, or curtailed. To search and property Society now endorses the position that an individuals

personal rights are more important than those of an employer. It can be shown that , in a particular circumstances, the employers interest is :

Reasonable Legitimate Morally acceptable E.g: Placing a surveillance camera in a washroom not acceptable, unless theres a threat to life and death

 Workers must be allowed informed consent, which in: They have time to delibrate Have a free choice among reasonable alternatives Have adequate information to understand the problem and options In term of harassment, it is not only objectionable on

grounds of dignity and privacy, but also on grounds of fairness. Harassment = as any improper behavior directed at you that you find offensive & that the other person knew reasonably to have known would be unwelcome.

 Discrimination to be unethical & illegal if it involves

age, race, gender and sexual preference. It should be equal opportunity for employment and equal pay for equal pay for equal work especially for women and minorities. Workers should entitled to fair policies that include : Fair wages Fair hours Fair consideration for promotion and for downsizing

If dismissal is required, employers must follow appropriate

process towards their employees. People with disabilities are frequently accorded more than an equal chance for employment.

 This ethic refers to workers health and safety which is not

be unreasonably compromised. Workers must know what the risks are in advance Right-to-know
To ensure that organizations make information on hazardous

substances, processes, and related treatments readily accessible.

It is showing that companies respect for the preferences of

their worker
E.g : smoke-free workplace areas

: need for fitness & recreation on site daycare for children of employees

 Object to blind loyalty : the argument that a worker

just did what he was ordered to do will no longer provide the worker with protection in many jurisdiction, so the worker should exercise his own conscience.
Whistle blowing : create protection program to

encourage whistle-blowers to come forward within the organization.

 Protection program : an inquiry or allegation is

handled by an individual who has credibility with employees to undertake a speedy, fair investigation without revealing the name of the inquirer. Reports of inquiries received are made on an aggregate basis, without revealing the name of whistle-blowers. Also known as ethnics inquiry services.

 Sufficient trust of employees towards their leaders.

Willing to follow the instructions of a trustworthy or

ethical leaders.

 Willing to contribute to innovation, participate

wholeheartedly in restructuring sessions (ethical renewal), that even involve downsizing and may accept the necessity of shared work assignments or part time work contract with greater understanding (contingent workforce)

 Establish an Enforceable Code of Conduct

Initial and Ongoing Training Regular Communications

Anonymous Reporting Hotline

Enforcement/Action Rewarding Employees That Live the Culture

 Having an ethical culture is an important component to

running an effective business today. In fact, with the current state of legal and industry regulations not only is having an ethical culture a good idea, it is now practically a requirement. Of course to be able to get management, let alone employees, to support an ethical culture, there has to be benefits. There are a number of benefits of an ethical culture: Reduced risk Reduced fraud Reduced litigation Happier Employees = Improved bottom line

 The most difficult problems arise when the values of

the primary corporate stakeholders differ from those in the local foreign country. Differences noted in the media in recent years have included :
Approval of bribery b) Use of child labor c) Unhealthy labor conditions
a)

Treatment of women e) Support of repressive regimes through location of operations f) Lack of freedom of association g) Respect for environment h) Dealing with family members are expected
d)

 Corporation locate operations in a country because :

They want access cheap labor b) Lower environmental protection cost

a)

Lawsuits have also arisen in domestic jurisdictions where the offending companys stock has been traded because of investors and foreigners claim that management was negligent and should have issued warnings of heightened risk caused due to reduce safeguard.

 Facilitating payment : nominal in value, made to

speed up a result that would have happened anyway given enough time.
Bribe : larger than nominal and without which the

desired result would not occur.

 Both payment are intended to influence. Both are

problematic for reasons other than illegality, including :

Adding to the cost of the operation, good or service. b) Undermining the practice of purchasing based on merit in a country or firm. c) Risking possible negative consequences from stakeholder groups should they find out. d) impossibility of enforcing performance after bribes are paid
a)

Impossibility of assessing sales force effectiveness. f) Indicating to employees elsewhere in the multinational corporation, that bribes are acceptable in spite of what codes of conduct say. g) Indicating to seekers of bribes elsewhere that bribes are possible if they ask.
e)

 CSR is a form of corporate self-regulation integrated into a business model.

CSR policy functions as a built-in, self-regulating mechanism whereby business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of public interest into corporate decision-making, that is the core business of the company or firm, and the honouring of a triple bottom line: people, planet, profit.

 Corporate citizenship is a term used to describe a company's role in, or

responsibilities towards society. For this reason it is sometimes used interchangeably with corporate social responsibility, and in fact many companies have used it in this way to describe their social initiatives. However, many also take it to mean that corporations should be regarded as citizens within a territory - i.e. that corporations have citizenship of some sort This is usually based on the principle of corporate personhood, in that in certain legal jurisdictions, such as the United States, companies are afforded some of the same legal rights as individuals. Therefore, if corporations are 'artificial persons' under the law (e.g. they own their own assets, they can sue and be sued etc), then they can also claim some of the entitlements, privileges and protections of citizenship such as rights to free speech and political participation Although this debate remains very active (see legal controversies below), a more recent approach to corporate citizenship has also stressed the political role of corporations in protecting or inhibiting the citizenship rights of individuals (such as by taking over previously governmental roles and functions) or direct political activity such as lobbying and party financing.

 To develop a comprehensive plan or framework for CSR

an organization should consider its strategic goals, both as an operation and how it wishes to appear as a corporate citizen, the cultures its operations will encounter and the interest of its stakeholder, both in domestic and foreign theatres.

CSR is more than just making profit, provided jobs and had a donations policy. Stakeholders expect more. A responsible corporation is now expected to impact favorably on its stakeholder, to disclose those impacts and the strategies that gave rise to them. The sustainability Reporting Guidelines developed by the Global Reporting Initiative (GRI) a cooperative venture by many stakeholder, including professional accounting bodies offers the most comprehensive reporting framework and is instructive for those who are considering improving their CSR planning, delivery and reporting.

Measurement of CSR Performance. Eg. Used by EthicScan Canadas Corporate Ethics Monitors. Measure of fact are grouped into categories. (pg 471)
Anticipatory measures Quality assessment Reporting of CSR Internal reports focused on the programs performance objectives Public reports disclose performance on dimensions that stakeholders are interested in, eg environmental performance on health and safety performance

Audit Assurance of CSR Reports European initiatives in environmental protection, and through the International Standards Association (ISO), have had a driving influence on corporate behavior and have required public disclosure of environmental performance.
Professional societies take a greater interest in the provision of assurance for CSR reports. Future phase of ISO reporting may push currently registered firms beyond documentation of systems to the reporting and audit levels.

It is possible for a corporation to have company personnel audit CSR reports. Internal audit staff may be used, as may mangers for others divisions of a company.

Accountability to stakeholders thus managers and professional accountants will have to become involved as designers, preparers and assurance providers. Effective system of social accountability facilitate better mgt of organization's ethical culture and performance. Providing guidance to employees and others about the corporations intended CSR expectations will reduce the ethics risks and enable the taking of ethics opportunities in an orderly manner.