The Role of Social Responsibility in Business Ethics

Introduction

Business ethics take into consideration responsibilities not just inside the workplace, but
also within the environmental, cultural, and social structures of communities. They also
deal with accountability issues involved in scientific research, consumer protections,
and the overall structure of any business or corporation.

Corporate social responsibility has been divided into four types that must be considered
simultaneously, including ethical, legal, economic and philanthropic responsibilities to
consumers and society.

Corporate Accountability

Corporate responsibility and accountability spreads into areas of ethics, legalities, and
regulations. It also has an impact on the economy and the environment. Economic
responsibilities refer to a business's focus on producing goods and services for
consumers. While every business wants to make a profit, such profits should be made
by following basic rules of society, which include ethical and legal considerations.

Businesses and corporations must operate within government, state, and local
regulations and guidelines. As such, ethical responsibilities may be exemplified through
codes of conduct, civil rights, and social and acceptable standards in many areas. Many
companies strive to go beyond legal requirements. Businesses that take care to ensure
workers are safe, treated with dignity and respect, and offered reasonable work hours
and wages are considered to be ethically responsible.
It is often a challenge to balance the financial demands of stockholders and the need to
enhance profits, with the well-being of employees and the environment. For example,
many drug or chemical companies that produce pesticides or pharmaceuticals may find
that the byproduct can be pollution, damage the surrounding environment, or present
potential danger to employees and even residents. Finding a middle ground in such
situations is not easy, and unfortunately, more often than not, businesses have been
much more concerned with the financial bottom line than with the safety or health of
people or the environment.

Companies that get involved in promoting human welfare or goodwill are considered to
be philanthropic in nature. Those that donate money, as well as time, training, and
expertise - especially in the realm of health and medicine - are an excellent example of
a business that takes its social responsibility very seriously.

Within the United States, the wealthy are expected to help those less fortunate, and that
goes for corporations, too. Businesses that donate to charities, participate in local
services, or otherwise support the community are often admired and looked up to. One
of the largest foundations in United States history was created by Microsoft founder Bill
Gates. Whether addressing AIDS or cancer research or anything in between,
corporations that give back to the community are considered socially responsible.

When it comes to values and social

responsibility, businesses and
corporations should not only take
care of their stockholders, but also be
able to benefit society in some way.
In some cases, companies do so
because consequences of ignoring
rules and regulations, or causing
damage to the environment, may
prove to be more damaging than
agreeing to follow them in the first
place.

As long as a corporation appears to care about its employees and the environment, the
general public is usually more than willing to consider them socially responsible, which
rewards the corporation with higher stock values, happier employees, and of course, a
better reputation.
Companies have a huge impact on their surrounding communities and environments.
One of the ways in which a company affects any community is through its approach to
their surrounding environment.

Community and Ethics

Growing concerns about the environment have encouraged many companies to make
changes in the way they design and produce goods for consumption. In the 1960s, the
public was made aware of the hazards of pesticides, not only to humans but also to the
environment. As a result, the U.S. Environmental Protection Agency was formed in
1970 and has taken a huge role in protecting the environment.

In recent history, many companies have experienced accidents or poor operational

procedures that have resulted in pollution and even death. Perhaps one of the most
famous of these is the disaster that occurred at the Union Carbide plant in India in the
early 1980s. Forty tons of a lethal chemical used to manufacture pesticides leaked from
a storage tank in India. The toxic cloud that formed immediately killed more than 3,000
people and injured hundreds of thousands more, many of whom later died due to the
exposure.

Union Carbide took immediate action and also shut down its plant in West Virginia.
Management sent medical supplies and help to India to assess the damage. However,
the accident had a great impact on the financial and public image of the company.
Negative publicity and diving stock prices were just the beginning. Eventually, Union
Carbide paid out nearly $500 million in damages, and almost $60 million in litigation
costs. The accident at Union Carbide served to increase awareness of how United
States-owned companies are operated and maintained in foreign countries. Since then,
most international companies utilize staff from the United States for day-to-day
operations and management.

Then there was the Exxon Valdez disaster off the coast of Alaska in 1989, when an oil
tanker ran aground and spewed more than 11 million gallons of crude oil into in Prince
William Sound. More than 800 miles of coastline was covered in oil. Countless
thousands - if not millions - of sea otters, birds and other marine life perished. The fish
population took years to even begin to recover from the contamination. Exxon
contributed $2 billion to the cleanup, but the company's image was forever damaged.

Such cases are only two of the examples of ways in which a company may have an
impact on the financial, social, and environmental aspects of society. They can be
considered ethical issues because they involve responsibilities and obligations not only
to stockholders, but also to society and the environment. Everyone, from consumers to
company executives, were affected by these issues.

There is no industry or company that does not, at least once, deal with an ethical
problem or an unethical employee. Conflicts of interest, product safety, advertising,
shareholders, and community all play a role in how a company is perceived by society.

What Would You Do?

Pretend for a moment that you have been named CEO of a drug manufacturing plant in
the Pacific Northwest. After the glow has worn off and you're ready to settle into your
position, you realize that your predecessors have left behind toxic chemical waste,
which is currently stored underground beneath the new parking structure. A new office
building for management personnel of the chemical plant was also built on the location
of the dump site five years ago.

After researching the situation, you discover evidence that, while the chemicals were
drained from their containers years earlier, the containers have begun to rust and are
still leaking. Unfortunately, the area where the containers have been stored is also in
direct contact with underground water supplies.

The water supply is siphoned off about 50 miles away to provide groundwater for
agricultural farming needs. Needless to say, it will cost a lot of money to deal with the
cleanup. Architects and engineers have agreed that the office building is going to need
to be destroyed in order to access the containers, and the soil in land surrounding the
office building decontaminated.

After discussing the issue with your board of directors and finance officers, you make
the decision to go ahead with the demolition and the cleanup within six months. Funding
the cleanup is going to be difficult, so you decide to offer stocks in the company to raise
the necessary funds. On the other hand, if you announce the reason for offering the
stocks, public outcry may sabotage the efforts to raise the funding necessary.

How would you deal with this dilemma? As the CEO, one who was aware of the dire
consequences of your find, are you morally obligated to disclose to the public?
Concerns in such a situation do not merely surround the reputation or financial success
of the company, but also involve the environment as well as consumer and community
safety.

Ethics Versus Success

In the above scenario, it is clear that some decisions in situations are more involved and
complicated than straightforward issues. Because people hold different values, it's often
difficult to say who is right or who is wrong. Remember that values were described as
standards or beliefs that encourage people to behave a certain way.

On the other hand, hundreds, thousands, or even millions of people may be affected by
decisions made by one or a handful of individuals more concerned with financial
success than with the environment or community safety.

No specific list exists that illustrates any corporation's responsibility to the environment.
Rules and regulations have been put into place in many industries to help provide
guidance and direction, and public policy takes into consideration concerns within
various fields of natural resources, conservation, and protecting the environment.

Environmental issues that affect businesses may include negligence and liability,
property rights, and basic ethical concepts such as rights and responsibilities. For
example, what of nuclear waste? While modern society is relying more and more on
nuclear energy, we have yet to determine a proper and guaranteed safe manner in
which to dispose of nuclear waste. In such cases, resolutions to such issues will be left
for our children or grandchildren to deal with.

When it comes to environmental responsibilities, debates will continue on moral

considerations as well as ethical concepts. For example, many of us might tend to lean
toward preserving natural environments because they are beautiful, while others are
allowed to be used and depleted because they offer nothing in the way of beauty,
recreation, or usefulness to mankind, per se.

Protecting endangered species is often a matter of relative opinion. For example, many
Americans are not so concerned about horned owls as they are with preserving the
habitat of the bald eagle. Because the bald eagle represents the American people, it is
common and understandable that a great affinity has been associated with the bird.
However, does that mean that another bird species is not as valuable?

Conclusion

Social responsibility involves walking a fine line between conservation and consumer
demand. Balancing environmental responsibilities with economic considerations is not
an easy task, but it's one that many corporations are struggling with well into the 21st
century.

Making social responsibility a part of the corporate environment is not always a matter
of black-and-white, but is filled with fields of gray. While many people believe the
decisions regarding business ethics and social responsibility should not be that difficult,
the implications and results of various decisions may have a huge impact on local
consumers, communities, and even global ramifications. Making positive choices and
decisions may also create a positive impact on business in the fields of productivity and
employee rights.