BUSINESS ETHICS AS

FOUNDATION OF CSR

Ronald P. Palado
Business ethics is an oxymoron, a phraseology that
produces an effect by self-contradiction.

Like: silent scream, virtual reality, peace force, living dead

etc.

In the traditional sense, people get into business to

maximize profit, while ethics deals with anything other than
profit. Ethics, in the field of philosophy, is a specialized
study of what is right or wrong.
However, there is a dilemma about “doing the right thing,”.
The one who abides the moral principles is usually poorer
and the crook is richer.

Business ethics is a form of applied ethics that examines

moral rules, theories, and principles in a business context.

It is a normative discipline, whereby particular ethical

standards are advocated and applied. It makes a specific
judgement about what is right or wrong.
Executives and managers are caught in a balancing act
between the ideal and practical.

Role of ethics in management.

Ethical management in the work place.

covers those ethical issues arising from employee-
employer relationship, such as the rights and obligations
justly owed between them.
Ethical management regarding intellectual property
rights.
here we take into account the issues regarding
copyright, patent and trademark infringement, business
intelligence, employee trading, leaking of information or
industrial espionage.

Ethical management in sales, advertising, and

marketing.
business ethics and social responsibility deal with
the issues on price fixing, moral dimension of the antitrust
law, bait an switch, viral marketing, and pyramid scandal,
etc.
Ethical management in production.
companies are obligated by law and ethics to ensure
that products and production processes do not cause harm.

Ethical management in finance, accounting, and

auditing.
the issues comprise executive compensation,
manipulation of financial markets, bribery, facilitation
payments, fraud, and false reporting.
Business ethics can become a philosophy of management – if
the practitioner chooses to do so. Ethics is personal while CSR
in social and corporate, it is a practical guidepost in one’s private
and professional life. Ethical behaviour of a corporation depends
to a large extent on the moral conviction of certain degree
depends on the personal ethics of the CEO.

The biggest challenge is to actually implement and sustain

ethical management.

Ethical management and CSR are dedicated to the mutual

interest existing between business growth and social
development.
Revenues are not meant to fill up the pockets of those who
run the business; they are meant to be shared to all, in
accordance with distributive justice.

Codes of Conduct –fundamental international rights and

corresponding duties.
- it covers four major business areas.
a. basic human rights
b. employee practises and policies
c. consumer protection
d. environmental stewardship
 Chapter 2 Business Ethics and CSR
compared
The Center for Corporate Citizenship in Boston College
“continuing commitment by business to behave ethically
and contribute to economic development while improving
the quality of life of the workforce and their families as well
as of the local community and society at large”

According to Griffin, business ethics is related to CSR at

the very least as the moral basis of the corporate
citizenship, that is, business leaders are engage in CSR
practice because they believe they are ethically
accountable to society, in other words, business ethics is
the basis of the practice of CSR.
Business ethics seeks to determine whether a particular
behaviour, decision, or action of an individual or
organization is morally right or wrong.

It is not subjective rather it is objective and the basis for

doing what is right is a universal standard common to all.

The wisest thing to do, it seems, is to practice business

ethics first, and then engage in CSR activities.
The 2002 Asian Forum on CSR characterized business
ethics and social responsibility as follows.

a. Beyond profit – meaning that business learns to

genuinely address the common public good beyond that of
corporate interest.
b. Beyond compliance – that business responds to higher
standards and principles beyond mere obedience to the
law.
c. Beyond form – that the company goes beyond public
relations and image building.
8 similarities and common characteristics existing between
business ethics and CSR, namely:

1. Both are beyond compliance with the law;

2. Both are not tantamount to relativism;
3. Both are born with universal values;
4. Both are not utilitarian.
5. Both are pragmatic and practical;
6. Both are about firm conviction ;
7. Both are beyond public relations
8. Both are centered on total human development.
Beyond compliance with the law
CSR and ethical management coincide with the law
and local regulation. Hence, the legal prohibitions against
fraud, tax evasion, pollution, bribery, child labour, sexual
harassment, and job discrimination are also CSR and
moral concerns. But the observance of what is legal is only
the minimum requirement of ethics and CSR. It means that
something more is required of business.
Business ethics and CSR are not similar to relativism.
relativism professes that all beliefs are equally valid,
and the truth is relative – depending on the situation, level
of modernization, environment, and individual preference.
 Philosophical concept of relativism
includes 4 narrower notions
1. Ethical relativism – says that morality depends on
social construct.
2. Situation ethics – teaches that right or wrong is based
on the particular situation.
3. Cognitive relativism – says that truth itself has no
objective standard.
4. Cultural relativism – explains that certain cultural
practices are acceptable depending on cultural context.
Business ethics is not relativism because the former
accepts moral values that are objective, permanent, and
universal.

Marco Landi “ the question of ethics cannot be separated

from any other aspect of our business. The concept of
ethical behaviour remains constant regardless of the
culture. Indeed, business ethics is global. Its fundamentals
concerns are applicable to all people who do business
anywhere in the world regardless of the culture.
Business ethics and CSR born with universal values
both business ethics and CSR deal with the human
conduct, practices, decisions, way of doing things,
including both external observable behaviours and internal
unobservable intentions. Both deal with universal moral
values.
in other words, there is only one universal language
for all business practitioners and professionals everywhere,
the true, the just, the fair and the good.
Both business ethics and CSR utilitarian.
focuses on the results of action rather than the
motive behind the action. It entails a benefit-cost analysis.
It seeks to establish two things, namely:
a. The greatest good ( or the relative level of benefits in
the future)
b. The greatest number to whom it will be distributed ( or
the scope of the population)
According to utilitarian principle
An action is ethically right when the sum total of benefits
( hence “greatest good) produced by that act is greater that
the sum total of benefit produced by any other act the
agent could have performed in its place.

An action is right if it produces the greatest good or the

most “ usefulness” for all person affected by the act
(including the agent performing the act).
When the utilitarian is applied
Several basic rights and freedom of others are restricted or
disregarded. The utilitarian consideration cannot simply
override the basic right to life, the right to be treated
equally, right to privacy, to practice religion, and others.

Business and the government are duty-bound to solemnly

respect human dignity and basic human rights. Human
dignity is the most central issue in ethical decision making.
Business ethics and CSR pragmatic and
practical
CSR promotes fundamental principles applied to concrete
situations of business life. Both are concerned with
orthodoxy (correct policy) and orthopraxis (best practice).

Ethics and CSR can become an integral part of the work

ethic of a company. Since they do not end in memorized
codes and principles, business ethics and CSR are
practical, pragmatic and alive.
According to Francisco Tantoco Jr., Executive Director of
Caritas Manila, “Morality should not only be lectured in
classrooms. It should be an operative experience that is
founded on personal and corporate integrity”.

Universal values and timeless truth are nothing without

praxis, since fine words can never actually substitute for a
meaningful living.

CSR is the result off a deep conviction that there is

something more superior than the truth, and that is social
involvement. A good theory without daily living is
deceased, just as faith without deed is dead.
Business ethics and CSR about firm
conviction
Corporate involvement is not about feelings, since ethical
standards are not just emotional or sentimental issues.

Ethics is a fixed standard, objective, permanent, and

grounded on the strongest convictions about what is right
and wrong. Similarly, CSR constitutes a firm decision, and
solid conviction. It necessarily refers to the myriads of the
extraordinary and ordinary decisions and practices, which
men and women of goodwill make, and the lasting values
for which they stand.
Business ethics and CSR are beyond
public relations and profitability
Individuals do not practice business ethics and
corporations do not benchmark CSR to do public relations
and increase sales.

You practice ethics because it is your philosophy of

management, you benchmark CSR because it is the right
thing to do.
Business ethics and CSR centered on
total human development

The total development of the human person embraces the

physical and the spiritual, material and immaterial, financial
and moral.

Economic development itself is not an end. It is a means to

an end, and the end is the total welfare of man, that is, for
the whole human person.
Evolution of Business ethics and CSR.
CSR and ethical management are evolving continuously,
following several phases or periods of realization.

First phase – company sees profit and only profit. No

enterprise goes into business to be altruistic or
philanthropic, otherwise it is a non-profit organization. The
overriding concern at this initial stage is profit maximization.

Second phase – company complies with laws and

regulations, which is the minimum requirement of being
corporate citizen.
Third phase – company conforms to ethical requirements to
build its image, as it reassesses and safeguards its
reputational value.

Ultimate phase – company institutionalizes CSR and

ethical management because it is the right thing to do.

Responsibility Societal Examples

Expectation
Economic Required Be profitable. Maximize sales,
minimize costs, etc.
Legal Required Obey laws and regulations.

Ethical Expected Do what is right, fair and just.

Discretionary Desired / Be a good corporation citizen.

(philanthropic) Expected
Should there be a CSR department?
It is advantageous if a company has its CSR department
that involves both the leadership and the rank-and-file.
Because it is primarily social, CSR includes code of
conducts, corporate citizenship, employee volunteerism,
resource sharing and management, social investment and
sustainable development.

A growing number of global companies are now taking

pride in corporate citizenship, committing themselves to
ethical accountability and social responsibility. SA-8000 is
notable evolution of a global standard providing a
framework for the independent verification of ethical
practice, principally in the manufacturing industry.
CSR begin in the Philippines.
PBSP – Philippine Business for Social Progress
- started with 50 leading corp.
- 1991 UN NGO conference invited then PBSP Chair
Andres Soreano III to address the August assembly.
- 1992 Prince of Whales Business Leader Forum
cited PBSP’s exemplary work in the promotion and
praxis of CSR in this part of the globe.
Andres Soreano III once explains:
The practice of corporate social responsibility has
evolved through the years from company philantrophy to
direct involvement. Today, corporate social responsibility
has been institutionalized in many business orgnzations as
a distinct corporate function, which means that it has
become a significant part of the main line of their business.”
 The end,,,

Thank you and once again

good morning !!!