Business Ethics

The International Travel College of New Zealand 1

Legislation and Ethics in the Travel and Tourism SectorUnit #8 – Learning Outcome 3

BUSINESS ETHICS

• Ethical Theory• Business Ethics


What are Ethics?• A set of moral standards that are relied upon to reach conclusions and make

decisions.

• In a business environment, ethics are a key factor in responsible decision making.

• Maintaining a high ethical standpoint when operating your business can provide benefits to both the internal and external stakeholders of your business.

• Personal ethics are developed as we grow up, influenced by people and environment.

• Some ethical viewpoints are considered universal and apply to people around the world, whereas others are of a personal nature and may only apply to you.

• Your ethical viewpoints continue to evolve and change over time as you interact with different people and are exposed to different situations and environments.


Ethical Theory

• Ethical theory serves as the foundation for ethical solutions to the difficult situations people encounter in life.

• For centuries, philosophers have come up with theoretical ways of telling right from wrong and for guidelines about how to live and act ethically.

• Business ethics theories include the moral principles or codes a company implements to ensure that all individuals working in the company act with acceptable behaviour.

• Business owners and managers can use an ethics theory they deem most appropriate for use in their operations.


Virtue Ethics

• Character matters above all else. • Living an ethical life, or acting rightly, requires

developing and demonstrating the virtues of courage, compassion, wisdom, and temperance.

• It also requires the avoidance of vices like greed, jealousy, and selfishness.

• The virtue approach is a more difficult for businesses to implement, as its approach focuses on following ethical principles that should be evident in society.


Utilitarianism• The amount of happiness and suffering created by a person’s

actions is what really matters. • Thus, acting rightly involves maximizing the amount of happiness

and minimizing the amount of suffering around you. • You may even need to break some of the traditional moral rules to

achieve such an outcome. • The utilitarian approach focuses on using ethical actions that will

promote the most good or value among a society while limiting the amount of harm to as few people as possible.

• Among the business ethics theories, this is typically seen as the oldest theory.

• Businesses can use this theory to ensure the outcome of various situations helps the maximum amount of stakeholders.


Kantianism & Contract Theories

• Kantianism emphasizes the principles behind actions rather than an action’s results. Acting rightly thus requires being motivated by proper universal principles that treat everyone with respect. When you’re motivated by the right principles, you overcome your animal instincts and act ethically.

•Contract theory proposes thinking about ethics in terms of agreements between people. Doing the right thing means abiding by the agreements that the members of a rational society would choose.


Care Ethics & Rights Ethics

• Care ethics focuses ethical attention on relationships before other factors. As a result, acting rightly involves building, strengthening, and maintaining strong relationships. Acting rightly displays care for others and for the relationships of which they are a part.

• Rights - A rights ethical approach is based on the belief that all individuals have rights in life and should be treated with respect and dignity. Morals play a large role in this because individuals must personally use ethical behavior in order to achieve the end goal without mistreating people. Business ethics theories often use this approach by not imposing their missions, products, or systems on consumers.


Justice Theory & The Common Good

• Justice as an ethical approach focuses on treating all people equally, regardless of rank, position, class, creed, or race. This is also known as the fairness approach in business ethics theories. If people are not treated fairly a justifiable reason must exist. eg paying somebody more money may be appropriate because of higher technical skills or level of responsibility.

• The common good approach promotes the common values and moral or ethical principles found in a society. This varies from place to place based on each countries' specific cultural or societal beliefs. eg. the moral principles in Japan may be different than those in the USA. Business owners and managers often implement these principles to ensure their company’s overall mission is in sync with society as a whole.


Definition of Business Ethics

"Business Ethics" can be defined as the critical, structured examination of how

people & institutions should behave in the world of commerce. In particular, it involves

examining appropriate constraints on the pursuit of self-interest, or profits, when the

actions of individuals or firms affects others.”

Chris MacDonald (Business Ethics lecturer – Toronto, Canada)


Why apply Ethics in Business?

• The business case for maintaining high ethical standards is based on the positive benefits that it can provide to a business:– Improved employee and organisational morale– Increased ability to attract new customers– Improved customer loyalty– Reduced risk of negative exposure and public

backlash caused by poor ethics– Attraction of new stakeholders– Making a positive impact on the community


Being ethical makes good business sense

• Ethical and sustainable development is good business. It involves implementing and measuring ethical business practices that benefit all stakeholders to create an increased triple bottom line of financial, social and environmental performance.

• Business ethics are important for managing a sustainable business mainly because of the serious consequences that can result from decisions made with a lack of regard to ethics. Poor ethics can have a detrimental effect on profits.

• Poor ethical standards can result in business managers making misinformed, misguided or bad decisions. The future effects of their actions could be significant and wide reaching, particularly if they cause injury or financial loss to other people or businesses.

• In a sustainable business, employees at every level should be committed to the ethical standards of the business. Business managers should clearly define and communicate to staff what factors and ethical standards are expected of them and what the consequences are for failing to meet those expectations.


Ethics in Human Resource Management

Recruitment:

• There are clear ethical issues in relation to the hiring, management and dismissal of the people who work in a business.

• An ethical approach to the recruitment process requires employers to be honest open with people applying for a job.

• Job ads should state the nature of the position and any questions

regarding salary, job tasks, hours, timeframes and expectations should be answered as honestly and as thoroughly as possible.

• This upfront honesty protects both the employer and the applicant from having unrealistic expectations about the nature of the job.



Health & Safety:

• The people who work in a business also have certain rights that are closely tied to ethics.

• Occupational health and safety conditions are mandated by law in NZ, but a business should also be bound by its ethical values to ensure that workers are provided with safe conditions in the workplace.

• The ‘climate’ in the workplace should be such that employees feel ‘comfortable’ to bring forward any potential health and safety risks that they notice to ensure the wellbeing of people working in the business.



Performance or Disciplinary Issues:

• There some important ethical considerations in relation to dismissing an employee.

• In NZ Employment Law exists to protect workers from unfair dismissal and employees should not be dismissed unless a valid reason that is related to their employment can be provided.

• Alternatives to dismissal include further training, counseling or coaching, job sharing or temporary leave.



Conflicts of interest:

• A conflict of interest arises when an individual or organisation is involved in multiple interests, where one could potentially corrupt the actions in regards to the other.

• For example, a manager interviewing job applicants would face a conflict of interest if a family member applied for the job. Their obligations in helping out a relative could compromise their responsibility as a manager to hire the best candidate for the job.

• This type of situation is also known as an ‘ethical dilemma’, where your moral or ethical obligations to different parties contradict each other, making it difficult to come to a resolution.



‘Fringe Benefits’:

• The appropriate use of business resources and facilities raises a number of ethical problems.

• Some businesses offer privileges to their employees or associates as a gesture of goodwill, however, people should avoid exploiting the generosity of the business by using them inappropriately or unfairly.

• Employees should also avoid using their business connections to gain an inappropriate personal advantage.


Business Ethics and Stakeholders

• A stakeholder is any person or group that has interest or concern in an organization or business and who are affected by the actions or policies of the business. Stakeholders include creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources.

• Businesses should adhere to a strict set of ethical standards, when accounting and providing reports to stakeholders.

• All information provided to stakeholders should be done so on the basis that it is accurate, timely and comprehensive.

• There are also a number of ethical issues that can be raised in regards to certain industries, the products they sell and the way they market their products.

• Common examples are the tobacco industry, which sells products to consumers that are proven to be detrimental to their health, and companies that sell unhealthy food, which have been accused of marketing directly to children.

• Ethical dilemmas arise because the products they sell are not illegal, yet the negative impacts on society are considered significant.

• Business owners need to make decisions in regards to the ethical standards and moral values that they want to follow in their business.


ETHICS IN ADVERTISING• Ethical Dilemmas in Advertising and Marketing• Ethical Consumerism• Ethical Shopping• Fair Trade


Ethics in Advertising

• Ethics in advertising means a set of well defined principles which govern the ways of communication taking place between the seller and the buyer.

• Ethics is the most important feature of the advertising industry.

• Whilst there are many benefits of advertising there are some aspects which don’t match the ethical norms of advertising.

• An ethical ad is the one which doesn’t lie, doesn’t make fake or false claims and is in the limit of decency.

• There are concerns that currently ads are more exaggerated


Fundamental Ethical Issues in Marketing and Advertising

• The objective for advertisers is to increase sales, gain more customers and increase demand for the product through the ads.

• Ads are designed to affirm claims that their product is the best, has unique qualities, is better than competitors, more cost effective, and more beneficial.

• Many of these ads are found to be false, misleading customers and unethical.


Marketing/Advertising Ethical Dilemmas

• Customer exclusion whereby potential customers from the market: selective marketing is used to discourage demand from undesirable market sectors.

• Examples of unethical market exclusion are past industry attitudes to the gay, ethnic minority and obese markets.

• Another example is the selective marketing of health care, so that unprofitable sectors (i.e. the elderly) will not attempt to take benefits to which they are entitled.

• Targeting the vulnerable (e.g. children, the elderly). The elderly hold a disproportionate amount of the world's wealth and are therefore the target of financial exploitation.

• In the case of children, the main products are unhealthy food, fashion and entertainment goods. Children are a lucrative market as children 12 and under spend more than $11 billion of their own money and influence family spending decisions worth another $165 billion but are not capable of resisting or understanding marketing tactics at younger ages

• Other vulnerable audiences include emerging markets in developing countries where the public may not be sufficiently aware of skilled marketing ploys transferred from developed countries.

• Another vulnerable group are mentally unstable consumers. • The definition of vulnerability is also problematic: for example, when should

endebtedness be seen as a vulnerability and when should "cheap" loan providers be seen as ‘loan sharks’ unethically exploiting the economically disadvantaged?


Ethical ‘Pitfalls’ in Advertising

• Issues over truth and honesty such as the promotion and advertising of products like tobacco and alcohol.

• The use of sexual innuendo which attracts potential customers but can be seen as sexual harassment

• Violence in advertising that can be seen by children• Taste and controversy. The advertising of certain

products may strongly offend some people while being in the interests of others.

• Negative advertising techniques, such as attack or comparison ads. In negative advertising, the advertiser highlights the disadvantages of competitor products rather than the advantages of their own.


Business Ethics and Big Business

• Business ethics has been an increasing concern among larger companies, at least since the 1990s.

• Major corporations increasingly fear damage to their image associated with press revelations of unethical practices.

• Marketers have been among the fastest to perceive the market's preference for ethical companies, often moving faster to take advantage of this shift in consumer taste. This results in the promotion of ethics itself as a selling point or a component of a corporate image.

• The Body Shop is an example of a company which marketed itself and its entire product range solely on an ethical message.

• Greenwashing is an example of a strategy used to make a company appear ethical when its unethical practices continue.


Business Ethics and Big Business cont..

• Marketers are ethically responsible for what is marketed and the image that a product portrays.

• Marketing ethics, regardless of the product offered or the market targeted, sets the guidelines for which good marketing is practiced.

• When companies create high ethical standards upon which to approach marketing they are participating in ethical marketing.

• To market ethically and effectively, all marketing decisions and efforts must meet and suit the needs of customers, suppliers, and business partners.

• Ethical behavior should be enforced throughout company culture and through company practices.


The Ethical Consumer

• The term ethical consumer describes someone who practices ethical consumerism

• It is practiced through 'positive buying' in that ethical products are favoured, or 'moral boycott', that is negative purchasing and company-based purchasing


Ethical Consumerism• Ethical consumerism is a type of consumer activism that's based on the

concept of dollar voting. • It is practiced through 'positive buying' in that ethical products are favoured, or

'moral boycott', that is negative purchasing and company-based purchasing. • The term "ethical consumer", now used generically, was first popularised by

the UK magazine the Ethical Consumer, first published in 1989. • Ethical Consumer magazine's key innovation was to produce 'ratings tables,'

inspired by the criteria-based approach of the then emerging ethical investment movement.

• Ethical Consumer's ratings tables awarded companies negative marks (and from 2005 overall scores) across a range of ethical and environmental categories such a 'animal rights', 'human rights' and 'pollution and toxics‘.

• This empowered consumers to make ethically informed consumption choices and providing campaigners with reliable information on corporate behaviour.

• Such criteria-based ethical and environmental ratings have subsequently become commonplace both in providing consumer information and in business-to-business corporate social responsibility and sustainability ratings.


5 Principals to Shopping Ethically

1. Every purchase makes an impact

2. Avoid unnecessary consumption - ask, ‘Do I need it?’

3. Learn about the issues - but take on one issue at a time

4. Seek out a ‘Best Buy’ according to what you value and the options available

5. Make lasting change -celebrate good choices, create good habits, give feedback

www.ethical.org.au/


Trade Aid

• Trade Aid is a Fair Trading organization, established in NZ 1973, and carries out retailing, education and advocacy work on fair trade issues

• Trade Aid is a not for profit organisation who operate in retailing, importing, wholesaling and also act as a development agency

• Shops throughout NZ• Education and advocacy work on fair trade• Strategic partnership with the New Zealand Aid Programme of the Ministry

of Foreign Affairs and Trade to work collaboratively on realising the enormous benefits that trade can have in reducing poverty and promoting development.

• Trade Aid are pioneers in fair trade in New Zealand, members of the World Fair Trade Organisation (WFTO), an international body of organisations who are 100% committed to fair trade. It is the only global network whose members represent the fair trade chain from production to sale.


GREEN BUSINESS• Sustainable business practices • Measuring your Carbon Footprint• ‘Green Washing’• Green Issues That Impact Global Business • Social Sustainability:


Green Issues in Business• Sustainable business, or green business, is an enterprise that has

minimal negative impact on the global or local environment, community, society, or economy - a business that strives to meet the ‘triple bottom line’.

• Often, sustainable businesses have progressive environmental and human rights policies.

• In general, business is described as green if it matches the following four criteria:

1. It incorporates principles of sustainability into each of its business decisions. 2. It supplies environmentally friendly products or services that replaces demand for non-

green products and/or services. 3. It is greener than traditional competition. 4. It has made an enduring commitment to environmental principles in its business

operations.


Green Issues in Business cont…

• It is a business that “meets the needs of the present world without compromising the ability of the future generations to meet their own needs.”

• Sustainable businesses try to balance all three through the triple-bottom-line concept - using sustainable

development and sustainable distribution to affect the environment, business growth, and the society.

• All companies can examine what their actions are doing to make the planet cleaner or dirtier, as well as how

their environmental record is affecting their bottom line.


Going Green Sustainable Business Practices:

• Eliminate or decrease the environmental harm caused by the production and consumption of goods.

• The impact of human activities in terms of the amount of greenhouse gases produced can be measured in units of carbon dioxide and is referred to as the carbon footprint.

• The carbon footprint concept is derived from ecological footprint analysis, which examines the ecological capacity required to support the consumption of products.

• One of the most common examples of green initiatives is "going paperless“.• On a higher level, examples of sustainable business practices include: refurbishing

used products revising production processes in order to eliminate waste and choosing nontoxic raw materials and processes.

• Sustainable business leaders also take into account the life cycle costs for the items they produce.

• Input costs must be considered in regards to regulations, energy use, storage, and disposal.

• Designing for the environment is also an element of sustainable business. This process enables users to consider the potential environmental impacts of a product and the process used to make that product.


Carbon Footprints• A Carbon Footprint is defined as ‘the total amount of greenhouse

gases produced to directly and indirectly support human activities, usually expressed in equivalent tons of carbon dioxide (CO2)':– When you drive a car, the engine burns fuel which creates a certain

amount of CO2, depending on its fuel consumption and the driving distance. (CO2 is the chemical symbol for carbon dioxide).

– When you heat your house with oil, gas or coal, you generate CO2. – Even if you heat your house with electricity, the generation of the

electrical power may also have emitted a certain amount of CO2. – When you buy food and goods, the production of the food and goods

also emitted some quantities of CO2. • Your carbon footprint is the sum of all emissions of CO2 (carbon

dioxide), which were induced by your activities in a given time frame. Usually a carbon footprint is calculated for the time period of a year.

• Carbon offsetting is used to compensate for your emissions by funding an equivalent carbon dioxide saving elsewhere.


Green Washing• Pressure is being put upon companies from consumers, employees,

government regulators and other stakeholders to adopt greener practices

• Some companies have resorted to ‘green washing’ instead of making meaningful changes, merely marketing their products in ways that suggest green practices.

• Green investment firms are attracting unprecedented interest. • In the UK the Green Investment Bank is devoted exclusively to

supporting renewable domestic energy. • Green investment firms are creating more and more opportunities to

support sustainable development practices in emerging economies.• By providing micro-loans and larger investments, these firms assist

small business owners in developing nations who seek business education, affordable loans, and new distribution networks for their "green" products.


Steps to Going Greener in Business:

• Recycle more, and more efficiently

• Do an Energy Audit

• Office printers and copiers

• Use technology

• Power

• Install green products

• Use video conferencing


Examining a company's environmental impact

• Each industry, as well as each business, has its own individual impact on the environmental.

• In identifying what green issues affect global business, the best place to start is by looking at what kinds of environmental harm -- or help -- specific kinds of companies do.

• Eg: looking at how much carbon an oil company is adding to the environment, how much rubbish a fast food enterprise is adding to a landfill.

• What are regulations and laws exist to regulate pollution? (penalizing certain types of pollution, either through penalties or additional taxes, and favouring certain types of clean alternatives, can impact on business operations)

• External intervention (by lawmakers) can greatly affect how companies do business, including where they do business and what kind of practices they follow in regard to energy use and pollution.


Measuring consumer sentiment

• Good businesses are designed to be responsive to what consumers want.

• Businesses react to consumer preferences related to the environment.

• Shifts in consumer spending habits generally force changes in business practices.

• Eg: car manufacturers producing new models with greater fuel efficiency/lower pollution outputs because consumers have expressed a preference for them.


Identifying changes related to competitiveness

• In some cases, businesses make decisions that impact their effect on the environmental for reasons only incidentally related to concern about green issues.

• Eg: a company may decide to adopt energy-efficiency light bulbs because it saves money.

• However, doing so will also cause less electricity to be used, which, in most cases, means that less pollution will be created to produce this electricity.


Social Sustainability

• Organizations that give back to the community, whether through employees volunteering their time or through charitable donations are often considered to be socially sustainable.

• Organizations can also encourage education in their communities by training their employees and offering internships to younger members of the community.

• Practices such as these increase the education level and quality of life in the community.

• In order for a business to be truly sustainable, it must sustain not only the necessary environmental resources, but also its social resources, including employees, customers (the community), and its reputation


ETHICAL DILEMMAS IN TRAVEL AND TOURISM


UNWTO Global Code of Ethics• The Global Code of Ethics for Tourism was adopted

by resolution of the UNWTO in Santiago, Chile – 1999• The Global Code of Ethics for Tourism sets a frame of

reference for the responsible and sustainable development of world tourism.

• With international tourism forecast to nearly triple over the next 20 years, members of the World Tourism Organization believe that the Global Code of Ethics for Tourism is needed to help minimize the negative impacts of tourism on the environment and on cultural heritage while maximizing the benefits for residents of tourism destinations.


Global Code of Ethics• The Global Code of Ethics for Tourism (GCET) is a comprehensive set of

principles whose purpose is to guide stakeholders in tourism development: central and local governments, local communities, the tourism industry and its professionals, as well as visitors, both international and domestic. The key principles are concerned with:

Mutual Respect– The first provision of the code of ethics is that tourists and the cultures

they visit engage on terms of mutual respect and understanding. Tourists should respect the values and traditions of the host regions, and, in turn, tourism officials in host areas should become familiar with the tastes, practices and expectations of visitors.

Fulfillment– Tourism is a means of both individual and group fulfillment. While tourism

is a leisure activity, the pursuit of satisfaction must not come at the expense of other people's dignity or rights, or involve the social or economic exploitation of vulnerable groups.


Global Code of EthicsSustainable Development– Tourist activities should not endanger the natural resources of the

visited area, and insofar as possible, tourist programs and related funding should protect ecosystems and biodiversity.

Cultural Heritage– While cultural differences are a great draw for tourists, tourism

should be conducted in a way that protects and preserves the artistic and social traditions of the host region. Tourist activities should help to maintain local and authentic artisan activities and not allow productive traditions to degenerate or become commodities for purchase.

Host Benefits– Local populations should participate in tourism and equitably

receive the associated social and economic benefits. Tourism policies should work to help raise the local standard of living and address local needs.


Global Code of Ethics

Stakeholder Obligations– Tourism professionals are responsible for

providing honest information to tourists and, insofar as possible, work to ensure the health, safety and fulfilment of their clients.

Right to Tourism– The enjoyment of the world's natural and cultural

pleasures is everyone's right, and obstacles should not be placed in the way of discovery. For children, the elderly and handicapped populations, tourism should be encouraged and made accessible.


Global Code of Ethics

Freedom of Movement• When visiting another state or country, tourists should be

granted the same liberty of movement as citizens of the host regions. Tourists should be allowed to convert their currency into local denominations, and border crossings should be facilitated.

Workers' Rights• Individuals working in tourism should be protected by the

laws of their country and encouraged to develop professionally. International tourist corporations should not exploit their position of economic dominance but should rather work toward local development to benefit the communities in which they operate.


Whistle Blowing – a definition

‘The disclosure by a person, usually an employee in a government agency or private

enterprise, to the public or to those in authority, of mismanagement, corruption,

illegality, or some other wrongdoing.’


Whistle Blowing activities• A whistleblower is a person who tells the public or someone in authority about alleged

dishonest or illegal activities (misconduct) occurring in a government department or private company or organization.

• The alleged misconduct may be classified in many ways; for example, a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health/safety violations, and corruption.

• Whistleblowers may make their allegations internally (for example, to other people within the accused organization) or externally (to regulators, law enforcement agencies, to the media or to groups concerned with the issues).

• Whistleblowers frequently face reprisal, sometimes at the hands of the organization or group which they have accused, sometimes from related organizations, and sometimes under law.

• Questions about the legitimacy of whistle blowing, the moral responsibility of whistle blowing, and the appraisal of the institutions of whistle blowing are part of the field of political ethics.

• The term whistle-blower comes from the whistle a referee uses to indicate an illegal or foul play. US civic activist Ralph Nader coined the phrase in the early 1970s to avoid the negative connotations found in other words such as "informers" and "snitches"


Whistle Blowing actions• Most whistleblowers are internal whistleblowers, who report misconduct on a fellow employee or

superior within their company.

• People are more likely to take action with respect to unacceptable behaviour within an organization if there are assurances and processes in place to deal with the complaint with absolute confidentiality.

• External whistleblowers report misconduct on outside persons or entities, reporting to lawyers, the media, law enforcement or watchdog agencies, or other government sector agencies. In some cases, external whistle blowing is encouraged by offering financial rewards.

• Whistleblowers are commonly seen as selfless martyrs for public interest and organizational accountability; others view them as "snitches," solely pursuing personal glory and fame.

• Many people don’t consider blowing the whistle, not only because of fear of retaliation, but also because of fear of losing their relationships at work and outside work.

• Persecution of whistleblowers has become a serious issue in many parts of the world. Although whistleblowers are often protected under law from employer retaliation, there have been many cases where punishment for whistle blowing has occurred, such as termination, suspension, demotion, wage garnishment, and/or harsh mistreatment by other employees.


Legal Protection for Whistle Blowers

• Legal protection for whistle blowing varies from country to country and depends on the country of the original activity, where and how secrets were revealed, and how they eventually became published or publicized.

• More than 12 countries have now adopted comprehensive whistleblower protection laws which create mechanisms for reporting, investigate reports, and provide legal protection to the people who informed them.

• Over 50 countries have adopted more limited protections as part of their anti-corruption, freedom of information, or employment laws.


New Zealand LawProtected Disclosure Act 2000

• The Protected Disclosures Act 2000 is often referred to as the "whistle blower's legislation".

• Enacted to promote the disclosure of information that the public has an interest in seeing disclosed, including serious wrongdoing, and to protect those employees who make those disclosures.

• The Act provides a framework whereby employers may create internal procedures to allow employees to make disclosures about serious wrongdoing.

• Provided that such disclosures are made in accordance with the requirements of the legislation, the employee disclosing information is entitled to certain protections against reprisal - including protection against disciplinary action being taken by an employer.

• The Act only applies to disclosures about "serious wrongdoing" - which broadly relate to significant matters such as unlawful use of public funds, actions that might endanger public health or would constitute an offence, and actions of a public official that are indicative of gross mismanagement.


• The Act protects whistle blowing in both the public and private sectors, but it imposes greater demands on the public sector.

• Private sector organisations are not required to have an internal whistle blowing policy; however it is recommended that employers consider devising one to suit their organisation size and structure.

• An employee, who experiences retaliatory action because of the disclosure of serious wrongdoing in the organisation, may have a personal grievance pursuant to the Employment Relations Act 2000 or, a complaint of unlawful discrimination under the Human Rights Act 1993

• Not every disclosure by an employee can be a protected disclosure.

• To gain the protection of this Act, not only must the information be of the kind prescribed by the Act but additionally the employee must follow the Act’s procedural steps for disclosure.


Disclosures to which the Act applies

• An employee of an organisation may disclose information in the manner provided by this Act if:

– the information is about serious wrongdoing in or by that organisation; and

– the employee believes on reasonable grounds that the information is true or likely to be true; and

– the employee wishes to disclose the information so that the serious wrongdoing can be investigated; and

– the employee wishes the disclosure to be protected


• An employee who makes a disclosure of serious wrongdoing in accordance with the Act is protected by the Act against: – Unjustifiable dismissal and disadvantage by

the employer’s unjustifiable action.

– Victimisation within the meaning of section 66 of the Human Rights Act 1993 and


CORPORATE SOCIAL RESPONSIBILITY & CODES OF

ETHICS


Corporate Social Responsibility

• The philosophy behind corporate social responsibility (CSR) is that business doesn't exist solely to make a profit.

• While being profitable is important for creating jobs and enhancing the standard of living through economic growth, profitability shouldn't come with grave costs to the communities that support business activity.

• CSR takes conscientious action beyond simply doing no harm.

• Businesses that believe in CSR purposely engage in activities that promote healthy environments, stable communities and respect for human rights.


Environmental Responsibility

• Companies that are socially responsible try to engage in business activities while limiting harm to the environment.

• For example, a socially responsible oil company would not drill at a site if environmentalists reported that drilling could be catastrophic.

• Some organizations show their dedication to the environment by changing the nature of their products or their packaging. eg: PepsiCo snack food brand ‘SunChips’ altered the composition of their bags in 2009 to make them biodegradable.


Responsibility to Workers and Communities

• The underlying principles of CSR also dictate that corporations should treat their workers and the communities they work in with respect.

• Manufacturing companies have been criticized for killing communities by pulling out and moving to countries where operating costs are lower.

• Historically, running shoe manufacturer Nike has been accused of the socially irresponsible practice of child labour but has since worked on resolving the issue thanks to consumer and media backlash.

• Coffee retailer Starbucks has long advertised its commitment to buying ethically-traded coffee and supporting coffee-growing communities.


How Socially Responsible Behavior Benefits Business

• According to the International Organization for Standardization (ISO), corporate social responsibility can make good business sense as well as just be the right thing to do. Investors are attracted to companies that engage in socially responsible business practices.

• Being socially responsible can also attract community-minded consumers, act as a source of good publicity and be a proactive strategy for keeping reputation-damaging bad publicity at bay.

• However, socially responsible behaviour doesn't always have a positive impact on profits.

• In April 2009, PepsiCo reported that an 11% drop in its SunChips' sales was probably due to their new environmentally-friendly packaging, which bothered consumers by being too noisy.

• But consumers have a role to play in this. By purchasing products that are less convenient but more responsibly-produced, consumers give companies a profit incentive to do business ethically.


Corporate Social Responsibility in action

• Businesses can encourage employees to volunteer for good causes in society, and they can implement good environmental practices.

• Organizations also need to implement fair business practices in terms of working conditions and the use of scarce resources.

• Making donations to community causes is a direct form of CSR. Organizations can provide funds to support specific projects in schools, hospitals and other community facilities. They can also provide support in the form of products or services.

• Some organizations provide ongoing support for charity and community organizations.

• Supporting employees who volunteer for community causes is an indirect form of CSR.

• Organizations use green business practices to comply with industry regulations, as well as to demonstrate CSR.

• Many industries face stringent regulations relating to environmental pollution, recycling of waste, taking back products at the end of their life and consumption of raw materials and energy.

• Organizations can also take proactive environmental action, such as modifying their packaging to reduce waste and raw material consumption, reducing unnecessary business travel to lower energy consumption and changing their manufacturing processes to use less energy.

• CSR also applies to conditions for employees in the workplace, ie the use of child labour or inhumane working conditions (locked into unsafe factories, ‘sweatshops’)


EMBRACING ETHICS

Codes of Ethics


What is a Code of Ethics?• Ethical codes are adopted by organizations to assist members in

understanding the difference between 'right' and 'wrong' and in applying that understanding to their decisions.

• An ethical code generally implies documents at three levels: codes of business ethics, codes of conduct for employees, and codes of professional practice.

• A code of ethics will set out the values that underpin the code and will describe a company's obligation to its stakeholders.

• The code is publicly available and addressed to anyone with an interest in the company's activities and the way it does business.

• It will include details of how the company plans to implement its values and vision, as well as guidance to staff on ethical standards and how to achieve them.

• However, a code of conduct is generally intended only for employees.

• It usually sets out restrictions on behaviour, and will be far more focussed on compliance or rules than on values or principles.


Why have a Code of Ethics?

• to define accepted/acceptable behaviours • to promote high standards of practice • to provide a benchmark to use in self evaluation • to establish a framework for professional

behaviour and responsibilities • as a vehicle for occupational identity • as a mark of occupational maturity


Developing a Code of Ethics

• What will be the purpose of your new code? Is it to regulate behaviour? To inspire?

• A code of ethics should be tailored to the needs and values of your organization.

• Many ethics codes have two components: - an aspirational section that outlines what the organization aspires to, or the ideals it hopes to live

up to. - an ethics code that lists some rules or principles, which members of the organization will be

expected to adhere to.

• Often the principles or values listed in an ethics document will be listed in rough order of importance to the organization.

• How will your new code be implemented?

• How will it be publicized, both inside and outside of your organization?

• What steps, if any, will be taken to ensure that the values embodied in your code get implemented in organizational policies and practices?

• How / when will your code be reviewed / revised?


Social Audit

• Social auditing is the process whereby an organisation can account for its social performance, report on and improve that performance. It assesses the social impact and ethical behaviour of an organisation in relation to its aims and those of its stakeholders.

• A social audit looks at factors such as a company's record of charitable giving, volunteer activity, energy use, transparency, work environment and worker pay and benefits to evaluate what kind of social and environmental impact a company is having in the locations where it operates.

• Social audits can help companies create, improve and maintain a positive public relations image.

• Good public relations is key because the way a company is perceived will usually have an impact on its bottom line.


Environmental Audit• An environmental audit determines how well your business

complies with environmental laws and regulations as well as with company policy. The audit may also cover potential improvements in environmental performance and systems.

• The most important results of an environmental audit are recommendations how a company can reduce the damaging impacts on the environment in an efficient and cost-benefit manner, and how it can in a long-term save funds by using environment friendly technology.

• There are important business reasons for conducting environmental audits as many organisations now require their suppliers to certify compliance with international environmental standards as a condition of doing business