Business Ethics & the Individual – Class 4

UG Sections L4, L5 & L6

Fall Semester 2021

Professor Mitya New

 Course Overview

Class Class title Notes

Class 1 What is Business Ethical Leadership BP & Deep Horizon, Stakeholder vs Shareholder Thinking

Class 2 Making Ethical Choices Right vs Right Dilemmas and approaches to ethical choices

Class 2a Presentation/Debate class A Cases: Apple, Deutsche Bahn, OR Facebook (1 case/student)

Class 3 The Healthy Workplace #MeToo, Mental Health, Discrimination, Case: France Telecom

Class 3a Presentation/Debate class B Case: Camino Therapeutics (multi-part)

Class 4 Making CSR strategic What is CSR. Michael Porter’s strategic CSR, Case: Singtel

Class 4a Presentation/Debate class C Case: IKEA and child labour

Class 5 Investing for ESG impact Understanding and delivering ESG, Case: Generation Invest.

Class 6 Whistleblowing – the individual choice Challenge of Whistleblowing, Cases: First America, Olympus (1
case/student)
Class 7 Ethical challenges in a world of AI Ethics for Robots, Machine Bias, do Robots have emotions, Future of
the workplace. Open class debate
Class 8 Creating responsible & ethical Cases: Corruption at Siemens, Gender & Free Speech at Google
leadership cultures
Class 9 Review & assessment Review course themes and open discussion. Assessment questions.
Strategic CSR and ‘shared value’
 What is CSR?

Strategic CSR and shared value

Agenda
Case Study: Singtel
 Introduction

What is Corporate Social Responsibility?

https://www.youtube.com/watch?v=E0NkGtNU_9w
 How many of the 8 points defining CSR can you remember?
video summary
on
p o ints
T f or 8 ideo
M CHA ade in v
ZOO CSR m Corporate Social Responsibility

1. CSR = Corporate Social Responsibility

2. CSR is based on the question of good business for a good society – today
& tomorrow
3. CSR is not charity – it is about how companies earn not spend their profit
4. Employees of integrity & appropriate organizational structures needed to
realize CSR – individual and institutional ethics
5. Politics important since power of regulations limited across borders
6. Companies, therefore, play increasingly important role for CSR
7. Soft laws = companies’ self-commitments
8. Good and fair society cannot be created without companies
 Strategic CSR

 CSR has moved from the level of optional corporate ethical choice

 Corporate self-regulation

 Legally reportable and mandatory requirement in some local, national even

international jurisdictions (e.g. India 2013 Companies Act requires
companies with profits above certain level to spend 2% of net profits on
CSR projects)

 But critics argue this kind of legal approach may not be effective
o Some firms might reduce CSR expenditure to the required level
o No measure of quality of CSR initiative company spends profits on
o Some legislation defines categories of appropriate CSR spending, but leaves
companies to select which may not be effective
 Strategic CSR

What is the concept of Strategic CSR described by Michael Porter & Mark
Kramer?
 Strategic CSR

 Two disadvantages with CSR as practised today by companies:

1. Zero-sum, win:lose confrontation between companies and society
2. Companies CSR activities are generic and not aligned with individual company
strategy

CSR practiced ‘strategically’ could generate even more

opportunity, innovation and competitive advantage for companies
and more social progress for society
 Strategic CSR
Four Reasons companies focus on CSR today

1. Ethical behaviour
o Do the right thing – generate profit ethically and respecting people,
communities and environment
2. Sustainability
o Steward of environment and community for the future
o “Meeting the needs of the present without compromising the ability of future
generations to meet their needs,” Gro Harlem Brundtland, Norwegian PM
3. License to operate
o Satisfy requirements and expectations of local stakeholders in different
countries
4. Brand reputation
o Improve brand image with customers and employees

Doesn’t help companies become more competitive

 Shared Value

According to Michael Porter, companies and CSR proponents need to think in

terms of :

‘Shared Value’
Business and society are mutually
interdependent, one cannot succeed
without the other.

How can companies identify potential areas of ‘Shared Value’ and exploit them to
their own competitive advantage while also benefiting society and the environment?
 Shared Value
Social Impact Value Chain

“inside-out”

How does your company

impact society through its
normal operations.

Use Value Chain to help

identify challenges and
opportunities in social impact
of operating activities.
 Shared Value
Diamond Framework

Extractive Industries
Transparency Initiative
2 Nestle knowledge transfer to
includes 19 oil companies
Indian / Sri Lankan milk farmers
boost productivity, output, quality & who disclose all payments
“outside-in” prices. to governments to boost
transparency and combat
https://www.nestle.com/brands/dairy
/dairycsv corruption. https://eiti.org
Video: https://www.youtube.com/watch?v=FXfMi_s1glE Video: https://youtu.be/g8yCBLanuLw
Aim to resolve as many of the
social impact challenges as
possible.

Identify and pursue those social

impact opportunities in operations
where there is also the greatest
competitive advantage for the
company.
Sysco supports small family farms in US to offer healthy
home-grown products to restaurants & other buyers.
http://sustainability.sysco.com/supplying-food-responsibly/s
ourcing-food-responsibly/local-sourcing.php
Video: https://www.youtube.com/watch?v=1wBtSGM-dwU
Hindustan Lever (Unilever) in India
develops a new model to serve
poorest rural customers in India
with different packaging, price
points and sales force.
https://www.hul.co.in/news/news-a
nd-features/2018/more-power-to-r
ural-women.html
Video: https://www.youtube.com/watch?v=IwBbr0SP3I8
 Shared Value
Responsive CSR and Strategic CSR

Where society and business interact and opportunities for Shared Value arise …

Social responsibility
issues may be important “Outside-in”
to society, but not
affected by company Social responsibility
operations and don’t issues that impact the
impact company drivers of
competitiveness competitiveness in
markets where company
operates.

“Inside-out”
Social responsibility
issues that significantly
impacted by company
operations.
 Shared Value
Responsive CSR and Strategic CSR

 Responsive CSR
o Business acts as a good corporate citizen
towards society
o Reduces or removes negative impact of
business activities on society
 Strategic CSR
o Finding activities that will boost the
companies USP in costs or service to
customers while also taking responsibility to
help society
 Shared Value
What CSR do companies follow?

 What kind of CSR are companies engaged in?

 In your teams review one of these two companies and

discuss whether they are pursuing Responsive or O U TS
AK )
Strategic CSR. BRE oups of 6
(gr
 Use the URLs noted on the top of the handout to get to
the company’s CSR pages.

o Cathay Pacific – Teams 1, 2 & 3 0 minutes

2
o New World – Teams 4, 5 & 6
 Shared Value
What CSR do companies follow?

Responsive CSR
or Strategic CSR?

Cathay Pacific New World

Team 1 xxx Team 4 xxx

xxx xxx
Team 2 xxx Team 5 xxx
xxx xxx
Team 3 xxx Team 6 xxx
xxx xxx
 Case
Singtel: Philanthropic or Strategic Corporate Social Responsibility

 Discuss in your team breakouts what you believe the components of Andrew Buay’s proposal for a
new Strategic CSR approach for Singtel are. Submit the six to the assignment on Canvas.
 There are at least 6 components that I am looking for.
15 m
 The six components are: inute
s
1. VolunTeaming – encourage employees to work in CSR initiatives and give Singtel a competitive
advantage in recruitment
2. CSR projects that project a better image to consumers since research (Cone Communication Green
Gap Trend Tracker) indicate consumers willing to pay a 20% premium for sustainable products.
3. Partnering – Supplier code of conduct for its supply chain to leverage complimentary skills
4. Partnering – collaborate with government to set up IT and contact training centre for PWDs
(persons with disabilities). Competitive advantage of better relations with government which
dissatisfied with corporate commitment to employment for PWDs.
5. Employee Performance – Strategic CSR initiatives foster pride and improve employee engagement
and performance
6. Reduce costs – Strategic CSR initiatives might result in employees accepting lower wages for
positive value of working for a company committed to the right CSR efforts.
 Reading and preparations for Class 4a

 Reading and preparations for Class 4a:

o In your teams read the case study IKEA’s global sourcing challenge: Indian rugs and child labour (B)

o Prepare the debate position ‘For’ and ‘Against’ on the question allocated to your team.

o Team Cases and Questions:

1. IKEA was right not to join the Rugmark consortium in its CSR campaign against Indian child labour
 Teams 6 and 2
2. The ILO was right to eliminate home stitching in soccer ball production in Pakistan before the 1998 World Cup even
though thousands of workers (particularly women) lost their jobs.
 Teams 5 and 4
3. IKEA would be right to terminate the supplier agreement with Venkat Industries because of its breaches of the IWAY
requirements.
 Teams 3 and 1

o Your team should prepare and allocate roles for:

 Opening statement
 Argument 1 Max 2 minutes each
 Argument 2
 Argument 3
 Closing Statement