Food for Thought
'Corporate Social Responsibility and Ethical Trading' - the latest business buzzwords. Can you afford to miss out?
Once upon a time companies felt their social mission was complete by employing people. As times progressed, companies started engaging in social philanthropy by donating money to charity at the end of the financial year or through employee initiatives such as sponsored events. Today, when the expectations from – and accompanying market pressures on – companies have increased, the government and business leaders see this as a year-round responsibility. This requires businesses to think strategically, focusing on the environment around them, the best working practices, and engagement in the local community. It is recognised that brand names depend not only on quality, price and uniqueness, but also on how the company contributes to sustainable development.
A variety of concepts have been developed to capture the changing rules in the world, both generally and particularly in the business world. Business ethics, corporate social responsibility, corporate accountability, corporate sustainability, and being a good corporate citizen are only few among a large number. Defining concepts in its turn has spurred various debates on the nature and scope of companies’ obligations towards their employees, host communities, other stakeholders and the environment. The pressure to meet the expectations both of shareholders and of the wider society has become a foundational ethical tension facing companies.
Law could be a good starting place from which to sketch the type of things a company should do, but equating law with a moral template risks leaving out many life situations for which there may be no legal answer. The concept of Corporate Social Responsibility (CSR) can be seen as a successful attempt to capture the behaviour of businesses over and beyond legal requirements. The CSR movement should be praised for spurring the debate about corporate objectives and what those should be along with corresponding accountability arrangements. Indeed, the CSR movement appears to be converging with broader trends in corporate governance.
The recent changes introduced by the Companies Act 2006 in some way support this argument. Notably, the duty to act bona fide in the interests of the company has been replaced by the duty to promote the success of the company for the benefit of its members, with directors required to have regard to a wider range of ‘stakeholder’ interests, thus introducing the so-called principle of ‘enlightened shareholder value’. Although the concept of CSR can be seen from this angle as closer to an all-encompassing ethical template, it also has its flaws – in particular not being self-sufficient.
As a matter of fact, there is no universally shared definition of acceptable moral behaviour. The notion of ethics may depend on the circumstances of time and place, and even on the ‘hat’ worn by each individual decision-maker in a given scenario. Or we may ignore what we are in everyday life, and treat all types of situations from the perspective of one and the same ‘human being’. The second option has its own pitfalls in that making judgements in business activities, because of their nature, requires special assessment. However, without agreeing on some standards that could inform the term ‘ethical business’ or the idea of companies’ CSR policies, one risks achieving little. Human rights standards may offer some help.
The Human Rights Act and the development of a “human rights culture” over the last ten years has already made many businesses focus more on rights-related issues in the workplace, and on the level of respect shown towards individual rights by suppliers. For many customers the extent to which a company is involved in socially responsible activities is as important as the USP’s attributed to the company’s products and services.
Knowing how to begin to be socially responsible need not be difficult. To this end Fisher Jones Greenwood LLP in conjunction with the Human Rights Centre at the University of Essex and the Essex Chamber of Commerce joined ranks to offer a seminar entitled "Ethical business: don't get left behind". The seminar was held on the 19th March at Waterside, Chelmsford, 9:30am – 2:30pm, and focused on how companies can trade ethically and help secure respect for fundamental human rights – and how developing socially responsible ways of doing business can work equally well for large and small enterprises.
More Information
Listen to the Q&A session here
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Read the news article here
