How and Why Are Ethical Concerns and Corporate Social Responsibility Impacting Businesses in the UK - Term Paper Example

Business in Focus How and why are ethical concerns and corporate social responsibility impacting businesses in the UK? Introduction Ethical responsibility and corporate social responsibility have become buzzwords for modern business enterprises but in the present day and age, a company has to do a lot more than simply pay lip service to social causes. The relative ease with which information can be distributed and shared between individuals, especially in developed nations like the UK, makes it impossible for a company to hide something for long. If there are any skeletons in the closet, sooner or later they come out and hurt the company in more ways than one. A Historical Example Corporate social responsibility is important for businesses because crimes committed more than half a century ago still haunt some European companies. Bertelsmann is one such organisation which shows this amply, the company claimed that it was shut down by Hitler’s government in 1944 and the management created a legend of defiant Nazi resistance which led to the company being granted a clean operational license in the years after the war. The truth of the matter, as reported by the BBC, was that the company was shut down due to the paper shortages created by the war and not their defiance to the Nazis (BBC, 2002). As a matter of fact, Bertelsmann cooperated with the Nazi government for generation of profits. The company went ahead and published several volumes of anti-Semitic documents contracted by the German government during the Nazi era. Additionally, those profits were made using Jewish slave labour in camps within Lithuania and Latvia. Before the war, the company was a small school and religious books and after the war (with the aid of illegal profits) it became one of the giants of the print media. Additionally, the BBC (2002) reports that in collaboration with the Nazi government, the company targeted children for recruitment with its sponsored publication of The Christmas Book of the Hitler Youth and that book along increased the publisher’s sales twenty times over. The Current Situation The negative image that comes with social irresponsibility is simply unaffordable in a time where corporations and international companies have profit structures that surpass the annual budgets many countries of the world. It is often assumed that the only responsibility a business venture can have is to the shareholders or directors of the company therefore profit is the only motivation for any action. However, that though process is a based on very weak foundations since Government pressure, legal requirements and the regulatory guidelines given by industry authorities can force a corporations to recognize their social responsibility and establish the need to keep a good image with the public. Companies like BP, Shell, Dell, Microsoft, and Apple are loved or hated by many people for many different reasons (Colvin, 2006). Despite this, none of these companies can ever afford their brand name and corporate image to be hurt in any way. Even falsified information about a company’s contracted suppliers being cruel to employees in China can have a negative effect on the sales of the company. As suggested by Forbes (2005), it is possible for a company to be respected by analysts depending solely on the financial performance of the company. At the same time, greater appreciation would come to a company that shows social responsibility along with financial stability (Natural Health, 2005). The Why I feel that the fundamental reason for why ethics have become important for companies doing business in the UK is profit. Without being ethical, a company will not be able to pass the test which levied by ethical consumers about the company’s products and services. In fact, the emergence of the ethical and socially aware consumer is one of the reasons why companies have to be ethical and socially aware themselves since they would lose a portion of the market if their socially unacceptable practices were revealed to the public. An ethical consumer is a responsible buyer who does not want to help those companies who are not ethical themselves. This consumer will make many buying decisions which are greatly influenced by the operations of the company from which the purchase is being made. Of course there are as many personal definitions of ethical actions as there are individuals therefore the more bases a company can cover, the better off it will be (Ethical Consumer, 2006). Generally speaking, such consumers will not purchase buying goods or services from any organisation which does not ensure that its products do not exploit labour, do not harm animals or cause water and air pollution. Such consumers can be found in increasing numbers in Europe and the UK since the availability of information about various companies has become common place. In fact, it has come to the point that companies themselves publish corporate social responsibility reports as marketing tools (Ethical Consumer, 2006). As a matter of fact, anyone with even a slight interest in a certain company as well as having basic search skills on the internet can find out as much as they would like about the company. There may be situations where a company would not divulge its suppliers or explain their labour related management systems to outsiders but an educated guess is often good enough. Consider the sale of beauty products where Brand X pushes the fact that they do not test their products on animals testing and ensure a mandatory global minimum wage for workers in off shore locations along with employee benefits to everyone working for the company. On the other hand, Brand Y remains absolutely silent about their operations. With this information and other things being equal, the consumer who value ethics would prefer to buy Brand X. Buying something is no longer based on price alone since there is a moral dimension involved in the act of buying. In case where the consumer is well informed about the negative practices of a company, defence against the allegations can is impossible because the consumer is working with undeniable facts. However, it must be noted that the internet itself and the various pub houses of Britain are full of stories, exaggerations and complete fabrications about the dirty practices of giant companies and it is frequently very difficult to quell these stories. The How To show how companies work with ethical responsibility, it is best to use the example of an international organisation which works all over the world since ethical concerns are not limited to British companies alone. GE is one such company that has offices in the UK as well as in many locations around the world and has been faced with ethical concerns throughout its existence. The company uses the internet to its advantage since its social responsibility report is published online for all to see. This state of being open about their operations adds to the repute of GE since it makes the host country as well as other stake holders a bigger part of the process of social accountability (Colvin, 2006). In terms of social responsibility, not only does this make access to information easier, it also ensures that GE makes their own information the primary source for data about the company which removes any gaps in information access or chances of spreading any misinformation about the company (Chwastiak & Young, 2003). In fact, an individual who wishes to look for negative information about GE would have to go through a lot more than simply use the internet for a few hours. While researching for this document, negative information about GE was much harder to come by than companies like Starbucks which has earned the scorn of many different environmentalist groups for the excessive use of its Styrofoam cups (Dineen, 2005). In terms of focusing on the various stakeholders for the company, the social responsibility report of GE divides itself into various parts that cover all the individuals who are linked with GE or its offices around the globe. GE makes it very obvious from the information within the opening pages of the report that GE is not taking stockholders or buyers as the intended target of the material but is actually casting a net for a wider audience which includes host countries like China, Indian even the European Union as it shows how it helps disaster struck areas around the world. In social terms, one of the hot topics for many debates this year has been the energy problem that is facing the world and rising oil prices. The document focuses on these topics by highlighting GE’s involvement in the search and development of renewable energy resources and makes it the first section of the overall report (GE, 2006). The ethics, compliance and governance section comes next where GE makes it a point to show that all of their compliance audits reports are produced by independent contractors. The criticisms made by Adams (2004) as well as Chwastiak & Young (2003) are effectively countered in the report by citing the information given FT/PricewaterhouseCoopers annual global survey of CEOs that puts GE at the number one spot for adherence to good corporate governance and ethically responsible conduct (GE, 2006). By using a reputable external source for information about their compliance with government regulations, GE also answers to the allegations made by Medawar (1976) who suggested that internal social responsibility audits may not be enough. The company also focuses on human rights issues which are connected with not only their operations in the western countries but also for countries where labour laws have traditionally been weaker. For instance, in Mexico, it is a common practice to test female employees for pregnancy and refuse employment based on them being pregnant and this practice was followed by many companies who have manufacturing concerns in Mexico. GE stopped this policy at their Mexican operations and made questions regarding pregnancy or employment discrimination based on this situation to be unlawful in their operations. Similarly, Chinese laws are completely silent on age based employment discrimination and GE declared such discrimination to be against their company policies (GE, 2006). Perhaps the most evident change in how business is conducted for big business is the change in where the responsibility and drive for being ethical comes from, i.e. the very top of the company as the CEO becomes the driving force for a socially responsible company (Welch, 2005). Conclusion Undeniably, the customers of today have become more aware of social issues concerning the business world and have clearly been seen to understand that corporate responsibility can be very easily forced upon sellers if their products are not used. For businesses, the situation means that simply informing the consumers about the personal and economic benefits of buying a certain product is no longer enough, a customer must also be informed about the ethical practices and socially responsible operations of a company which confirm that the company is acting for the benefit of society. Caveat Venditor is the opposite of Caveat Emptor which signifies that in the selling process, the seller also has to be careful and be concerned about the items being sold. The responsibility of the sale, use and resulting influences from the product might be with the seller of the goods as much as they are with the person who bought them in the first place. Ethical responsibility has already changed the way business is done and it can be expected that the future will bring more changes with it. Works Cited BBC. 2002, ‘Bertelsmann admits Nazi past’, BBC.co.uk, [Online] Available at: http://news.bbc.co.uk/2/hi/business/2308415.stm Chwastiak M. & Young J. 2003, ‘Silences in Annual Reports’, Critical Perspectives on Accounting, vol. 14, no. 1, pp. 533-552. Colvin, G. 2006, ‘What Makes GE Great?’, Fortune, vol. 153, no. 4, pp. 90-96. Dineen, S. 2005, ‘The Throwaway Generation: 25 Billion Styrofoam Cups a Year’, The Environmental Magazine, vol. 16, no. 6, pp. 35-36. Forbes, S. 2005, ‘Whoda Thunk It? Coffee Is Hot’, Forbes, vol. 176, no. 12, pp. 33 -34. GE. 2006, ‘Citizenship Report’ GE.com, [Online] Available at: http://www.ge.com/files/usa/citizenship/pdf/GE_2006_citizen_06rep.pdf Natural Health. 2005, ‘Ethos water & Starbucks’, Natural Health, vol. 35, no. 10, pp. 24-25. Welch, J. 2005, Winning, HarperCollins. Word Count: 2,034 Read More