Business & Management

CSR and Business Ethics: Are they one and the same? 2019-2020

RESEARCH REPORT

In Brief

This article attempts to draw a fine line between the notion of CSR and business ethics.
The article draws from past literature to highlight the subtle variations between the two concepts.

Ethics in business generally takes into its ambit issues pertaining to corporate governance and codes of conduct, moral principles and decision making. It has been argued that there is scope to find that business ethics might comprise of a fundamental dislocation associated with phenomenal experiences that emerge in the event that things might not be in place. At the time of recognizing practices that project ethics in business, researchers often find themselves in the domain of morality and a definition pertaining to what actually makes up morality. Later, actions in business would be judged not on the basis of actions that are effective or efficient but whether the actions were defensible from a moral perspective. It can be comprehended that ethics in business as a notion is gradually changing, with regards to innovative manner of how resources are being mobilized and utilized, innovative technologies, evolution in practices within the society and gradually growing towards a business network which is connected globally. An increase in the awareness of the limitations of natural resources, the growth in the divide of wealth and the ever pervading existence of business within the life of an individual citizen through technologies like cloud computing and big data, bring to the fore the issue of ethics in business within conversation on societal norms.

Nonetheless, is it possible to recognize ethics in business as an array of standards that organizations are known to practice? How different is business ethics from corporate social responsibility (CSR), a term that has become a buzzword across corporate circles today? Apparently ethics and CSR has been perceived by some as one and the same however, there is a fine thin line that dissects the two, this article attempts to explore CSR from a business ethics setting.

CSR from a Business Ethics Context

The normative stakeholder theory within CSR has been known to draw its idea from ethics. Thus it confirms that organizations involved in business are obliged morally to consider any concerns expressed by a bigger stakeholder group comprising of customers, employees, owners, vendors and community instead of the owners exclusively. The notions of CSR and business ethics have unique identities. Nevertheless, they are frequently utilized in reference to the very same code or argument. Business ethics as a term is meant to be an amalgamation of two well-known terms viz., business and ethics. Business people might reach the very edge of or even move over to traditional standards of morality, while pursuing a creative destruction, in pursuit of an objective that could be a form of the ‘means being justified by the end’. CSR is then viewed as a fee that has been levied on the outcomes extracted through the wrongdoing by business as a penalty to pay for some of the rights. Thereby, the income generated through taxes linked with wrongdoing and exploitation are frequently reserved towards restoring the environment and health, if not providing downright incentives for manufacturing products that are more salutory in nature.

Adopted from PTTEP 2013

Present Pertinence of CSR

CSR for long has been an integral aspect of responsible and ethical practice of business. Nonetheless, the notion has gained increased traction in view of the economic environment which is rather globalized currently. CSR functions as per the rule that businesses are responsible to cater to their responsibilities towards a wider spectrum of stakeholders as compared to its shareholders. CSR should never be a policy that is added-on by an organization, but it is something which is incorporated within the strategy and structure of governance. According to a report, it has been observed that CSR initiatives the world over has witnessed a remarkable increment in recent times as

“businesses realize their value not only commercially, but also in terms of boosting employee value, cutting costs and attracting staff”.

Equating Good CSR Practices with Ethics

But the question here would be; will complying with every regulation and standards as laid down in CSR essentially ensure that the business entity is practicing ethics in business? Is there a correlation between the activities initiated by the organization from a CSR setting and business ethics? There have been several instances of organization that adhere to all the prescribed standards of CSR outwardly, but there is no indication that they have been ethical in their business practices. Instances where unethical business practices have come to light is evident through the ‘Enron’ fiasco. During the year 2001, Enron was a leading giant and vociferously advocated and practiced CSR. However, it was later revealed that business practices at Enron were not entirely ethical as they manipulated their financial statements. This instance and several other clearly indicates that adhering to CSR is one thing and being ethical in business is an entirely different thing altogether.

Our Take

Perceiving CSR through the normative stakeholder theory, it can be proposed that CSR is actually as subclass of business ethics. Stakeholder theory commences on the assumption that values could be openly and essentially an integral aspect of conducting business. CSR is restricted in its definition of the responsibilities and mandate for a business towards their stakeholders. CSR is what the organization is expected to do to give back to society or being socially responsible whereas business ethics would require business owner to be sensible in all their business actions or being morally responsible.

Future [Scope]

Research in this domain in future could possibly explore strategies that can be set forth to ensure business ethics are being followed by organizations.

Business Ethics CSR from a Business Ethics Context

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