5.7 Putting It Together: Ethics and Social Responsibility
In this module we’ve covered a range of different corporate ethical challenges, legal requirements, and opportunities to contribute to social good. Every year, a company called Ethisphere provides a thorough review of businesses seeking to gain recognition for being upstanding corporate citizens. (See the full list of the World’s Most Ethical Companies honourees and Maclean’s List of Canada’s top 50 Socially Responsible Companies).
The review process captures company performance in five areas, but in order to be honoured, the companies must demonstrate that they are addressing ethics and social responsibility holistically. The five factors, which are nicely aligned with the topics of this module, are described below, each with a brief description of how the companies show compliance.
1. Ethics and Compliance Program
We discussed this topic in our focus on company policy, along with the important role of executive leadership in supporting and following the policy. This category reviews the ethics program structure, responsibility, and resources, and evaluates the program oversight and tone among top management in the company.
In the following video, Walmart’s chief ethics officer, Cindy Moehring, explains how the compliance and ethics team makes this sophisticated program simple:
You can view the transcript for “Making the Sophisticated Compliance Program Simple”. (opens in new window)
2. Corporate Citizenship and Responsibility
We’ve looked at a number of ways in which companies can be good corporate citizens and “give back” to society and stakeholders. In this category, Ethisphere evaluates a wide range of a company’s performance indicators associated with sustainability, citizenship, and social responsibility, with special attention to areas such as environmental stewardship, community involvement, corporate philanthropy, workplace impact and well-being, and supply chain engagement and oversight.
In the video below, Executive Vice President of Government Affairs, General Counsel, and Corporate Secretary of PepsiCo, Tony West discusses the responsibility to society that businesses have:
You can view the transcript for “Sustainable and Responsible: Social License to Operate”. (opens in new window)
3. Culture of Ethics
We also discussed the importance of building a culture of accountability within an organization. In this area the Ethisphere evaluation measures an organization’s efforts and success at establishing an ethical tone throughout every level of the company.
In the following video, Tony West of PepsiCo shares insight on sustainable ethical cultures, employee values, and their persistence over time:
You can view the transcript for “Sustaining Longterm Growth Through Culture”. (opens in new window)
4. Governance
We discussed the importance of executive leadership when it comes to monitoring and promoting a quality company culture. This category of the Ethisphere review examines the availability and quality of systems designed to ensure strong corporate governance, which not only includes executive managers, but also the company’s board of directors.
CH2M Hill board member Georgia Nelson discusses the positive effects of board diversity on corporate governance and innovation in the video below:
You can view the transcript for “Importance of Board Diversity on Corporate Governance and Innovation”. (opens in new window)
5. Leadership, Innovation, and Reputation
The companies that make Ethisphere’s list of honorees are visibly presenting themselves in an ethical context, which supports their reputation among all stakeholders. This category evaluates the company’s ethical reputation in the marketplace and among key stakeholders such as employees and customers.
In the video below, the corporate communications manager of Aflac International, John Sullivan, explains how ethical practices reflect on the business:
You can view the transcript for “Aflac Incorporated on How Ethical Practices Reflect on the Business”. (opens in new window)
New Solutions with Different Corporate Structures and Business Models
With the evolution of Corporate Social Responsibility (CSR) to Environmentally Social Governance (ESG) which measures and holds organizations to account for their practices, new global business models have appeared to formalize not only their policies and practices but their legal structures on how they generate and measure economic value. A few examples described below include Non-Profits, Non-Governmental Organizations (NGO), Social Enterprises and B Corps.
Non-Profits and Non-governmental organization (NGO)
They are effectively the same thing. Non-governmental organizations, or NGOs, were first called such in Article 71 in the Charter of the newly formed United Nations in 1945. They operate in many different areas across the globe.
An NGO is a non-profit, citizen-based group that functions independently of government. NGOs, sometimes called civil societies, are organized on community, national and international levels to serve specific social or political purposes, and are cooperative, rather than commercial, in nature.[1]
An example of an NGO is Oxfam or World Vision
Social Enterprises
Social enterprises are not a formal tax structure but they are different from charities.
While earning profits is not the primary motivation behind a social enterprise, revenue still plays an essential role in the sustainability of the venture. Sustainable revenue differentiates a social enterprise from a traditional charity that relies on outside funding to fulfill its social mission. [2]
There are many social enterprises in Nova Scotia, one well-known one is Hope Blooms.
B Corps
B Corps are a more recent development, started in 2006 by three friends who quit their jobs to start the certification and global impact and measurement process. Any organization can qualify for the demanding standards.
Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.
Here’s the 2018 list of the top B Corp organizations. In Canada some B Corps include Danone Dairy Products and Bull Frog Power and Business Development Bank of Canada (BDC).
View the video on how B Corps work around the world.
- Folger, J. (2021, January 18) What is an NGO (Non-Governmental Organization)? Investopedia. https://www.investopedia.com/ask/answers/13/what-is-non-government-organization.asp ↵
- Barone, A. (2020, October 27). Social Enterprise. Investopedia. https://www.investopedia.com/terms/s/social-enterprise.asp ↵