Traditionally, business ethics have
focused on fair and honest practices.
While moral integrity is still the fundamental core of ethics, the definition has
become much broader.
“For many years the emphasis was on the
shareholder approach,” says Cordell P.
Schulten, MA, JD, lecturer, business ethics,
Fontbonne University. “The primary responsibility in policy declarations was to owners/shareholders and essentially was fulfilled
by profitability and economic measures.
Now, we’ve moved to the stakeholder
approach where decision makers in business
take into account not just the owners, but
employees, suppliers, the community, and
broader relationships with government agencies and within a global context.”
This concept, says Schulten, has gained
prominence in business ethics within the
past 15 years and is known as the triple bottom line, where a company looks at economic results, social responsibility and environmental stewardship and impact.
Smart Business spoke to Schulten about
the triple bottom line and how to utilize it.
What are the business benefits of corporate
social responsibility?
Companies that are adopting the triple bottom line approach are presenting demonstrative evidence that considering all stakeholders translates into good business that bodes
well for overall profitability. Starbucks, with
its commitment to fair trade for coffee growers, is a good example. Starbucks demonstrates how being deliberate about social
responsibility and environmental steward-ship pays off. In today’s world, authenticity is
key, especially with our 20-something emerging leaders and consumers. In many cases,
people and organizations won’t even do business with companies that do not have a reputation for being socially responsible.
How can companies deal more responsibly
with customers and suppliers?
The key to putting the triple bottom line
into practice is listening. Be aware of the concerns and interests of employees and customers. Provide ways to obtain feedback.
Open and maintain lines of communication.
A good example of a company that deals
responsibly is Stonyfield Farms. It stands
behind its suppliers and is willing to pay a
higher price for organic milk. The commitment of the company to the value of organic
products is essential to its identity. Some of
this goes back to your ethical theory. Is it
duty-based, where decisions are made based
on the best thing to do? Or do you have a consequentialist view, where you take the action
that will bring the best results to the greatest
number of people? Or are your ethics virtue-based? Stonyfield provides proof that there is
a return on virtues-based ethics. Treating
employees and suppliers fairly, with practical
demonstrations of that fairness (e.g., paying
them well and on time), creates loyalty.
How can companies foster strong relationships with the local community?
A good starting point is to be aware of how
your business impacts the community and
how you can use the best parts of your business to help. What do you do well? How can
you connect that to the needs of organizations, charitable groups and others focused
on helping your community? Some companies focus on one, two, or three local organizations by doing things such as encouraging their employees to help out with specific
projects for these groups. Helping in the community is a great way to create and build relationships in the social context, raise awareness of your company, and enhance the community’s appreciation of your business.
How can companies demonstrate their commitment to the environment?
Again, it involves awareness and a willingness to listen to and be aware of the issues.
You can start with the basics, for example the
paper products you’re consuming. How
much paper do you use? What type of paper
is it? Pedro’s Planet Inc., which sells recycled
office supplies, is a good example of an environmentally responsible company that helps
other businesses be environmentally responsible as well. Other examples include the
many companies across the country that are
‘greening’ their headquarters by implementing solar power, daylighting, water conservation measures, and other sustainable design
strategies. Actions such as these demonstrate a commitment to reducing adverse
environmental impact.
How can companies measure the effectiveness of corporate social responsibility?
Many companies are now releasing social
responsibility reports, which follow the
financial audit model, in order to audit ethics
policies. These reports show what the company intended to do, how it approached this,
and what it achieved. It involves doing surveys and interviews with employees, customers and suppliers, asking whether the
company is honest and fair and if it has a reputation for integrity. Some companies have
compliance officers who monitor whether
they are following the law. However, a true,
broad-based approach to ethics goes beyond
doing what you have to do to monitoring
how well you are doing it. On a final note, a
solid ethical approach to doing business
must come from the top down. You can have
a written policy, but if your employees don’t
see the company’s leaders embody it in concrete ways, it won’t be effective.
CORDELL P. SCHULTEN, MA, JD, is a lecturer of business ethics at Fontbonne University. Reach him at [email protected] or
(314) 223-8182.
