CSE and Moral Reasoning
CSR and CSE are grounded in moral reasoning that reflects the relationship between a company and the society in which it operates. It assumes businesses recognize that they do not exist in a vacuum and that their ability to operate and achieve ongoing success comes as much from societal resources (e.g., infrastructure, rule of law) and consent (e.g., social contract) as from factors that are internal to the firm. CSR and CSE emerge from the interaction and interdependence between for-profits and society. Both are shaped by individual and societal standards of morality, ethics, and values that define contemporary views of human rights and social justice.
On the one hand, it can be argued that business success depends on the society that provides the infrastructure, employees, consumers, and other elements that are central to success. On the other hand, if a business must fully reflect societal costs, it may not be able to compete—especially with firms in other societies that may be able to externalize their costs (such as dumping unfiltered pollution into local waterways).
CSE and Ethics
CSE has a strong ethical component. Responsibility is one of the core five elements of ethics and a key requirement of today’s modern business including:
Ethics requires all five components. Therefore, a corporation can have a strong sense of responsibility without necessarily being honest.
CSR and subsequently CSE are based on two forms of ethical reasoning—consequentialist (utilitarian) and categorical (Kantian). Consequentialist reasoning justifies action in terms of the outcomes generated specifically the greatest good for the greatest number of people, while categorical reasoning justifies action in terms of the principles by which that action is carried out specifically the application of core ethical principles, regardless of the outcomes they generate.
At a more practical level, these two ethical perspectives become realized in social norms accepted by the organization, the industry, the profession, or in society as necessary for the proper functioning of business. They are codified with the organization in the form of a code of conduct or ethics, which acts as a guide for the company in acting ethically according to conventional standards,
Violation of a society’s ethical principles regarding issues of social justice, human rights, and environmental stewardship is deemed to be ethically wrong and socially irresponsible. This premise is the foundation of the “social contract,” based on societal expectations that bind organisations as compliance is directly related to a social license to operate. Remaining within these implicit ethical boundaries is directly related to the firm’s societal legitimacy and long-term viability.
CSE and Ethical Trading
Ethical trading is focused on protecting workers’ rights throughout the supply chain. By treating employees, suppliers and their workers fairly and ethically, organisations demonstrate corporate social responsibility (CSR).
What is ethical trade?
Ethical trade is about the purchasing practices of a business – and the steps taken to ensure that supplier companies respect workers’ rights.
The term ethical trading often implies socially responsible sourcing, which focuses on:
- worker welfare
- agricultural practice
- natural resource conservation
The leading alliance that supports ethical trade in global supply chains is the Ethical Trading Initiative
Ethical trade and suppliers
Choosing suppliers carefully is an important part of an organisations approach to CSR and CSE. For example, using local suppliers as much as possible supports the local community and reduces the environmental impact of product and materials sourcing, logistics and distribution practices.
When choosing suppliers, it is important to examine their:
- employment practices
- health and safety procedures
- environmental policies
Customers are increasingly concerned about the wider impact of supply chains, for example on the local workforce and environment. Being associated with businesses that abuse the rights of their workers or their local environment can significantly harm an organisation’s reputation.
Larger organisations often audit their suppliers to ensure that they follow responsible working practices. Organisations should treat their suppliers fairly, particularly smaller businesses that rely heavily on the organisation. For example, on-time payments can make a big difference to small suppliers.
Ethical Trade and Customers
Customers often want to know that the companies they deal with don’t exploit the people who make and sell the products they purchase. It makes eminent sense to articulate what you do and how you do it:
- Create brochures and frankly disclose any ‘small print’ limitations.
- Be open and honest about your products and services. Tell customers what they want to know, including what steps your organisation takes to be socially responsible.
- If something goes wrong, acknowledge the problem and deal with it.
In return, you can expect customers to be loyal. Listening to your consumers can also help improve the products and services you offer them.
Additional Materials on this Subject
- Ethics and Corporate Social Responsibility – Introducing a Strategy Framework (Free Open University Course)
- Ethics & CSR (Free Open University Course)