Business Ethics

The International Travel College of New Zealand 1
Legislation and Ethics in the Travel and Tourism Sector
Unit #8 – Learning Outcome 3
BUSINESS ETHICS
• Ethical Theory
• Business Ethics

What are Ethics?
• A set of moral standards that are relied upon to reach conclusions and
make decisions.
• In a business environment, ethics are a key factor in responsible decision
making.
• Maintaining a high ethical standpoint when operating your business can
provide benefits to both the internal and external stakeholders of your
business.
• Personal ethics are developed as we grow up, influenced by people and
environment.
• Some ethical viewpoints are considered universal and apply to people
around the world, whereas others are of a personal nature and may only
apply to you.
• Your ethical viewpoints continue to evolve and change over time as you
interact with different people and are exposed to different situations and
environments.

Ethical Theory
• Ethical theory serves as the foundation for ethical
solutions to the difficult situations people encounter in
life.
• For centuries, philosophers have come up with
theoretical ways of telling right from wrong and for
guidelines about how to live and act ethically.
• Business ethics theories include the moral principles
or codes a company implements to ensure that all
individuals working in the company act with acceptable
behaviour.
• Business owners and managers can use an ethics
theory they deem most appropriate for use in their
operations.

Virtue Ethics
• Character matters above all else.
• Living an ethical life, or acting rightly, requires
developing and demonstrating the virtues of
courage, compassion, wisdom, and temperance.
• It also requires the avoidance of vices like greed,
jealousy, and selfishness.
• The virtue approach is a more difficult for
businesses to implement, as its approach
focuses on following ethical principles that
should be evident in society.

Utilitarianism
• The amount of happiness and suffering created by a person’s
actions is what really matters.
• Thus, acting rightly involves maximizing the amount of happiness
and minimizing the amount of suffering around you.
• You may even need to break some of the traditional moral rules to
achieve such an outcome.
• The utilitarian approach focuses on using ethical actions that will
promote the most good or value among a society while limiting the
amount of harm to as few people as possible.
• Among the business ethics theories, this is typically seen as the
oldest theory.
• Businesses can use this theory to ensure the outcome of various
situations helps the maximum amount of stakeholders.

Kantianism & Contract Theories
• Kantianism emphasizes the principles behind actions
rather than an action’s results. Acting rightly thus
requires being motivated by proper universal principles
that treat everyone with respect. When you’re motivated
by the right principles, you overcome your animal
instincts and act ethically.
•
Contract theory proposes thinking about ethics in terms
of agreements between people. Doing the right thing
means abiding by the agreements that the members of a
rational society would choose.

Care Ethics & Rights Ethics
• Care ethics focuses ethical attention on relationships
before other factors. As a result, acting rightly involves
building, strengthening, and maintaining strong
relationships. Acting rightly displays care for others and
for the relationships of which they are a part.
• Rights - A rights ethical approach is based on the belief
that all individuals have rights in life and should be
treated with respect and dignity. Morals play a large role
in this because individuals must personally use ethical
behavior in order to achieve the end goal without
mistreating people. Business ethics theories often use
this approach by not imposing their missions, products,
or systems on consumers.

Justice Theory &
The Common Good
• Justice as an ethical approach focuses on treating all people
equally, regardless of rank, position, class, creed, or race. This is
also known as the fairness approach in business ethics theories. If
people are not treated fairly a justifiable reason must exist. eg
paying somebody more money may be appropriate because of
higher technical skills or level of responsibility.
• The common good approach promotes the common values and
moral or ethical principles found in a society. This varies from place
to place based on each countries' specific cultural or societal beliefs.
eg. the moral principles in Japan may be different than those in the
USA. Business owners and managers often implement these
principles to ensure their company’s overall mission is in sync with
society as a whole.

Definition of Business Ethics
"Business Ethics" can be defined as the
critical, structured examination of how
people & institutions should behave in the
world of commerce. In particular, it involves
examining appropriate constraints on the
pursuit of self-interest, or profits, when the
actions of individuals or firms affects others.”
Chris MacDonald (Business Ethics lecturer – Toronto, Canada)

Why apply Ethics in Business?
• The business case for maintaining high ethical
standards is based on the positive benefits that
it can provide to a business:
– Improved employee and organisational morale
– Increased ability to attract new customers
– Improved customer loyalty
– Reduced risk of negative exposure and public
backlash caused by poor ethics
– Attraction of new stakeholders
– Making a positive impact on the community

Being ethical makes good business sense
• Ethical and sustainable development is good business. It involves implementing and
measuring ethical business practices that benefit all stakeholders to create an
increased triple bottom line of financial, social and environmental performance.
• Business ethics are important for managing a sustainable business mainly because
of the serious consequences that can result from decisions made with a lack of
regard to ethics. Poor ethics can have a detrimental effect on profits.
• Poor ethical standards can result in business managers making misinformed,
misguided or bad decisions. The future effects of their actions could be significant
and wide reaching, particularly if they cause injury or financial loss to other people or
businesses.
• In a sustainable business, employees at every level should be committed to the
ethical standards of the business. Business managers should clearly define and
communicate to staff what factors and ethical standards are expected of them and
what the consequences are for failing to meet those expectations.

Ethics in Human Resource Management
Recruitment:
• There are clear ethical issues in relation to the hiring, management
and dismissal of the people who work in a business.
• An ethical approach to the recruitment process requires employers
to be honest open with people applying for a job.
• Job ads should state the nature of the position and any questions
regarding salary, job tasks, hours, timeframes and expectations
should be answered as honestly and as thoroughly as possible.
• This upfront honesty protects both the employer and the applicant
from having unrealistic expectations about the nature of the job.

Health & Safety:
• The people who work in a business also have certain rights that are
closely tied to ethics.
• Occupational health and safety conditions are mandated by law in
NZ, but a business should also be bound by its ethical values to
ensure that workers are provided with safe conditions in the
workplace.
• The ‘climate’ in the workplace should be such that employees feel
‘comfortable’ to bring forward any potential health and safety risks
that they notice to ensure the wellbeing of people working in the
business.

Performance or Disciplinary Issues:
• There some important ethical considerations in
relation to dismissing an employee.
• In NZ Employment Law exists to protect workers
from unfair dismissal and employees should not
be dismissed unless a valid reason that is
related to their employment can be provided.
• Alternatives to dismissal include further training,
counseling or coaching, job sharing or temporary
leave.

Conflicts of interest:
• A conflict of interest arises when an individual or organisation is
involved in multiple interests, where one could potentially corrupt the
actions in regards to the other.
• For example, a manager interviewing job applicants would face a
conflict of interest if a family member applied for the job. Their
obligations in helping out a relative could compromise their
responsibility as a manager to hire the best candidate for the job.
• This type of situation is also known as an ‘ethical dilemma’, where
your moral or ethical obligations to different parties contradict each
other, making it difficult to come to a resolution.

‘Fringe Benefits’:
• The appropriate use of business resources and facilities
raises a number of ethical problems.
• Some businesses offer privileges to their employees or
associates as a gesture of goodwill, however, people
should avoid exploiting the generosity of the business by
using them inappropriately or unfairly.
• Employees should also avoid using their business
connections to gain an inappropriate personal
advantage.

Business Ethics and Stakeholders
• A stakeholder is any person or group that has interest or concern in an organization
or business and who are affected by the actions or policies of the business.
Stakeholders include creditors, directors, employees, government (and its agencies),
owners (shareholders), suppliers, unions, and the community from which the
business draws its resources.
• Businesses should adhere to a strict set of ethical standards, when accounting and
providing reports to stakeholders.
• All information provided to stakeholders should be done so on the basis that it is
accurate, timely and comprehensive.
• There are also a number of ethical issues that can be raised in regards to certain
industries, the products they sell and the way they market their products.
• Common examples are the tobacco industry, which sells products to consumers that
are proven to be detrimental to their health, and companies that sell unhealthy food,
which have been accused of marketing directly to children.
• Ethical dilemmas arise because the products they sell are not illegal, yet the negative
impacts on society are considered significant.
• Business owners need to make decisions in regards to the ethical standards and
moral values that they want to follow in their business.

ETHICS IN ADVERTISING
• Ethical Dilemmas in Advertising and Marketing
• Ethical Consumerism
• Ethical Shopping
• Fair Trade

Ethics in Advertising
• Ethics in advertising means a set of well defined principles which
govern the ways of communication taking place between the seller
and the buyer.
• Ethics is the most important feature of the advertising industry.
• Whilst there are many benefits of advertising there are some
aspects which don’t match the ethical norms of advertising.
• An ethical ad is the one which doesn’t lie, doesn’t make fake or false
claims and is in the limit of decency.
• There are concerns that currently ads are more exaggerated

Fundamental Ethical Issues in
Marketing and Advertising
• The objective for advertisers is to increase sales,
gain more customers and increase demand for
the product through the ads.
• Ads are designed to affirm claims that their
product is the best, has unique qualities, is
better than competitors, more cost effective, and
more beneficial.
• Many of these ads are found to be false,
misleading customers and unethical.

Marketing/Advertising Ethical Dilemmas
• Customer exclusion whereby potential customers from the market: selective
marketing is used to discourage demand from undesirable market sectors.
• Examples of unethical market exclusion are past industry attitudes to the gay,
ethnic minority and obese markets.
• Another example is the selective marketing of health care, so that unprofitable
sectors (i.e. the elderly) will not attempt to take benefits to which they are entitled.
• Targeting the vulnerable (e.g. children, the elderly). The elderly hold a
disproportionate amount of the world's wealth and are therefore the target of financial
exploitation.
• In the case of children, the main products are unhealthy food, fashion and
entertainment goods. Children are a lucrative market as children 12 and under spend
more than $11 billion of their own money and influence family spending decisions
worth another $165 billion but are not capable of resisting or understanding marketing
tactics at younger ages
• Other vulnerable audiences include emerging markets in developing countries where
the public may not be sufficiently aware of skilled marketing ploys transferred from
developed countries.
• Another vulnerable group are mentally unstable consumers.
• The definition of vulnerability is also problematic: for example, when should
endebtedness be seen as a vulnerability and when should "cheap" loan providers be
seen as ‘loan sharks’ unethically exploiting the economically disadvantaged?

Ethical ‘Pitfalls’ in Advertising
• Issues over truth and honesty such as the promotion and
advertising of products like tobacco and alcohol.
• The use of sexual innuendo which attracts potential
customers but can be seen as sexual harassment
• Violence in advertising that can be seen by children
• Taste and controversy. The advertising of certain
products may strongly offend some people while being in
the interests of others.
• Negative advertising techniques, such as attack or
comparison ads. In negative advertising, the advertiser
highlights the disadvantages of competitor products
rather than the advantages of their own.

Business Ethics and Big Business
• Business ethics has been an increasing concern among larger
companies, at least since the 1990s.
• Major corporations increasingly fear damage to their image
associated with press revelations of unethical practices.
• Marketers have been among the fastest to perceive the market's
preference for ethical companies, often moving faster to take
advantage of this shift in consumer taste. This results in the
promotion of ethics itself as a selling point or a component of a
corporate image.
• The Body Shop is an example of a company which marketed itself
and its entire product range solely on an ethical message.
• Greenwashing is an example of a strategy used to make a company
appear ethical when its unethical practices continue.

Business Ethics and Big Business
cont..
• Marketers are ethically responsible for what is marketed
and the image that a product portrays.
• Marketing ethics, regardless of the product offered or the
market targeted, sets the guidelines for which good
marketing is practiced.
• When companies create high ethical standards upon
which to approach marketing they are participating in
ethical marketing.
• To market ethically and effectively, all marketing
decisions and efforts must meet and suit the needs of
customers, suppliers, and business partners.
• Ethical behavior should be enforced throughout company
culture and through company practices.

The Ethical Consumer
• The term ethical consumer
describes someone who
practices ethical
consumerism
• It is practiced through
'positive buying' in that
ethical products are
favoured, or 'moral boycott',
that is negative purchasing
and company-based
purchasing

Ethical Consumerism
• Ethical consumerism is a type of consumer activism that's based on the
concept of dollar voting.
• It is practiced through 'positive buying' in that ethical products are favoured,
or 'moral boycott', that is negative purchasing and company-based
purchasing.
• The term "ethical consumer", now used generically, was first popularised by
the UK magazine the Ethical Consumer, first published in 1989.
• Ethical Consumer magazine's key innovation was to produce 'ratings tables,'
inspired by the criteria-based approach of the then emerging ethical
investment movement.
• Ethical Consumer's ratings tables awarded companies negative marks (and
from 2005 overall scores) across a range of ethical and environmental
categories such a 'animal rights', 'human rights' and 'pollution and toxics‘.
• This empowered consumers to make ethically informed consumption
choices and providing campaigners with reliable information on corporate
behaviour.
• Such criteria-based ethical and environmental ratings have subsequently
become commonplace both in providing consumer information and in
business-to-business corporate social responsibility and sustainability
ratings.

5 Principals to Shopping Ethically
1. Every purchase makes an impact
2. Avoid unnecessary consumption - ask, ‘Do
I need it?’
3. Learn about the issues - but take on one
issue at a time
4. Seek out a ‘Best Buy’ according to what you
value and the options available
5. Make lasting change -celebrate good
choices, create good habits, give feedback
www.ethical.org.au/

Trade Aid
• Trade Aid is a Fair Trading organization, established in NZ 1973, and
carries out retailing, education and advocacy work on fair trade issues
• Trade Aid is a not for profit organisation who operate in retailing, importing,
wholesaling and also act as a development agency
• Shops throughout NZ
• Education and advocacy work on fair trade
• Strategic partnership with the New Zealand Aid Programme of the Ministry
of Foreign Affairs and Trade to work collaboratively on realising the
enormous benefits that trade can have in reducing poverty and promoting
development.
• Trade Aid are pioneers in fair trade in New Zealand, members of the World
Fair Trade Organisation (WFTO), an international body of organisations who
are 100% committed to fair trade. It is the only global network whose
members represent the fair trade chain from production to sale.

GREEN BUSINESS
• Sustainable business practices
• Measuring your Carbon Footprint
• ‘Green Washing’
• Green Issues That Impact Global Business
• Social Sustainability:

Green Issues in Business
• Sustainable business, or green business, is an enterprise that has minimal
negative impact on the global or local environment, community, society, or
economy - a business that strives to meet the ‘triple bottom line’.
• Often, sustainable businesses have progressive environmental and human
rights policies.
• In general, business is described as green if it matches the following four
criteria:
1. It incorporates principles of sustainability into each of its business decisions.
2. It supplies environmentally friendly products or services that replaces demand for non-
green products and/or services.
3. It is greener than traditional competition.
4. It has made an enduring commitment to environmental principles in its business
operations.

Green Issues in Business cont…
• It is a business that “meets the needs of the present
world without compromising the ability of the future
generations to meet their own needs.”
• Sustainable businesses try to balance all three through
the triple-bottom-line concept - using sustainable
development and sustainable distribution to affect the
environment, business growth, and the society.
• All companies can examine what their actions are doing
to make the planet cleaner or dirtier, as well as how
their environmental record is affecting their bottom line.

Going Green
Sustainable Business Practices:
• Eliminate or decrease the environmental harm caused by the production and
consumption of goods.
• The impact of human activities in terms of the amount of greenhouse gases produced
can be measured in units of carbon dioxide and is referred to as the carbon
footprint.
• The carbon footprint concept is derived from ecological footprint analysis, which
examines the ecological capacity required to support the consumption of products.
• One of the most common examples of green initiatives is "going paperless“.
• On a higher level, examples of sustainable business practices include: refurbishing
used products revising production processes in order to eliminate waste and
choosing nontoxic raw materials and processes.
• Sustainable business leaders also take into account the life cycle costs for the items
they produce.
• Input costs must be considered in regards to regulations, energy use, storage, and
disposal.
• Designing for the environment is also an element of sustainable business. This
process enables users to consider the potential environmental impacts of a product
and the process used to make that product.

Carbon Footprints
• A Carbon Footprint is defined as ‘the total amount of greenhouse
gases produced to directly and indirectly support human activities,
usually expressed in equivalent tons of carbon dioxide (CO2)':
– When you drive a car, the engine burns fuel which creates a certain
amount of CO2, depending on its fuel consumption and the driving
distance. (CO2 is the chemical symbol for carbon dioxide).
– When you heat your house with oil, gas or coal, you generate CO2.
– Even if you heat your house with electricity, the generation of the
electrical power may also have emitted a certain amount of CO2.
– When you buy food and goods, the production of the food and goods
also emitted some quantities of CO2.
• Your carbon footprint is the sum of all emissions of CO2 (carbon
dioxide), which were induced by your activities in a given time
frame. Usually a carbon footprint is calculated for the time period of
a year.
• Carbon offsetting is used to compensate for your emissions by
funding an equivalent carbon dioxide saving elsewhere.

Green Washing
• Pressure is being put upon companies from consumers, employees,
government regulators and other stakeholders to adopt greener
practices
• Some companies have resorted to ‘green washing’ instead of
making meaningful changes, merely marketing their products in
ways that suggest green practices.
• Green investment firms are attracting unprecedented interest.
• In the UK the Green Investment Bank is devoted exclusively to
supporting renewable domestic energy.
• Green investment firms are creating more and more opportunities to
support sustainable development practices in emerging economies.
• By providing micro-loans and larger investments, these firms assist
small business owners in developing nations who seek business
education, affordable loans, and new distribution networks for their
"green" products.

Steps to Going Greener in
Business:
• Recycle more, and more efficiently
• Do an Energy Audit
• Office printers and copiers
• Use technology
• Power
• Install green products
• Use video conferencing

Examining a company's environmental impact
• Each industry, as well as each business, has its own individual
impact on the environmental.
• In identifying what green issues affect global business, the best
place to start is by looking at what kinds of environmental harm -- or
help -- specific kinds of companies do.
• Eg: looking at how much carbon an oil company is adding to the
environment, how much rubbish a fast food enterprise is adding to a
landfill.
• What are regulations and laws exist to regulate pollution?
(penalizing certain types of pollution, either through penalties or
additional taxes, and favouring certain types of clean alternatives,
can impact on business operations)
• External intervention (by lawmakers) can greatly affect how
companies do business, including where they do business and what
kind of practices they follow in regard to energy use and pollution.

Measuring consumer sentiment
• Good businesses are designed to be responsive
to what consumers want.
• Businesses react to consumer preferences
related to the environment.
• Shifts in consumer spending habits generally
force changes in business practices.
• Eg: car manufacturers producing new models
with greater fuel efficiency/lower pollution
outputs because consumers have expressed a
preference for them.

Identifying changes related to competitiveness
• In some cases, businesses make decisions that
impact their effect on the environmental for
reasons only incidentally related to concern
about green issues.
• Eg: a company may decide to adopt energy-
efficiency light bulbs because it saves money.
• However, doing so will also cause less electricity
to be used, which, in most cases, means that
less pollution will be created to produce this
electricity.

Social Sustainability
• Organizations that give back to the community, whether
through employees volunteering their time or through
charitable donations are often considered to be socially
sustainable.
• Organizations can also encourage education in their
communities by training their employees and offering
internships to younger members of the community.
• Practices such as these increase the education level and
quality of life in the community.
• In order for a business to be truly sustainable, it must
sustain not only the necessary environmental resources,
but also its social resources, including employees,
customers (the community), and its reputation

ETHICAL DILEMMAS IN
TRAVEL AND TOURISM

UNWTO Global Code of Ethics
• The Global Code of Ethics for Tourism was adopted
by resolution of the UNWTO in Santiago, Chile – 1999
• The Global Code of Ethics for Tourism sets a frame of
reference for the responsible and sustainable
development of world tourism.
• With international tourism forecast to nearly triple over
the next 20 years, members of the World Tourism
Organization believe that the Global Code of Ethics for
Tourism is needed to help minimize the negative
impacts of tourism on the environment and on
cultural heritage while maximizing the benefits for
residents of tourism destinations.

Global Code of Ethics
• The Global Code of Ethics for Tourism (GCET) is a comprehensive set of
principles whose purpose is to guide stakeholders in tourism development:
central and local governments, local communities, the tourism industry and
its professionals, as well as visitors, both international and domestic. The
key principles are concerned with:
Mutual Respect
– The first provision of the code of ethics is that tourists and the cultures
they visit engage on terms of mutual respect and understanding. Tourists
should respect the values and traditions of the host regions, and, in turn,
tourism officials in host areas should become familiar with the tastes,
practices and expectations of visitors.
Fulfillment
– Tourism is a means of both individual and group fulfillment. While tourism
is a leisure activity, the pursuit of satisfaction must not come at the
expense of other people's dignity or rights, or involve the social or
economic exploitation of vulnerable groups.

Sustainable Development
– Tourist activities should not endanger the natural resources of the
visited area, and insofar as possible, tourist programs and related
funding should protect ecosystems and biodiversity.
Cultural Heritage
– While cultural differences are a great draw for tourists, tourism
should be conducted in a way that protects and preserves the
artistic and social traditions of the host region. Tourist activities
should help to maintain local and authentic artisan activities and
not allow productive traditions to degenerate or become
commodities for purchase.
Host Benefits
– Local populations should participate in tourism and equitably
receive the associated social and economic benefits. Tourism
policies should work to help raise the local standard of living and
address local needs.

Stakeholder Obligations
– Tourism professionals are responsible for
providing honest information to tourists and,
insofar as possible, work to ensure the health,
safety and fulfilment of their clients.
Right to Tourism
– The enjoyment of the world's natural and cultural
pleasures is everyone's right, and obstacles
should not be placed in the way of discovery. For
children, the elderly and handicapped
populations, tourism should be encouraged and
made accessible.

Freedom of Movement
• When visiting another state or country, tourists should be
granted the same liberty of movement as citizens of the
host regions. Tourists should be allowed to convert their
currency into local denominations, and border crossings
should be facilitated.
Workers' Rights
• Individuals working in tourism should be protected by the
laws of their country and encouraged to develop
professionally. International tourist corporations should
not exploit their position of economic dominance but
should rather work toward local development to benefit
the communities in which they operate.

Whistle Blowing – a definition
‘The disclosure by a person, usually an
employee in a government agency or private
enterprise, to the public or to those in
authority, of mismanagement, corruption,
illegality, or some other wrongdoing.’

Whistle Blowing activities
• A whistleblower is a person who tells the public or someone in authority about alleged
dishonest or illegal activities (misconduct) occurring in a government department or
private company or organization.
• The alleged misconduct may be classified in many ways; for example, a violation of a
law, rule, regulation and/or a direct threat to public interest, such as fraud,
health/safety violations, and corruption.
• Whistleblowers may make their allegations internally (for example, to other people
within the accused organization) or externally (to regulators, law enforcement
agencies, to the media or to groups concerned with the issues).
• Whistleblowers frequently face reprisal, sometimes at the hands of the organization
or group which they have accused, sometimes from related organizations, and
sometimes under law.
• Questions about the legitimacy of whistle blowing, the moral responsibility of whistle
blowing, and the appraisal of the institutions of whistle blowing are part of the field of
political ethics.
• The term whistle-blower comes from the whistle a referee uses to indicate an illegal
or foul play. US civic activist Ralph Nader coined the phrase in the early 1970s to
avoid the negative connotations found in other words such as "informers" and
"snitches"

Whistle Blowing actions
• Most whistleblowers are internal whistleblowers, who report misconduct on a fellow employee or
superior within their company.
• People are more likely to take action with respect to unacceptable behaviour within an
organization if there are assurances and processes in place to deal with the complaint with
absolute confidentiality.
• External whistleblowers report misconduct on outside persons or entities, reporting to lawyers,
the media, law enforcement or watchdog agencies, or other government sector agencies. In
some cases, external whistle blowing is encouraged by offering financial rewards.
• Whistleblowers are commonly seen as selfless martyrs for public interest and organizational
accountability; others view them as "snitches," solely pursuing personal glory and fame.
• Many people don’t consider blowing the whistle, not only because of fear of retaliation, but also
because of fear of losing their relationships at work and outside work.
• Persecution of whistleblowers has become a serious issue in many parts of the world. Although
whistleblowers are often protected under law from employer retaliation, there have been many
cases where punishment for whistle blowing has occurred, such as termination, suspension,
demotion, wage garnishment, and/or harsh mistreatment by other employees.

Legal Protection for Whistle Blowers
• Legal protection for whistle blowing varies from country
to country and depends on the country of the original
activity, where and how secrets were revealed, and how
they eventually became published or publicized.
• More than 12 countries have now adopted
comprehensive whistleblower protection laws which
create mechanisms for reporting, investigate reports,
and provide legal protection to the people who informed
them.
• Over 50 countries have adopted more limited protections
as part of their anti-corruption, freedom of information, or
employment laws.

New Zealand Law
Protected Disclosure Act 2000
• The Protected Disclosures Act 2000 is often referred to as the "whistle
blower's legislation".
• Enacted to promote the disclosure of information that the public has an
interest in seeing disclosed, including serious wrongdoing, and to protect
those employees who make those disclosures.
• The Act provides a framework whereby employers may create internal
procedures to allow employees to make disclosures about serious
wrongdoing.
• Provided that such disclosures are made in accordance with the
requirements of the legislation, the employee disclosing information is
entitled to certain protections against reprisal - including protection against
disciplinary action being taken by an employer.
• The Act only applies to disclosures about "serious wrongdoing" - which
broadly relate to significant matters such as unlawful use of public funds,
actions that might endanger public health or would constitute an offence,
and actions of a public official that are indicative of gross mismanagement.

• The Act protects whistle blowing in both the public and private sectors, but it
imposes greater demands on the public sector.
• Private sector organisations are not required to have an internal whistle
blowing policy; however it is recommended that employers consider devising
one to suit their organisation size and structure.
• An employee, who experiences retaliatory action because of the disclosure
of serious wrongdoing in the organisation, may have a personal grievance
pursuant to the Employment Relations Act 2000 or, a complaint of unlawful
discrimination under the Human Rights Act 1993
• Not every disclosure by an employee can be a protected disclosure.
• To gain the protection of this Act, not only must the information be of the
kind prescribed by the Act but additionally the employee must follow the
Act’s procedural steps for disclosure.

Disclosures to which the Act applies
• An employee of an organisation may disclose
information in the manner provided by this Act if:
– the information is about serious wrongdoing in or by
that organisation; and
– the employee believes on reasonable grounds that
the information is true or likely to be true; and
– the employee wishes to disclose the information so
that the serious wrongdoing can be investigated; and
– the employee wishes the disclosure to be protected

• An employee who makes a disclosure of
serious wrongdoing in accordance with the
Act is protected by the Act against:
– Unjustifiable dismissal and disadvantage by
the employer’s unjustifiable action.
– Victimisation within the meaning of section 66
of the Human Rights Act 1993 and

CORPORATE SOCIAL
RESPONSIBILITY & CODES OF
ETHICS

Corporate Social Responsibility
• The philosophy behind corporate social responsibility (CSR) is that
business doesn't exist solely to make a profit.
• While being profitable is important for creating jobs and enhancing
the standard of living through economic growth, profitability
shouldn't come with grave costs to the communities that support
business activity.
• CSR takes conscientious action beyond simply doing no harm.
• Businesses that believe in CSR purposely engage in activities
that promote healthy environments, stable communities and
respect for human rights.

Environmental Responsibility
• Companies that are socially responsible try to engage in
business activities while limiting harm to the
environment.
• For example, a socially responsible oil company would
not drill at a site if environmentalists reported that drilling
could be catastrophic.
• Some organizations show their dedication to the
environment by changing the nature of their products or
their packaging. eg: PepsiCo snack food brand
‘SunChips’ altered the composition of their bags in 2009
to make them biodegradable.

Responsibility to Workers and Communities
• The underlying principles of CSR also dictate that corporations should treat
their workers and the communities they work in with respect.
• Manufacturing companies have been criticized for killing communities by
pulling out and moving to countries where operating costs are lower.
• Historically, running shoe manufacturer Nike has been accused of the
socially irresponsible practice of child labour but has since worked on
resolving the issue thanks to consumer and media backlash.
• Coffee retailer Starbucks has long advertised its commitment to buying
ethically-traded coffee and supporting coffee-growing communities.

How Socially Responsible Behavior Benefits Business
• According to the International Organization for Standardization (ISO), corporate social
responsibility can make good business sense as well as just be the right thing to do.
Investors are attracted to companies that engage in socially responsible business
practices.
• Being socially responsible can also attract community-minded consumers, act as a
source of good publicity and be a proactive strategy for keeping reputation-damaging
bad publicity at bay.
• However, socially responsible behaviour doesn't always have a positive impact on
profits.
• In April 2009, PepsiCo reported that an 11% drop in its SunChips' sales was probably
due to their new environmentally-friendly packaging, which bothered consumers by
being too noisy.
• But consumers have a role to play in this. By purchasing products that are less
convenient but more responsibly-produced, consumers give companies a profit
incentive to do business ethically.

Corporate Social Responsibility in action
• Businesses can encourage employees to volunteer for good causes in society, and
they can implement good environmental practices.
• Organizations also need to implement fair business practices in terms of working
conditions and the use of scarce resources.
• Making donations to community causes is a direct form of CSR. Organizations can
provide funds to support specific projects in schools, hospitals and other community
facilities. They can also provide support in the form of products or services.
• Some organizations provide ongoing support for charity and community
organizations.
• Supporting employees who volunteer for community causes is an indirect form of
CSR.
• Organizations use green business practices to comply with industry regulations, as
well as to demonstrate CSR.
• Many industries face stringent regulations relating to environmental pollution,
recycling of waste, taking back products at the end of their life and consumption of
raw materials and energy.
• Organizations can also take proactive environmental action, such as modifying their
packaging to reduce waste and raw material consumption, reducing unnecessary
business travel to lower energy consumption and changing their manufacturing
processes to use less energy.
• CSR also applies to conditions for employees in the workplace, ie the use of child
labour or inhumane working conditions (locked into unsafe factories, ‘sweatshops’)

EMBRACING ETHICS
Codes of Ethics

What is a Code of Ethics?
• Ethical codes are adopted by organizations to assist members in
understanding the difference between 'right' and 'wrong' and in
applying that understanding to their decisions.
• An ethical code generally implies documents at three levels: codes
of business ethics, codes of conduct for employees, and codes of
professional practice.
• A code of ethics will set out the values that underpin the code and
will describe a company's obligation to its stakeholders.
• The code is publicly available and addressed to anyone with an
interest in the company's activities and the way it does business.
• It will include details of how the company plans to implement its
values and vision, as well as guidance to staff on ethical standards
and how to achieve them.
• However, a code of conduct is generally intended only for
employees.
• It usually sets out restrictions on behaviour, and will be far more
focussed on compliance or rules than on values or principles.

Why have a Code of Ethics?
• to define accepted/acceptable behaviours
• to promote high standards of practice
• to provide a benchmark to use in self evaluation
• to establish a framework for professional
behaviour and responsibilities
• as a vehicle for occupational identity
• as a mark of occupational maturity

Developing a Code of Ethics
• What will be the purpose of your new code? Is it to regulate behaviour? To inspire?
• A code of ethics should be tailored to the needs and values of your organization.
• Many ethics codes have two components:
- an aspirational section that outlines what the organization aspires to, or the ideals it hopes to
live up to.
- an ethics code that lists some rules or principles, which members of the organization will be
expected to adhere to.
• Often the principles or values listed in an ethics document will be listed in rough order of
importance to the organization.
• How will your new code be implemented?
• How will it be publicized, both inside and outside of your organization?
• What steps, if any, will be taken to ensure that the values embodied in your code get implemented
in organizational policies and practices?
• How / when will your code be reviewed / revised?

Social Audit
• Social auditing is the process whereby an organisation can account for its
social performance, report on and improve that performance. It assesses
the social impact and ethical behaviour of an organisation in relation to its
aims and those of its stakeholders.
• A social audit looks at factors such as a company's record of charitable
giving, volunteer activity, energy use, transparency, work environment
and worker pay and benefits to evaluate what kind of social and
environmental impact a company is having in the locations where it
operates.
• Social audits can help companies create, improve and maintain a
positive public relations image.
• Good public relations is key because the way a company is perceived will
usually have an impact on its bottom line.

Environmental Audit
• An environmental audit determines how well your business
complies with environmental laws and regulations as well as
with company policy. The audit may also cover potential
improvements in environmental performance and systems.
• The most important results of an environmental audit are
recommendations how a company can reduce the damaging
impacts on the environment in an efficient and cost-benefit manner,
and how it can in a long-term save funds by using environment
friendly technology.
• There are important business reasons for conducting environmental
audits as many organisations now require their suppliers to certify
compliance with international environmental standards as a
condition of doing business

Business Ethics

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