13.7 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 conducts a thorough review of businesses seeking recognition for upstanding corporate citizenship. (See the full list of the World’s Most Ethical Companies honourees and America’s Most Reponsible Companies – 2022).

The review process captures company performance in five areas, but to be honoured, 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 accompanied by a brief description of how the companies demonstrate compliance.

1. Ethics and Compliance Program

We discussed this topic in our focus on company policy, along with the critical role of executive leadership in supporting and following the policy. This category reviews the ethics program’s structure, responsibilities, and resources, and evaluates the program’s 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 organisation. In this area, the Ethisphere evaluation measures an organisation’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 in monitoring and promoting a quality company culture. This category of the Ethisphere review assesses the availability and quality of systems designed to ensure robust corporate governance, which encompasses not only 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 assesses the company’s ethical reputation in the marketplace and among key stakeholders, including 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 Environmental Social Governance (ESG), which measures and holds organisations to account for their practices, new global business models have appeared to formalise not only their policies and practices but also their legal structures on how they generate and measure economic value. A few examples described below include Non-Profits, Non-Governmental Organisations (NGO), Social Enterprises and B Corps.

Non-Profits and Non-governmental organisations (NGO)

They are effectively the same thing. Non-governmental organisations, or NGOs, were first called such in Article 71 of 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 of which is Hope Blooms. 

B Corps

B Corps are a relatively recent development, initiated in 2006 by three friends who quit their jobs to establish the certification and measurement process for global impact. Any organisation 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.

Check out the most popular B corporations in the world, which include Moodle, TOMS, and Warby Parker.