ETHICS AND CORPORATE
RESPONSIBILITY
Ethics
• What are ethics?
• What are laws?
• Definition: principles established in a community by
some authority that is applicable to its people
• What are morals?
• Definition: pertaining to the rules of conduct or
behavior; distinguishing right from wrong
• Is there a difference between these?
Ethics
• Definition: rules of conduct recognized by a
particular group
• Structural guide for behavior
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Dependent on organization you are in
Examples
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Academia
Business
Athletics
• Video: http://www.youtube.com/watch?v=voQjgngODU0
How Do You Know?
• How do you know you are ethical?
• How can you demonstrate it to others?
• Scenario: You have planned to do a kayaking and camping
trip with a few others, including your best friend, who also
happens to be in your class. Your best friend got an
extension on his/her paper that is due in class, a paper
which you already turned in, on time. If you don't help your
best friend, he/she will have to stay home over the weekend
to complete the paper. If you help him/her, he/she will be
able to come on the long-awaited and already-planned trip.
What do you do?
Corporate Ethics
• Code of Ethics
• Social responsibility and philanthropy
• Bill and Melinda Gates Foundation
 Largest foundation ever
 Contributed ~$14B to Global Health since 1994
• Environmental responsibility
• Conserving the world around us
• “Green” efforts
Why have a Code of Ethics?
• To define accepted/acceptable behaviors;
• To promote high standards of practice;
• To provide a benchmark for members to use for self
evaluation;
• To establish a framework for professional behavior
and responsibilities;
• As a vehicle for occupational identity;
• As a mark of occupational maturity;
(from the website of Life Skills Coaches Association of BC)
Codes Come in Many Varieties
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The company has established a code of conduct, a set of
ethical principles, supported by detailed standards of
business conduct. The ethical principles of the company
(integrity, respect, teamwork, quality, innovation and
citizenship) are the foundation for ethical conduct. The
company’s Standards of Business Ethics and Conduct
booklet provides a clear road map for employees to
follow in their daily work. Each employee is a critical link
in the chain of excellence and acknowledges his or her
responsibility under the code.
• Raytheon
Dell Computer
• Key elements of their code of ethics:
• Trust – keep commitments
• Integrity – do the right thing without compromise
• Honesty – what we say is true and forthcoming
• Judgment – think before we act and consider
consequences
• Respect – treat people with dignity and value
their contributions
• Courage – speak up for what is right
• Responsibility – accept the consequences
Who Is This?
Values
Our company's foundation is built on our values, which
distinguish us and guide our actions. We conduct our
business in a socially responsible and ethical manner. We
respect the law, support universal human rights, protect the
environment, and benefit the communities where we work.
Integrity
We are honest with others and ourselves. We meet the
highest ethical standards in all business dealings. We do
what we say we will do. We accept responsibility and
hold ourselves accountable for our work and our actions.
Chevron/Texaco
Diversity
We learn from and respect the cultures in which we work.
We value and demonstrate respect for the uniqueness of
individuals and the varied perspectives and talents they
provide. We have an inclusive work environment and
actively embrace a diversity of people, ideas, talents and
experiences.
Ingenuity
We seek new opportunities and out-of-the-ordinary
solutions. We use our creativity to find unexpected and
practical ways to solve problems. Our experience,
technology, and perseverance enable us to overcome
challenges and deliver value.
Trust
We trust, respect and support each other, and we strive to
earn the trust of our colleagues and partners.
Partnership
We have an unwavering commitment to being a good
partner focused on building productive, collaborative,
trusting and beneficial relationships with governments,
other companies, our customers, our communities and each
other.
Protecting People and the Environment
We place the highest priority on the health and safety of
our workforce and protection of our assets and the
environment. We aim to be admired for world-class
performance through disciplined application of our
Operational Excellence Management System.
High Performance
We are committed to excellence in everything we do, and
we strive to continually improve. We are passionate about
achieving results that exceed expectations — our own and
those of others. We drive for results with energy and a
sense of urgency.
Who Is This?
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Microsoft
As a company, and as individuals, we value integrity, honesty,
openness, personal excellence, constructive self-criticism,
continual self-improvement, and mutual respect. We are
committed to our customers and partners and have a passion
for technology. We take on big challenges, and pride
ourselves on seeing them through. We hold ourselves
accountable to our customers, shareholders, partners, and
employees by honoring our commitments, providing results, and
striving for the highest quality.
INVESTOR RELATIONS
Investor Relations (IR)
• What is investor relations?
• Investor relations is a strategic management
responsibility that integrates finance, communication,
marketing and securities law compliance to enable the
most effective two-way communication between a
company, the financial community, and other
constituencies, which ultimately contributes to a
company's securities achieving fair valuation (Adopted
by the NIRI Board of Directors, March 2003).
Job Duties
• Intermediary between Financial Analysts & Investors, &
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Executives
Report quarterly and annual operating results
Ensure company is meeting SEC rules, esp. Fair Disclosure
Prepare reports for CEO, CFO and Board of Directors
Work with legal department on issues that may effect
shareholders
Ensure company & industry information in accurately
reported by Financial Analysts and Media
Ethics Implications
• Have company’s results before they’re reported
• Know of major company events before they occur
• Examples – layoffs, acquisitions, etc.
ENRON’S STORY
On-the-Job Ethical Conflicts
• Four ethical conflicts confront leaders in business:
• Conflict of Interest - A leader achieves personal gain
from a decision he/she makes
• Loyalty versus truth - A leader must decide between
loyalty to the company and truthfulness in business
relationships
• Honesty and integrity – A leader must decide if he/she
will be honest or lie; if he/she will take responsibility
for decisions and actions or blame someone else?
• Whistleblowing – Does the leader tell others (media or
government authorities) about the unethical behavior of
the company or institution?
Enron
• Energy company based in Houston, Texas
• Before its bankruptcy in late 2001, Enron
employed ~ 22,000 people
• Was one of the world's leading electricity, natural
gas, communications and pulp and paper
companies, with claimed revenues of nearly $101
billion in 2000.
Enron
• At the end of 2001, it was revealed that its reported
financial condition was sustained primarily by
institutionalized, systematic and creatively planned
accounting fraud
• Enron created offshore entities, units which may be used for
planning and avoidance of taxes, raising the profitability of
a business.
• This provided ownership and management with full freedom
of currency movement and the anonymity that allowed the
company to hide losses.
• These entities made Enron look more profitable than it
actually was, and created a dangerous spiral, in which each
quarter, corporate officers had to perform more and more
contorted financial deception to create the illusion of billions
in profits while the company was actually losing money.
Broken Trust – The Story of Enron
72 Pairs of Relationships
Senior
Management
Professional
Associations
Credit
Raters
Board of
Directors
Consultants
Accountants
Lawyers
Analysts
Investment
Bankers
Your Personal Code of Ethics
• Worth 5 extra credit points
• Due next Monday
• Must be present today (Nov. 8) and next Monday
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(Nov. 15) to play
Typed, double spaced, one page max
Your own elements that resound strongly with you
Personally signed by you
Challenge: hang/place in your work space