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 firstname.lastname@example.org or (314) 223-8182.