ETHICS, CORPORATE RESPONSIBILITY AND SUSTAINABILITY
DISCUSSION QUESTIONS
1 What ethical issues is Heather facing in this situation? What possible marketing claims about the company’s relationship with the Amazonian tribe would cross a line into unethical territory? What claims could it make ethically?
Heather is facing ethical issues dealing with her conscience; she believed that MA Earth was using natural ingredients to make their product, Ore Essential. Heather thought that she would be promoting beauty and concern for the environment. She, later on, comes to understand that the product, which her team are preparing a promotional campaign was actually not being made out of natural ingredients but the product is an inexpensive dye used as food colouring.
Heather is also faced with the issue of using the photos of Amazonian villagers in the promotion of the product yet in a real sense the villagers don’t really bother with growing Orellana, even the ingredients used in the product are not the ones displayed in the promotional program.
The company relationship with the Amazonian tribe would cross the line into unethical line if the company could be using the heritage and culture of the community and yet it does not engage the community in development such as building schools, this would happen when the company is benefitting at the expense of the community. Claims that would make it ethical is by the company contributing to the development of the Amazonian tribe.
2 How could Ma Earth create an ethical climate that would help managers such as Heather ensure that they are behaving ethically?
The company can create an ethical climate by using ethical hiring practices. This includes hiring employees with strong moral values and also emphasizing ethics when hiring new employees. The company can also create an ethical environment by making it mandatory for their employees to attend ethics training also as part of orientation employers should discuss ethical issues with the employees. The company ought to have policies and codes that will govern the conduct of employees
3 How effectively do you think Ma Earth is practising corporate social responsibility in this situation? Explain the reasoning behind your evaluation.
Ma Earth has effectively practised corporate social responsibility to the Amazonian people, for instance, the company sends tens of thousands of dollars every year to the community, the company has set up school, health clinic and even helped tribe members stay healthy and preserve their language and culture. All these have an impact of improving the social welfare of the villagers, for instance health clinics play a vital role in improving peoples health also schools improve people’s literacy levels.
4 What are the arguments for and against the concept of corporate social responsibility? Where do you stand and why? Give your opinions, specifically, with respect to the text example.
It is important to engage in corporate social responsibility. Businesses usually have the resources needed for solving society’s problems (de Bakker, F. (2016). Another reason a company ought to engage in corporate social responsibility is that it is possible for companies to prosper and build shareholder value by working to solve social problems. Also, it can be a great way for a company to build positive public relations and in the process attracting top talent in the industry.
The company ought not to engage in corporate social responsibility since it is the responsibility of the business to focus on making profits. The government and nonprofit organizations should be the one dealing with social and environmental issues. Being socially responsible has an effect of damaging a company in the global market place. For instance donating money to the community, the way Ma Earth was doing, has an effect of raising company costs. In the long run the cost will be passed to consumers. Other customers may not have issues buying from a company that engages corporate social responsibility, some customers might not be willing to buy a product that is retailing at higher prices, considering the effects of law of demand, in such a scenario a company is placed at an economic disadvantage. With the above consideration it is not viable for a company to engage in corporate social responsibility as it has an effect of raising company costs.
5 What is the current status of the Sarbanes-Oxley Act? What do executives think of it now? What impact has it had?
Currently all the segments of Sarbanes-Oxley Act have been implemented. The executives are not impressed with the Act, they argue that the costs of implementing the Act are currently high. For instance an estimate revealed that business will have to part with almost $ 1.4 trillion so as to implement the act (Willits, S. D., & Nicholls, C. 2014). The Act has strengthened the public companies’ audit committees. The Act gives the audit committee an extensive leverage while overseeing the accounting decisions of the top management. The Act has also strengthened the disclosure requirements. It is a requirement that public companies disclose materials not captured in the balance sheet, like operating leases and special purpose entities
REFERENCES
ArAs, G. (2016). A handbook of corporate governance and social responsibility. Routledge.
Banerjee, S., Humphrey-Jenner, M., & Nanda, V. (2015). Restraining overconfident CEOs through improved governance: Evidence from the Sarbanes-Oxley Act. The Review of Financial Studies, 28(10), 2812-2858.
De Bakker, F. (2016). Managing corporate social responsibility in action: talking, doing and measuring. CRC Press.
Willits, S. D., & Nicholls, C. (2014). Is the Sarbanes-Oxley Act Working?. The CPA Journal, 84(4), 38.