Business Ethics vs. Corporate Social Responsibility: What's the Difference?
Business ethics and corporate social responsibility in action
Business ethics and corporate social responsibility have never been more important for attracting and retaining top-tier employees and a loyal customer following. Although these two terms are often confused as having similar meanings, they actually vary quite a bit. Here, we’ll explain the difference and why both are essential for any successful company today.
Business ethics deals with moral principles and is based on the premise of good and bad behaviour – right versus wrong. When you incorporate ethics into business, you’re working to apply good ethical decision-making practices in the workplace. This includes doing what is best for the employees, stakeholders and the consumers alike – not just the shareholders.
Companies that focus solely on making profits often have poor ethical practices and policies in place. This can result in putting people’s security, privacy and livelihood at risk. Consider the recent sweatshop fires that occurred in Bangladesh which resulted in numerous deaths. Reports revealed that many of the brand names that used those factories to make their clothing knew for years that these factories were failing to protect their workers. Yet, they still decided to turn a blind eye instead of taking responsibility for the poor working conditions or putting in proper policies to avoid working with factories that had no safety procedures in place.
Having a complete disregard for ethical decision-making policies and procedures can eventually backfire on a business. When disasters happen because companies focus only on lowering the costs of production and driving profits, the result is often bad publicity and a loss of loyal customers. Business owners and management teams can also find themselves on the wrong side of the law, facing lawsuits for negligence and other crimes. Many corporate executives have been imprisoned for unethical conduct because of the consequences their decisions have made on the public, environment and even their own company.
When businesses have a proper code of ethics in place that acts in the best interests of their employees and customers, they are often rewarded for it. They are far more likely to attract and retain employees and customers.
Corporate Social Responsibility
Corporate social responsibility (CSR) applies to businesses that put policies and practices in place that will have a positive impact on the environment and community. Common CSR objectives include donating a portion of a company’s proceeds to charitable causes, supporting local vendors and suppliers, using FSR recycled packaging, among other pro-social initiatives.
Many companies already view CSR as an important part of their brand image and story. Those companies tend to have loyal customers and more productive employees. This is because customers are more likely to choose a brand that they can relate to and trust. Employees are no different. Would you rather work for a company that is focused on improving the community in which you live or one that is focused solely on profits? The answer is simple. So why isn’t every company getting onboard with CSR? They likely don’t understand the true benefits of implementing social and environmental policies into their business.
Businesses who have strong corporate social responsibility practices tend to have better brand recognition, a more positive brand reputation, and a greater ability to attract top talent and retain employees as well. Consumers today also expect businesses to operate responsibly to address social and environmental problems. So it should come as no shock that CSR-focused companies that actually “walk the walk”, also enjoy increased sales because they are taking steps to make the world a better place for everyone.
Anyone in business knows that it costs more to find a new customer and employee than it does to keep one. And today, more than half of the workforce is now made up of millennials and generation Z workers – two generations that are very socially conscious. Studies have shown that millennials deeply care about the environment, fair practices, social issues and sought out businesses with strong social values. Businesses that are not implementing CSR into their day-to-day practices are likely to struggle to find and retain top talent and loyal customers in future.
How Can You Implement Both Business Ethics and Corporate Social Responsibility Into Your Business?
Start by setting up a committee who can review your current policies and procedures and find the areas in need of improvement. The core values of your business should be focused on the well-being of all the stakeholders involved, as well as the environment and community around you.
Here are some ways to implement business ethics into your company’s policy and day-to-day operations:
- Create a strong code of ethics
- Create a compliance department
- Create a corporate training program
- Put a program in place to weed out misconduct
- Put monitoring practices in place
- Ask your employees and customers for feedback
- Review the policy annually and make changes
- Lead by example
- Reward ethical behaviour
Here are the steps to initiate corporate social responsibility practices into your company:
- Determine what initiates your customers and employees care about
- Define your goals for social and environmental practices
- Develop an approach and strategy to execute your CSR program
- Get involved with your local community
- Create a way to evaluate and measure your efforts and impact
- Develop a marketing plan to communicate your message
- Collect feedback from customers and employees and adjust where needed
- Leverage the right tools and software
Take Action Now With a Whistleblower Program and Speak-up Culture
Whistleblower protections are one piece of the business ethics and CSR puzzle that you don’t want to miss. Putting an ethics hotline and whistleblower program in place gives employees a safe place to voice their concerns anonymously without the fear of retaliation. It also ensures that if an organization or a particular team or person is not upholding their CSR responsibilities, that misconduct can be reported and properly addressed. Without a whistleblower policy in place, most employees fear speaking up and often stay silent. This can allow unethical or illegal practices to continue under the radar which can come back to damage you and your business in the future.
Staying silent isn’t the only threat to a company’s image. Many investors and consumers choose certain companies because of their social responsibility initiatives. If an employee was to turn to the media to voice their concerns because they feared speaking with management internally, the impact could be far worse.
Creating and implementing internal policies and procedures that ensure protections are given to employees with respect to blowing the whistle is not just good ethics practice but it’s also good CSR practice. Having a strong whistleblower policy in place can build more trust and confidence between the management team and employees, and it can also ensure that malpractice is dealt with properly and professionally.
To learn more about our whistleblower solutions and how they can benefit your business, contact Whistleblower Security today!