CRITICAL ANALYSIS ON THE REQUIREMENT OF A UNIVERSAL COMMERCIAL CODE OR SET OF REGULATIONS TO SOCIETIES BUSINESS ETHICS: TANISHA MISHRA

Ethics is a Code of Conduct commonly accepted by people in general. Kant, a sociologist believed that human nature can be both sensible and guided by impulse and there is a need to sort a balance. Ethics therefore plays an important role in making a man decide what is right or wrong, shaping the thoughts of an individual and society in general.

Business ethics and Corporate Social Responsibility

Business ethics refer to a code of conduct that a corporate or an organisation has to follow. Jones and Gorge who have extensively talked about ethics have implied that “there are many definitions for business ethics; they all stress the fact that managers must balance the ideal against the practical, the need to produce a reasonable profit for the company’s shareholders with honesty in business practices, safety in the workplace, and larger environmental and social issues.”[1] In order to impose discipline and righteousness in the workplace, business ethics is very pertinent and is widely being used almost in every part of the world.

On the other hand, Corporate Social Responsibility (CSR) is called social accounting, corporate citizenship, corporate responsibility, sustainable business and finally corporate social and environmental responsibility; and corporate social performance.[2] It is a mixture of ethical, economic and legal duties. Over the years, companies and the world have realised that it is the public who is supreme and a corporate strives in a society. Therefore, companies would want to associate with more and more public centric, philanthropic activities. For example in 2004, US Starbucks announced that they would pay health insurance for everyone who has worked for them for more than twenty days a month.[3] The relation between business ethics and CSR is just that by practicing business ethics CSR liabilities can be reduced. CSR is considered as a wider aspect however, it is also said that both business ethics and CSR are part of one another.[4]

CSR Implementation

The bone of contention is the implementation of CSR. Ethics is subjected to public policy and morality. It is an outcome of many factors such as geographical location, belief system, religion, lifestyle etc. sociologists like Marx and Engels believed that there can be no universal code for ethics due to its nature of relativity. Also sometimes a company has to choose one righteous act versus another righteous act or choose between one wrongful activity than another. Such decisions are solely based on the personal choice or code of conduct of an individual. Furthermore, there can be instances where the company may not wish to participate in CSR for maximising profits, lack of social skills or any other reason. Living in a world with so many cultures, people coming from different parts of the world harbouring different perspectives, it is very difficult to lay a set of rules applying to everyone,which is becoming a burden for multinational companies (MNC) who operate in different countries.

United Nations Global Compact

However, there are principles which are accepted worldwide. Lying, bribery, cheating are immoral and illegal in almost every part of the world. Keeping this in view the United Nations Global Compact (UNGC) a non-binding UN body was established on July 26, 2000. The objective of the initiative is to encourage businesses to adopt sustainable and socially responsible policies. It has laid down ten principles pertaining to themes of human rights, labour, environment and anti-corruption. As many as 12000 companies[5] spread over more than 160 countries are a part of this. UNGC can be termed as a successful initiative as according to UNGC Performance Report, those companies who have adopted those 10 principles perform twelve points on sustainability measures in supply chains.[6]Making commitments, striving to achieve sustainable goals and being held accountable by an entire community is what UNGC promotes. It facilitates as a platform for discussions and encourages responsible business corporates.

Conclusion

Business ethics is the heart of corporate organisations. Absolute values such as honesty, loyalty, fairness, respect and concern, integrity etc. make the corporate look good in the eyes of the consumers. According to Hejase et al. research in Lebanon, “83.5% of the respondents agreed that CSR impacts their decision to buy products. 46.2% of the respondents will buy more as of quantity and 76% may go into the substitution of products because of CSR. 75.2% of the respondents mentioned that CSR also may impact their feelings towards products and will increase their loyalty to CSR-applying corporations.”[7] However, due to their subjective nature, a universal code of conduct is difficult to establish. Like a gift to one of the business parties on the first two days of  a meeting might look as a bribe in the United States of America unlike not bringing a gift to any meeting in Japan may look immoral. Nonetheless, UNGC brings together a set of rules, basic yet very pertinent principles which should be followed by every organisation to make the business world accountable for environment change, develop mutual respect and promote a corruption free environment.

---

[1]Robert Reiss, Top CEOs place high value on corporate ethics and social responsibility to drive business, FORBES (11 Aug 2020, 3:25 PM), https://www.forbes.com/sites/robertreiss/2017/09/11/top-ceos-place-high-value-on-corporate-ethics-and-social-responsibility-to-drive-business/#750dafa74473.

[2]Fernando, S., Lawrence, S., Kelly, M. and Arunachalam, M. (2015) CSR Practices in Sri Lanka: An Exploratory Analysis,Social Responsibility Journal, 11, 869.

[3]ZouheyrGheraia, SawssanSaadaoui, Hanane Abed Abdelli, Business Ethics and Social Responsibility: Bridging the Concepts, SCIENTIFIC RESEARCH (12 Aug 2020, 1:10 PM), https://m.scirp.org/papers/95926#ref12.

[4]Supra note 3.

[5]Julia Moshkin, Why the UN Global Compact is a CSR Commitment that works, ETHICALCORP REUTERS EVENTS (14 Aug 2020, 7:20 PM), https://www.ethicalcorp.com/why-un-global-compact-csr-commitment-works.

[6]Ibid.

[7]Hussain Jose Hejase, FadiHashem, Ali El Dirani, (2017), Corporate Social Responsibility Impact on Consumer Decision, THE JOURNAL OF MIDDLE EAST AND NORTH AFRICA SCIENCES, 3,2, 3-20.