For more than eight decades, the modern paradigm of corporate responsibility in business has been one of the central interests of the company’s functioning and long-term development. Essentially, the notion of corporate social responsibility (CSR) concerns the fact that the business segment, as a significant part of the global community, is obliged to bear responsibility toward society (Agudelo et al., 2019). Currently, businesses worldwide are driven by the idea of securing sustainable value as a primary objective of any endeavor, presupposing strategic corporate social responsibility to be an integral part of both daily and long-term planning for the business to become socially beneficial and relevant in the modern socio-economic context (Agudelo et al., 2019). The present case study focuses on the example of a relevant ethical dilemma for businesses driven by the desire to obtain both sustainable and cost-efficient suppliers.
When considering the situation in question, the primary individual stakeholder in the case is an employee named John, who was the first to discover the unsustainability issue besides the management. Currently, John is faced with a serious ethical dilemma, as his obligation as a subordinate should be to follow the direct orders from the administration, and his obligation as a community member is to address the Comp Core’s disregard for CSR. In fact, once John reveals sensitive and confidential data to the public, the company can legally fire him for breaching the legal provisions of his contract. While the outcomes will not be beneficial for the employee, there will still be no guarantee that Comp Core will reconsider its sustainability and supplier policies.
On the other hand, the company may find it unproductive to fire the employee who discloses information regarding sustainability, as it may seem that the company renowned for its charitable activities is trying to willingly contain information that might compromise their actions. Thus, if instead of revealing the information to the public, John would help the management find an ethical solution while underpinning the importance of CSR in the modern business context, he may create a win-win scenario.
Another individual stakeholder is the CEO. Once the information about their primary supplier is disclosed, he is at risk of losing a number of clients and shareholders as well as losing the overall company’s reputation built on the years of client service and charity work. Even if at the moment, the employee has no legal right to reveal confidential facts about his current or prior workplace, the scandal concerning Vail’s unsustainability will become known to the public at some point, and Comp Core will be backed into a corner. For this reason, it would be more reasonable for the CEO to adopt a proactive approach to the situation and announce that the company, already aware of the detrimental activities of Vail, is currently seeking a new supplier and are planning on allocating a part of their rescue fund towards assisting community members affected by the supplier’s activity.
Finally, Susan, one of the regional managers of Comp Core, should by no means be threatening her employees, especially if they deal with sensitive information that should be addressed carefully by the management. If the whole situation is leaked to the public, Susan will be the one most likely to get fired because of unethical behavior while managing the situation. Hence, since one of her employees is already aware of the sustainability issue, the most logical decision will be to collaborate with him on finding ways to change the situation.
Corporate stakeholders encompass all people and organizations that the company’s activity could somehow impact. Generally, stakeholders are divided into employees, customers, shareholders, suppliers, communities, and government. When given the existing scenario, each of these groups becomes invested in the situation. Primarily, customers are affected because if right now they are somehow deceived by the company, they will be later facing the choice of either sticking to Comp Core’s inexpensive unsustainable products or paying more for the manufacturer with a high sense of CSR and community. According to the scholarly evidence, in some cases, customers tend to pay significant attention to the so-called “green awareness” of the company and are ready to pay more for an environmentally safer item only if it is not abusing such phenomena as “greenwashing” or labeling product as ecological with no empirical evidence to support the claim (Patnaik et al., 2021). For this reason, it would be reasonable for the consumers to look closely into the companies’ production patterns and become uninterested in the company that tries to contain its environmental impact.
Rapid customer turnover catalyzed by this precedent will significantly affect the shareholders’ stance on financing the company. The studies reveal a strong correlation between the shareholders’ investing behavior and CSR-related news, with corporate investors being highly sensitive to negative news (Murashima, 2020). For this reason, once the investors become aware of the major sustainability violation, the shareholder turnover will be at some point, inevitable. Indeed, in order for the shareholders not to lose their reputation in the community, the most logical decision would be to withdraw from the support provided to Comp Care as long as their suppliers are invested in such unlawful and inhumane activities.
Finally, the communities as primary stakeholders of the CSR-related activity are, by all means, affected by the endeavors employed by the company and suppliers, as the rainforest destruction currently affects a number of South American neighborhoods. While the company is willing to place emphasis on their charitable activity that is possible because of inexpensive suppliers, the causal effect of using unsustainable wood results in the company taking one step toward and two steps backward toward awareness and sustainability. For this reason, local communities affected by Vail have every right to publicly claim the damage caused by the supplier’s activity and demand social justice for their habitat.
Having taken into consideration the potentially dramatic consequences of the precedent, it becomes evident that the most predicted response of the stakeholders would be to terminate the cooperation with the company to a certain extent, whereas the employees would face a series of financial and reputational challenges. Undeniably, after the termination of the partnership with Vail, Comp Core will struggle to find new cost-efficient contractors, and the financial losses can result in staff reduction. Moreover, the financial losses will also be catalyzed by the distorted image of the company after revealing the damage caused by one of its contractors.
Rules for Ethical Decision-Making
Approaches to Ethics
There are a variety of approaches to defining a certain endeavor as inherently ethical or ethically wrong and inappropriate. The first and arguably the most widespread approach to this analysis is utilitarianism, or a branch of ethics and moral philosophy that drives people to make decisions, the consequences of which could benefit the overwhelming majority of people (Casali & Perano, 2020). Another approach to ethical decision-making is the realm of deontology or the belief that ethics require people to follow through with the promises and societal expectations, as people are capable of controlling their moral duties and not the ones of other people (Casali & Perano, 2020). Thus, the primary responsibility of ethics, in this case, becomes highly individual and strict, as it encourages people to place their social duties above everything else.
For its part, the model of moral rights or justice presupposes that every individual is given a certain set of rights they are to follow to create an ethical environment. The rights are usually created based on what the majority of people consider an acceptable solution. On the other hand, virtue ethics, instead of establishing a set of rules, are driven by people’s inherent moral characteristics in order to decide whether the action is ethical (Casali & Perano, 2020). Hence, while all these theories are beneficial to a certain extent, the best application of ethical practice would be the combination of all the premises, as no situation can have a definite roadmap of decisions and consequences.
Ethical Advice for Comp Core
Given the situation, it becomes evident that the consequences of unethical business management would be serious for the company at some point. Even if, for now, the authorities may threaten or ransom John into silence, the evident outcomes of Vail’s cruel deforestation practices cannot be ignored. For this reason, the most relevant piece of advice in terms of ethics would be to consider the mass consequences deriving from the company’s decision to continue the supply chain relationship. At some point, the number of people affected by the ruined ecosystem could not be financially supported by the relief fund money saved on the wood procurement. The issue becomes more challenging considering that it was never Comp Core’s intention to support the neighborhoods destroyed by floods. Thus, their funds were aimed at helping other natural disasters that were not caused by the company’s unethical behavior.
On the other hand, the price increase related to the cooperation with a new supplier will not be regarded as a severe threat for the company, given that they know that such pricing is explicitly correlated with Comp Core’s sustainability. For this reason, it would be ethically justified for the company to change the supplier and make amends by allocating relief fund supplies to help to flood survivors in South America.
Value and ROI Through Sustainability
There exists a serious misconception in terms of preserving return on investment (ROI) and “going green.” For many years, business owners have restrained from adopting sustainable business practices without considering the long-term benefits of CSR-related sustainable supply chain. However, there are many claims that the adoption of sustainable ROI is nothing but an asset for the company (Kneipp et al., 2019). Thus, it is highly advised Comp Core utilize the Return on Sustainability Investment (RSOI) model instead of profiting from unsustainable practices, as the South American rainforests are a rather limited and valuable resource. Thus, according to Atz et al. (2021), RSOI stands for the process of the company’s investment in sustainable practices that result in better customer loyalty, employee relations, innovation, stakeholder engagement, and supplier relations. In fact, RSOI may even contribute to the better management of the employees, as proper policy transparency would lead to less disobedience.
However, in the particular case of John, his disobedience should not be regarded solely as a liability because his intentions were utilitarian and aimed at benefiting others. While John’s behavior was against the politics of most companies that outline following superiors’ orders as one of an employee’s primary responsibilities, his intentions aimed at promoting sustainable practices for the company. Unlike Susan’s unethical behavior, John’s motivation may be justified both by the top management and the public.
Culture of Ethical Business
It is evident that business ethics is created by the company’s management and leadership and is later spread across the hierarchy. Thus, in the case of Comp Core, there is currently no indication of an ethically sustainable business in both manufacturing and employee management. Hence, the culture of ethical business should derive from the company CEO’s decision to make choices in favor of the community instead of short-term profitability. Moreover, the CEO should consider collaborating with John on the matter of finding more sustainable suppliers and, in such a way, demonstrate that in an ethically justified community, every employee has a right to voice their concerns and vision of the company’s sustainable development and thrive. The ignorance that took place during the communication with John might have resulted in his decision to leak the sensitive data to the public with personal comments on how the management of the company reacts to a serious ethical violation.
Civic Identity Improvement
In order for the company to improve its sustainability image, it is of paramount importance to make sure that the company is not afraid to seek public help in reconsidering its practices. Thus, a strategy of collaboration with such public organizations as the World Business Council for Sustainable Development or local nonprofit sustainability networks will provide the company with both assistance in seeking new practices and a respectable image in the global community. Additionally, Comp Core should start a global initiative of financial aid for people who lost their neighborhoods to floods caused by deforestation, preferably in collaboration with other public initiatives for a better outcome. Communities and separate individuals will be able to benefit from the company’s relief and assistance allocations aimed at recovering from the lack of sustainability in the past.
Civic Reflection and CSR
Importance of CSR
The power held by the business sector explicitly affects the trends in society. Such inherent socio-cultural phenomena as employment, pollution rates, housing, and social welfare across the country are explicitly related to decisions made by large enterprise owners. For this reason, it is hard to understand why some companies still fail to acknowledge the scopes of influence they have on people. The introduction of CSR and ethics as a consequence of decades of unethical business practices and industrialization has become the most tangible way to tackle the repercussions of the harm already made. As of now, the majority of people are no longer faced with a choice between cheap and unsustainable and expensive and “green.” Today, the only possible option is to pool efforts in order to preserve the resources still available to the public.
Civic Engagement Activity
A prime example of business’s civic engagement in the US was evident during the 2020 presidential election. The execution of citizens’ right to vote is one of the prominent manifestations of democracy. Thus, in 2020, more than forty apparel companies collaborated with such public initiatives as Vote.org with an intention to popularize voting among young adults as target demographics for elections (Tarlton, 2020). The initiative was beneficial for both collaboration parties, as people were invested in making voting a nationwide trend, whereas apparel brands benefited from revenue and brand recognition in the market. This particular example has demonstrated to me that civic engagement is not always about a large-scale commitment. For the initiative to become an asset, dedication and willingness to contribute to society are the primary prerequisites. Thus, in the case of Comp Core, it is not necessary to support considerable voluntary initiatives such as rebuilding neighborhoods after hurricanes to show civic engagement, especially if this assistance happens at the expense of others’ well-being. Instead, the company should set an example of how a company that makes a mistake is capable of recognizing the consequences and rebuilding its philosophy of sustainability from scratch.
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