Business ethics is of primary importance in 21st century businesses. Because of prominent scandals at companies such as Enron, HealthSouth and Tyco, society is holding organizations more accountable for the choices they make and their responses to ethical issues. Additionally, corporate social responsibility has expanded an organization's informal obligation to give back to communities to include environmental responsibility.
Honesty and Integrity
Business ethics begins with basic honesty and integrity. Along with telling the truth, companies and representatives must maintain accountability for commitments and business decisions. In his 2004 WebProNews article "The 7 Principles of Business Integrity," business strategist and author Robert Moment states in principle No. 1 that business leaders must "recognize that customers/clients want to do business with a company they can trust." Moment goes on to explain that this includes a company's accountability for its character, abilities, strengths and core substance as a business.
Business transparency goes beyond honesty and truth telling to encompass a company's moral obligation to disclose important information owed to the public or shareholders. Moment notes that companies should convey information in verbal or written communications that avoid misrepresentation and misinterpretation. Transparency is especially necessary in finances and accounting. Many of the most notable business scandals include accounting irregularities. The public expects companies to present fact-based and accurate accounting of business activities.
Companies have long faced some level of accountability to the public with which it does business. However, social responsibility expectations have increased in the 21st century to the point that corporate social responsibility (CSR) has become a business function on its own. The As You Sow Foundation defines CSR as "operating a business in a manner that accounts for the social and environmental impact created by the business." Moment also includes a business' obligation to stay involved in community-related events as one of his seven principles.
Environmental responsibility is incorporated into most definitions of CSR, but companies must consider environmental implications of business operations as an important and distinct entity. As You Sow points out that companies must consider environmental effects of its business operations while trying to operate efficiently and for profit. Business decisions that only consider profit are likely to lead a company to do things that negative impact the environment, thus drawing the ire of leading environmental protection agencies and groups. More stringent government regulations also hold companies more accountable for green-friendly activities.