Ethics and Corporate Social Responsibility CSR

The activities of businesses affect different stakeholders within the communities they operate in. They affect customers, employees, shareholders, suppliers, financiers, regulatory authorities, and communities. Accordingly, in their pursuit of economic objectives, business organizations have a responsibility to satisfy the concerns of stakeholders affected by their operations. This is the core of corporate social responsibility (CSR). CSR theory asserts that business organizations exist for not only profit motives, but also social and environmental objectives (Schwartz, 2011). Indeed, CSR has become so that important governments in most countries around the world have enacted laws and regulations that businesses must adhere to so as to foster community wellbeing and environmental sustainability. Inattention to social and environmental concerns may harm an organization's public reputation or have serious legal ramifications on the organization.

WECAREHealth (WCH), a New Jersey-based pharmaceutical company, is facing serious human rights issues and environmental concerns due to its activities in the African nation of Colberia. WCH is one of the most successful pharmaceutical companies in the world, but the company's little or no regard for workers and the environment in its Colberian operations is one of its major shortcomings as far as corporate ethical responsibility is concerned. Following a brief definition of the notion of stakeholder, this paper identifies WCH's stakeholders and the human rights issues the company presents for some of its stakeholders. The paper also identifies environmental concerns raised by the firm's operations and utilizes various ethical theories (utilitarianism, deontology, virtue ethics, and ethics of care) to evaluate the firm's treatment of the indigenous people of Colberia. Finally, a comparison of WCH's actions and a number of real-world companies is provided.

Broadly speaking, a stakeholder denotes a person or an entity affected by or that affects the operations of a given organization (Carroll, Brown & Buchholtz, 2017). Stakeholders are groups that are necessary for the existence of an organization. These include employees, managers, communities, customers, shareholders, lenders, investors, and government agencies. Stakeholders may also include suppliers, labor unions, professional associations, industry trade groups, advocacy groups, and competitors. These groups influence or are influenced by the activities of organizations in one way or another. For instance, managers make strategic decisions and drive organizational success. Equally, communities may be affected by an organization in that its activities may cause water or air pollution as well as habitat destruction.

As per the stakeholder matrix, stakeholders have different levels of power on and interest in an organization (Carroll, Brown & Buchholtz, 2017). Indeed, power (influence) and interest are the two major characteristics that differentiate stakeholders. This means that some stakeholders are more important than others. While some stakeholders command huge influence and have high interest in an organization, others have low influence and low interest. For instance, managers have both high influence on and high interest in an organization as they are the responsible for creating wealth for shareholders. On the contrary, suppliers have high interest in the organization owing to the need to secure business, but have little or no influence over the operations of the organization. It is imperative for an organization to understand its most important stakeholders so that it can closely engage and keep them informed.

Like any other firm, WCH is surrounded by numerous stakeholders. As a pharmaceutical firm, however, the most important stakeholders for the firm include managers, workers, shareholders, communities, government agencies, advocacy groups, and consumers. The company produces products that may pose serious danger to consumers, hence the identification of consumers as a crucial stakeholder group. Consumers have little interest in the operations of the organization, but can have immense power over the firm if the firm's products pose health hazards to human beings. Workers have high interest in the firm, but little influence. They are interested in the firm as it provides a source of income. Typically, workers are interested in good compensation and healthy working conditions.

The communities in which the firm operates are also a crucial stakeholder group. This is particularly because the manufacturing operations of the firm involve destruction of native plant species, transportation of raw materials, air pollution due to the emission of greenhouse gases, and environmental pollution due to the disposal of waste. If the firm's operations have negative consequences on the community and the environment, local communities can pressurize the firm to shut down or to be more responsive to community and environmental needs. Due to the impact of the firm's operations on workers, consumers, communities, and the environment, advocacy groups can impose pressure on the organization. Indeed, advocacy groups often pressurize firms to address the concerns of communities and consumers. Managers, shareholders, and government agencies hold a rather different stake in the organization. Managers are not only interested in the organization, but also have immense influence on how the organization operates. The management formulates and executes strategy, which in turn maximizes shareholder wealth. Shareholders are interested in how profitable the firm is. As such, shareholders may not be concerned about the firm's engagement in social and environmental pursuits. Finally, government agencies constitute a vital stakeholder group as the pharmaceutical industry is one of the most regulated industries. In addition to generally applicable regulations such as tax, employment, competition, and corruption regulations, pharmaceutical firms are subject to product safety and environmental regulations. Without adherence to all the relevant government regulations, the firm may be subject to costly litigations.

As mentioned earlier, workers comprise one of the most important stakeholder groups for WCH. In its Colberian operations, the company subjects local workers to inhumane working conditions. The company pays local workers $1 a day. Additionally, the workers have to carry heavy loads of indigenous plants for up to five miles from the jungle to the firm's manufacturing facility. On the whole, despite the presence of a powerful pharmaceutical company, the local community grapples with low standards of living, with much of the population living in primitive huts with no electricity or running water. The company's executives, however, live in a luxury compound, complete with a swimming pool, tennis courts, and a golf course. Evidently, WCH has little or no regard for the working conditions of its workers and the local community at large. This raises serious human rights concerns for the organization. More specifically, WCH is not concerned about the dignity of its local workers and the community, particularly with respect to food, health, and water.

Going forward, it would be imperative for WCH to reconsider its ethical behavior as far as its Colberian operations are concerned. One of the things the firm can do to be more ethical is to improve the working conditions of local workers. More specifically, the company should increase compensation so that workers have more financial resources to support their basic needs. Secondly, the firm should provide workers with transport mechanisms (such as trucks) to reduce the large distances they have to cover every day moving indigenous plants from the jungle to the firm's manufacturing facility. This would minimize the health hazards the long treks pose to works. Finally, the firm can improve the wellbeing of the local community by funding water and electrification projects. By drilling boreholes, constructing dams, and increasing access to electricity, the firm would make the local community much better off.

WCH's activities raise not only human rights issues, but also environmental concerns. The firm relies on indigenous plants to manufacture its products. This means that indigenous plants have to be cut down or destroyed. It also means destruction of the ecology and natural habitats for wildlife. In the U.S., regulations such as the Endangered Species Act 1973 have been enacted to protect natural habitats and prevent the exploitation of endangered plants and animals. Whereas the organization has been committed to environmental sustainability through recycling, packaging, and other green initiatives, its disregard for indigenous plants in Colberia represents a considerable ethical shortcoming. Furthermore, the organization's anti-environmental lobbying efforts are an indication that it is not fully or genuinely committed to environmental conservation and environmental regulations.

WCH's actions in Colberia can be examined in light of various ethical frameworks: utilitarianism, deontology, virtue ethics, and ethics of care. Utilitarianism asserts that an action is as good as the utility it produces (Shaw, 2017). Based on this thinking, an action is good if it maximizes utility. The implication is that the means used to achieve a particular end may not be important as long as that end brings happiness. From the perspective of utilitarianism, WCH's actions are not ethical as they do not maximize utility for the local community. The firm's actions only maximize happiness for executives and the organization.

While utilitarianism focuses on ends or consequences, deontology focuses on means, mechanisms, or actions (Shaw, 2017). In other words, though the consequences may be good, an action is unethical if the means used to achieve those consequences are not compliant with universally-applicable rules, regulations, and standards. As a firm, WCH has an obligation to follow the relevant regulations, especially in terms of treating workers, the local community, and the environment. From a deontological perspective, therefore, WCH portrays significant ethical deficiencies.

Closely related to the deontological perspective is the perspective of ethics of care. The ethics of care theory asserts that care or benevolence is the guiding compass of moral action (Shaw, 2017). This means that if an entity's actions or choices affect another entity, then the entity has an obligation to safeguard the affected. WCH's actions have a significant impact on local workers, the community, and the environment in Colberia, implying that its actions should be guided by their interests. Nonetheless, the organization evidently does not care about the interests of local workers and the community.

The theory of virtue ethics is quite different from utilitarianism, deontology, and ethics of care. As opposed to duties, rules, or consequences, virtue ethics emphasizes moral character (Shaw, 2017). For instance, helping others is a virtue as it is charitable or compassionate to do so. The theory of virtue ethics resonates with my moral compass. I strongly believe it is important for individuals to have good virtues. WCH has also failed in terms of virtue ethics. If the firm were virtuous, it would not subject the indigenous people of Colberia to the harsh conditions it subjects them to.