Creating Sustainable Organisations

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This article discusses sustainability and ethical issues that companies face. The relationship between sustainability and ethics is that in order to create sustainable organisations, ethical conduct and discussion is needed.

This article is a topic within the subject Managing Organisations and People.

Contents

Required Reading

Robbins et all, Managing Organisations and People MGMT1001, compiled from Management (6th ed) and Organisational Behaviour (6th ed), (3rd ed, Sydney, Pearson Australia, 2012), pp. 25-27, 72-74, 178-179, 198, 230, 297-302, 425-427.

Sustainability

[1]Sustainability refers to to the issue of creating organisations that consider the greater good to the widest possible community, taking into account social, ethical, environmental and economical factors. For businesses, it also includes making sure that the model used creates long term value. For example, high carbon emissions is not sustainable since it uses non-renewable forms of energy which may die out in the future as well as destroying the environment, affecting people all around the world.

Sustainability is concerned with:

  • Environmental issues
  • Socia Justice
  • Refers to the understanding of human rights and dignity, equality and solidarity
  • Refers both to within and outside of organisations
  • The long term rather than short term

The Evolution of Corporate Sustainability

[2]One model for how businesses consider and implement sustainability is the evolution of corporate sustainability model. It states that there are four "disciplines" or factors that affect sustainability decisions in business:

  1. Economics, ecology and social justice which determine a common societal goal and where to focus attention
  2. Moral philosophy, which underlies the concept of corporate social responsibility, gives arguments as to why organisations should act in an ethical and sustainable manner
  3. Strategic management which looks at the corporate as the stakeholder, and gives arguments as to why corporations should act sustainably (by ensuring long term value)
  4. Business law which looks at corporate accountability and gives reasons as to why companies should report sustainability performance

All these factors affect corporate sustainability and the direction in which it moves.

Ethics

[3]Ethics can be defined as the study of what is "good" or "bad" for human beings. It is important to note that it looks at what ought to be happening rather than what is happening. It can be proactive, that is one can be ethical by doing something good, or reactive, which is being ethical (to some extent) by not harming. However, ethics should not be confused with:

  • feelings
  • religion
  • following the law
  • culturally accepted norms
  • Science

Businesses should consider acting ethically for the following reasons:

  • Businesses deal with the external environment so that their actions directly impact society
  • Society, through the media and other means can criticise and even ban/boycott businesses
  • Ethical conduct can increase customer loyalty and trust
  • Ethical conduct reduces costs of criminal/civil liabilities

In general, there are three levels of ethical focus:

  1. Individual - referring to how individuals make choices
  2. Organisational - referring to how organisations make decisions, what their strategies and goals are, their work culture and environment and corporate social responsibility
  3. Macro/Systemic - referring to society as a whole and the legal, political, economic and social environment in which the organisations and individuals act

The factors that affect business ethics are:

  • Individuals which are affected by religious and personal standards and values
  • The organisation which create policies and codes of conduct and the organisations structure
  • External environment which includes laws and regulations and the norms and values of society

Determining Ethical Behaviour

[4]Common ways of judging whether an action is ethical or not are:

  • Individualism, which asks whether the decision promote the individual/organisation's long term interest
  • Duties/Moral rights, which asks whether the decision maintains human rights
  • Utilitarianism which is concerned with whether the decision do the greatest good to the most amount of people possible
  • Justice, which asks whether a decision show fairness and impartiality

Some other notes to consider are:

  • Under utilitarianism, a decision can be said to be ethical because the goal was ethical, even though the means may have been unethical
  • Under individualism, only the personal interests are taken into account- is this ethical? (this is also known as Ethical Egotism

Another ethical theory is that of universal principles or duties. That is, there exist actions that can always be judged as right or wrong in themselves. For example, treating humans as ends rather than means is always seen as ethical.

Employee Rights and Duties

One model of ethics in organisations is the Employee Rights and Duties Model. The model separates what rights employees have and what duties they must complete.

Employee rights are:

  • freedom from discrimination
  • due process
  • healthy and safe working conditions
  • fair wages
  • work
  • privacy
  • participation

Employee duties are:

  • compliance with labour contract
  • compliance with the law
  • respect to employee property

End

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References

"Textbook" refers to Robbins et all, Managing Organisations and People MGMT1001, compiled from Management (6th ed) and Organisational Behaviour (6th ed), (3rd ed, Sydney, Pearson Australia, 2012).

  1. Textbook p. 72
  2. Lectures, week 11, condensed from Wilton M, 2003, 'Corporate Sustainability: What is it and where does it come from?', Ivey Business Journal Online, March/April, pp.1-5
  3. Lectures, week 11
  4. Lectures, week 11
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