Session Content & Key Points

7/27/2019 Session Content & Key Points

1/10

LGST 001: ETHICS AND SOCIAL RESPONSIBILIT

Ethics & Social Responsibility Session Content & Key Points

Session #01: Introduction to Ethics

The enabling environment for ethical violations:

1. Technology

- Privacy Infringements

- Insider trading

- Licenses

2. Profit Maximization

- Search for lower costs at all expense (Foxcon)- Use of child labor (Pfizer)

- Expense of the environment (Shell)

3. Power without accountability

- Changing political structures

Front Burner Issues:

1. Assisted Suicide

2. Obesity & Advertising

3. Overfishing

4. Carbon Footprint & Sustainability

5. Whistleblowing

Topic #01: Corruption in Financial Transactions

The scourge of corruption:

Bribery is an evil practice that threatens the foundation of

any civilized society

- Lord Templeman in AG of HK v Reid

What is Bribery?

When a person confers, or agrees to confer any benefit

upon any employee, agent or fiduciary without the consent

of the latters employer or principal, with the intent to

influence his conduct in relation to his employers orprincipals affairs.

Legal Perspective

Prevention of Corruption Act Section 5

Corruptly give, solicit, receive or promise any gratification,

inducement, reward or otherwise for doing or forbearing to

do anything

PCA 37(1): Provisions of this act in effect, in relation

to citizens of Singapore outside or as well as within

Singapore;

Where an offence under this act is committed by a

citizen of Singapore in any place outside Singapore,

he may be dealt with in respect of that offence as if it

had been committed in Singapore.

Why should be care about Corruption?

Political Impact (Refugees, civil war, dictatorships)

Loss of business, loss of lives

Large impact on poor and most vulnerable

segments of society

Misuse of public funds, not directed to institution

that benefit the common man but instead feed th

lifestyles of corrupt officials.

Corruption of large magnitudes often accompanie

by ruthless oppression of personal freedom an

civic liberties

Breeds inefficiency lower GDP per capita becaus

of less investment (business efficiency)

Companies as Moral Actors

C (Corruption) = M (Monopoly Power) + D (Discretion)

(Accountability)

To reduce corruption, (1) Control: reduce lega

electoral, educational system; (2) Exit or increas

competition: eliminate subsidies, privatization; (3

Voice Strategy: Civil Society & NGOs, Publicizin

scorecards (CPI, corruption perceptions index)

A productive organization should enhance the long-ter

welfare of employees and consumers in the society in whic

it operates

As such, it must not violate the minimum standard

of justice and human rights in any society in which

operates.

Concept of Principal-Agent relationship and

fiduciary duty to employer. Corruption infringes as

possible breach of these duties.

Corrupt Payments versus Grease Payments

Corrupt Payments: Payments given to influence the exercis

of discretion by an official, so that action will be taken/givein favor of the person giving the payment.

Grease Payments: Payments usually small, given to pet

officials to expedite the performance of routine governme

activity like clearing a shipment through customs o

speeding up the formation of a company.

** Distinction here is that while one is used to expedite

procedural issue, the other is used to influence the decision

Arguments FOR/AGAINST grease payments:

Utilitarian Argument: Overall efficiency increase

and welfare is maximized.

Country and economy will not stagnate due t

overwhelming bureaucracy.

Grease payments are obvious and not hidde

Highlights the inefficiencies of the government s

they can take steps to improve situation

Sums of money are small; however, petty corruptio

can have subtle effects on viewpoints of citizens

Long-run might be better to eliminate pet

corruption for LR business efficiency

Prepared by: Tee Chin Min Benjamin


2/10


Questions to be asked in Approach to Problem

Is there violation of duty to state/employer?

Responsibilities and primacy of obligations

Was there a breach of fiduciary duty?

Is there an unspoken rule in the country?

What are the resulting benefits and costs in

engaging in corruption? (LR v SR consequences)

Is the situation likely to be recurring or was it a one-

off transaction?

Was the act hidden or in full purview of everyone?

Summary of Arguments on Corruption

Kantian: Corrupt payments like lying and not keeping

promises are under some prima facie substantive duty

because if everyone were corrupt and willing to bribe, the

society cannot survive since honesty between government

officials and public is a key element in keeping society

together.

Principal of Universality would sanction against

paying the bribe as the briber cannot rationally allow

the maxim of bribery to be universalized. Briberywhen universalized would result in the lack of

transparency in business dealings and reduce

incentives for productive labor and transaction costs.

As rational beings, one should follow the categorical

imperatives so that there isnt a first mover

disadvantage without paying the bribe.

Bribery is an intentional violation of a binding moral

duty owed exclusively to the principle. Inducing that

breach of duty via bribery or engaging in the breach

of duty by accepting the bribe are both morally

wrong.

Possible Maxims:

Contracting officers should not receive payments other than

what there are contracted to receive for their work

One should not submit a bid that is unjust and unfair

Utilitarian: Corrupt payment in a given situation would not

lead to the best result for society as a whole. Consider the

impact of corrupt payment distorting business efficiencies as

the best product is not eventually chosen for the consumer.

Companies with good products and practices would not be

rewarded adequately in a corrupted business climate. Prospect of lawsuits against you and your company

If listed on NYSE, subjected to prosecution under

the US Foreign Corrupt Practices Act.

If Singapore, look at PCA and repercussions locally

Fines, Loss of reputation of company over ST gain

Rule Utilitarian: Taking the position of the Chief Executive

in the Chamber of Commerce, desired outcome would be to

increase business efficiency and transparency in the country

so as to increase output and total welfare for the economy.

Applying the Rule of: No grand or petty corrupt payments

Increased business confidence in the fairness of th

regulatory and legal system resulting in increase

investment and desire for innovation and enterprise

Resulting long-term increase in the standard of livin

of citizens; good business = good products

Need to enforce (1) Good administrative and cou

system, (2) Supervision and Enforcement

However, development of such a system would als

have positive externality effects on other domains o

society such as political stability and low crime.

Benefit of greater equality and equal opportunity fo

all citizens. (Fosters meritocracy and competition)

Corruption has its most harmful effects in developin

countries where much needed public resources ar

often diverted to the hands of public officials.

Virtue Ethics: Two extremes identified:

(1) Engage in corruption to get the maximum benefi

from the proposed deal

(2) Engage in ZERO corruption

Middle ground: Difficult to establish because som

corruption is akin to concede to all corruption. Corruption lik

a drop of ink which penetrates through a fluid till the who

fluid is contaminated.

No corruption; but build strong relationships an

networks within the context of proper busines

dealings to understand the decisional proces

involved so as to give your company best chance.

Line not to cross: Relationship building whic

confers a benefit to the principle which influence

his decision making process.

Topic #02: Ethics in the Workplace

Main Issues:

Bullying, Sexual Harassment, Unfair Discrimination

Instructions to do things which are wrong

Privacy and Autonomy in hiring policies

Personal Ethics v Organizational Ethics

Personal policy v Company policy

Executive Compensation

Workers in the Vineyard:Should wages be determined entirely by contract?

Concept of equal pay for equal work. What is fair pay?

Legal Environment and Labor

Changing nature of employment

Relationship has gone from one where labor wa

obtained from people of certain status, to one wher

people are independent agents free to mak

contracts with whichever employer they choose.

Not excluded from occupations because of status


3/10


Result of increased social mobility and abolishment

of slavery laws.

Employment at Will model

Employer or employee may terminate the employment at will

unless disallowed under the terms of the contract and no

permission is required from a government authority to

terminate employment.

Employment dictated by market forces to facilitate

efficiency during downturn and boom cycles.

Does little to protect job security and leaves

contracting parties to agree on the conditions of

employment termination.

Government ensures sufficient social safeguards,

regulatory agencies and labor unions to ensure

employment is fair

Concept of Vicarious Liability

Employer is liable for the damages or wrongs done by the

employee in the course of the business operations.

Distinction drawn between an independentcontractor and an employee

Employer has the right to tell the person(employee)

what must be done and also how it must be done

and stipulate the range of subtasks one must follow.

Independent contract is told what is expected and

requirement would be to deliver the final product.

How the job is done is not the concern of the client.

Issues arising:

To what extent can the employer legitimately

monitor and control the behavior of the employee?

While the doctrine of vicarious liability provides a

justification for the employer to screen out

unsuitable applicants, an employer may use this

doctrine in matters which are not the business of the

employer.

Challenge to strike a balance between the checks

and monitoring that an employer may conduct in

order to prudently guard against wrongful

misconduct without intruding on employee space.

Challenges arising from Technology Proliferation

Virtual Workplace: Presence of emails, mobilephones, internet and company issued devices allow

work to be carried out anywhere and employee may

be answerable to the employer almost all the time.

Scope of control: Technology allows more freedom

in the way work is delivered allowing employees to

make use of technology in ways beyond dictated

scope.

Confidential information is now stored online and on

company intranet and databases. Law implies that

there is a duty of mutual trust between the employee

and the employer. However, there is no explicit

obligation for the employee to pursue the interests o

the employer.

Outsourcing: Technology has allowed th

outsourcing of work to different countries beyon

local borders. This creates the issue of differin

legal and ethical standards and the need for a goo

set of corporate code of conduct to govern actions.

Issue #01: Sexual Harassment in Asia

Background: In many Asian countries, there is an imbalancin the number of men and women due to the Asia

preference for males over females. This leads to th

presence of honor killings in Asia and also discriminatio

against women in the workplace.

1. Courtship (Employer advances on employee)

2. Sexual Harassment (Two forms)

Hostile work environment one that belittles o

degrades because of gender and the abuse o

power by the employer resulting in oppression

Quid pro Quo Sexual favors in order to b

appointed to a position, get a pay increase oget a good job evaluation

American Context (Harris v Forklift Systems):

There must be continuous abuse and degradin

actions

No grave psychological trauma necessary, just (1

Objective condition: reasonable perception th

behavior is hostile and abusive and (2) Subjectiv

condition: employee in fact so perceives it.

To avoid liability, employer must show that: (

exercised reasonable care to prevent and corre

promptly any sexually harassing behavior (2) victim

employee unreasonably failed to take advantage

preventive/corrective opportunities to avoid harm.

Summary of Arguments for Sexual Harassment:

Kantian: Categorical imperative of the Principle of Humani

states that all humans are to be treated with respect.

Sexual Harassment infringes on the right to be treated wit

respect and is akin to treating women as a sexual object i

a degrading and hurtful manner.

Part of a larger duty for employers to provide a fa

and safe working environment for employees. Violating human dignity transgresses a basic soci

norm relating to the respect of the modesty o

women.

Employers have a duty to provide a safe and fair working

environment for their employees.

Veil of Ignorance: Theory of Justice suggests that a

employees be given equal opportunity to hold careers and t

advance them without having to submit to unwante

advances or sexual harassment.


4/10


Utilitarian: Negative effects on the company severely

outweigh any positive effects:

Subordinates would be unwilling to work for a boss

who has a reputation for sexual harassment.

Time and energy devoted to improving the

companys profitability and performance is wasted in

sexual pursuits by the predator as well as the victim

having to fend off unwanted advances.

Results in negative reputation of the company and

also a corruption of the values of meritocracy in job

progress.

Issue #02: Discrimination in the Workplace

Discrimination: We all agree that human beings are equal in

the sense that no one has a greater intrinsic moral value

than another but we concede that human beings are not

equal in the sense of being equally gifted.

Credentials, recommendations and psychological

tests are directed to find a fit between the employee

and the employer.

Discrimination occurs when the employer useshis/her own prejudices, values and standards to

evaluate an employee for hiring or firing decisions

Is there a gap between the law and ethics; law does

not explicitly prohibit discrimination. There are laws

that protect employees such as health, safety,

minimum wage but no law on discrimination.

Multiethnic and multicultural nature of Asia results in

numerous people groups and cultures. Differences between

groups result in the formation of prejudices, stereotypes and

eventually give rise to discrimination.

Ethics of Discrimination

Employer is allowed to pass judgment on applicants

based on their qualifications and skills and

experiences required for the job

Where the decision fringes on race, religion, gender

or disability for reasons other than job requirements,

employers should be careful not to discriminate

against applicants.

Types of Discrimination

1. Intentional discrimination: Employer intentionally andconsciously takes into account a non-job related

criterion in a hiring, firing or promotion decision

2. Disparate-Impact discrimination: Discrimination

demonstrated by statistical evidence

Summary of Arguments for Workplace Discrimination

Kantian: Discrimination violates the principle of humanity.

People have a right to be judged on the basis of

their abilities and job performance and not on the

basis of a stereotype.

People are treated as means and not an end

Veil of Ignorance: One has to bear in mind that the

individual could be a member of a disfavored ethnic group,

religion, caste or gender.

The least advantaged would prefer to live in a

system of equal opportunity and meritocracy.

Discrimination violates the requirements of equal

freedom and equal opportunity which John Rawls

requires for a society to be considered just.

Issue #03: Employee PrivacyPrivacy is said to be of value because of the role it plays

developing and maintaining a healthy sense of person

identity. It has an important role in society in promoting

high degree of individuality and freedom of action amon

members in the society.

Definitions of privacy:

(1) Right to be left alone within a personal zone o

solitude (unwanted publicity) and

(2) Privacy as a right to control information abo

oneself(3) Privacy is a state where certain facts about onese

are not known to others

Breach of privacy (in Singapore):

Information had to possess the necessary quality o

confidence

Information had to be imparted in circumstance

importing an obligation of confidentiality

Unauthorized use of information to the detriment o

the party

Issues of Privacy in Business

No true privacy and no absolute ability to be le

alone in solitude. Workers cannot claim the right t

be free from supervision in the workplace. Need t

limit the concept of privacy involving selecte

information and not stretching to cover all intrusion

into personal life.

Privacy is the claim of individuals to control fo

themselves, when, how and to what exte

information about them is communicated to other

Privacy is not correlated to control so you can los

privacy without losing control (voluntary divulginformation)

Scope limited to undocumented person

information because certain facts about oneself ar

available as public records and can easily b

retrieved. No loss of privacy when it comes to leg

qualifications and legal compliance for records.

Pre-employment screening and selection. To wh

extent does the employer have the right to deman

personal and private information?


5/10


Information monitoring and intrusiveness: Googles

tracking of consumer preferences and profiling of

the consumer for targeted advertising.

Types of Privacy:

(1) Physical Privacy: Persons enjoyment of space from

which others can be excluded and within which his

activities are not monitored without his consent

(2) Informational Privacy: Persons control over access

of information relating himself or herself(3) Decisional Privacy: Right of a person to make

decisions and act on those decisions free from any

unwanted interference from others

Summary of Arguments for Privacy in the Workplace

Ethical issues arise in the process of gathering information,

usage of information and whether the employer has the right

to information deemed as private or personal.

Kantian: Based on the autonomy of individuals and the

respect for persons.

Both arguments violated with the invasion of privacy

because autonomy implies that a person has the

moral right to make a rational choice as an

autonomous being without interference from others.

Respect implies that others give due recognition to

a persons right as equal and autonomous person.

Extent of autonomy and respect given should be in

line and weighted in light of any contrasting duties

and obligations (e.g duty to the state; duty to family)

Utilitarian: Based on evaluating the consequences of

actions and weighing the resulting costs and benefits:

Great harm done to individuals when inaccurate or

incomplete information is collected by an employer

and is used as the basis for making important

personnel decisions.

Great harm done to individuals when personal or

private information is used against the employee for

purposes that the individual didnt intend for others

to know.

Increases tension and atmosphere of distrust in the

workplace which results in diminished workplace

satisfaction. Argument rests on the unproven assumption that

more harm than good will result when employers

amass files of personal information, hence there is a

need to realistically balance harm done to

employees by crossing privacy lines against the

benefits that such practices produce for employers.

Contrast negative impact of increased monitoring

with improved productivity, minimized damage to the

firm caused by negative actions by employees, low

cost of implementation to monitoring (wide range of

affordable monitoring equipment)

However, some practices are inherently considere

to be morally wrong even when they do not produc

negative consequences (monitoring with hidde

cameras, or tapping phone conversations)

Objection is overcome by more sophisticate

utilitarian arguments that focus on the fact that

certain amount of privacy is needed for th

enjoyment of some activities, hence monitoring o

concession of privacy rights can change th

experience and prevent satisfaction.

Social Contract Theory: Though every person has the rig

to autonomy, that right is said to be restricted by a soci

contract in our culture that prevents us from infringing o

another persons right to personal autonomy.

Reciprocal obligation an individual who receive

respect for his personal autonomy has a reciproc

obligation to respect the autonomy of others.

Social contracts can be observed in cultural

specific manners as well as part of a company

system of values and code of conduct. When an employee agrees to be a part of th

company, he agrees to act in line with the value

and conduct that the company respects.

Thomas Donaldson & Thomas Dunfee Hypernorms

fundamental core values across all cultures known a

Hypernorms as well as those that allow free moral spac

within local communities which are not Hypernorms.

Suggest that we look for a convergence of religiou

cultural and philosophical beliefs around certa

principles to identify Hypernorms.

Hypernorms include: Freedom of Speech, Right t

personal freedom, Freedom of Opinion, the Right t

physical movement and informed consent.

Specific Arguments for Workplace Privacy

Workplace privacy is violated when:

1. Employers infringe on personal decisions that ar

irrelevant to the employment contract (breach o

Decisional Privacy)

2. Personal information that is irrelevant to the contra

is collected, stored or used without informe

consent. (Informational Privacy) Employees need to be able to challenge a

information collected and to be informed about wha

type of information is being collected and its purpos

Onus is on the employer to show and justify th

need for collecting such information

Access to information dependent on the type o

information and the state of relationship betwee

parties.


6/10


Issue #04: Conflict of Interest

Conflict of interest arises when ones personal interests

comes into conflict with his duty to act in the interest of

another; or when ones personal interests interferes with his

ability to act in the interests of another when he has the

obligation to do so.

Business related COI:

Fiduciary duty; Principal-Agent relationship

When an employee is engaged in carrying out a taskon behalf of the company while at the same time

harboring a private interest that is either antagonistic

to the best interest of the company or has the

potential to affect his independent judgment.

Situations Arising:

Biased Judgment: when professionals (agents) do

not use their best judgment in the interest of the

principal (accepting a bribe)

Direct Competition: when employees engage in

direct competition with his employer (Moonlighting) Misuse of Position: Where you use the position to

advance personal interest (Personal Favors)

Violation of Confidentiality: Disclosure of information

that is privy to the principal (Insider Trading)

Types of Conflict of Interest

(1) Actual Conflict of Interest

Person actually discharges his or her duties to

the employer or some other person in a way that

is prejudicial to their interests out of his self-

interest

(2) Potential Conflict of Interest

When there is a possibility that person will fail to

perform a duty to act in the interest of another,

even though he has not yet done so

Whether the particular interest creates potential

conflict depends on the strength of the influence

exerted on the person

(3) Apparent Conflict of Interest

May sometimes overlap with potential conflict of

interest. In this situation, there might or might

not be a conflict of interest but an onlooker

might think there is one because thecircumstances of the situation suggest so

Issue #05: Bonuses for Bankers

Is there fair compensation with regard to the intrinsic

value of the job? Intrinsic value referring to value

added to society

Can argue that bankers are paid the market rate

(how the market values them), but markets can be

argued to be imperfect. (Nurses are severely

underpaid in relation to intrinsic value they give)

Healthy economy depends on healthy banks. Goo

bankers lead to healthy banks (assumed)

Summary of Arguments for Bankers Bonuses

Veil of ignorance

What is the fair social contract we want to achiev

justice?

No one group should be receiving exorbita

bonuses at the expense of others (state-funde

bailouts at Too Big To Fail banks)

Since we all do not know which profession we w

end up in, then we have no reason to accept th

high bonuses that bankers receive.

Hence bank bonuses are UNETHICAL

Deontology

Maxim: bankers have fiduciary duty to act in the be

interest of the company

Since bankers have a duty to act in the best intere

of the company, regardless of the bonus structure

the rationale of having high banking bonus to ensurbankers work hard is flawed and UNETHICAL. It

like paying for more than what you are entitled to.

Virtue Ethics

2 extremes: excessive reward for good performanc

and zero reward for good performances

What virtues do bonuses instill in bankers? W

bonuses make better bankers?

Good performances should be rewarded wit

bonuses. Excessive incentives cloud goo

judgment, and bankers need good judgment.

More importantly, excessive incentives breed gree

and greed cannot be controlled by any appeal t

morality and values. Greed has to be controlled b

some form of loss.

Since high bonuses lead to greed and clou

judgment, it is unethical to deviate too far from th

mean.

Rule Utilitarianism

Recurring situation: Payment of annual bonuses

Hat: Head of bankers association

Desired outcome: Attract and retain talent pool the industry

Rule: Attractive pay packages that reward goo

performances

Bonuses are ETHICAL

Deontology

Maxim: Employees should be adequate

compensated for their efforts to the company in lin

with their contract.


7/10


We must respect the rights of investment bankers.

They obtained bonuses as entitled in their contracts

as dictated by the free market.

Hence bank bonuses are ETHICAL

Conclusion

If you look at the issue from a micro perspective,

bank bonuses are ethical.

If looking from a macro perspective, considering

societys welfare as well, bank bonuses are

unethical.

We believe in free-market principles, yet recognize

that markets are not perfect. Banks are an integral

part of society; hence they should be subjected to

some form of public scrutiny.

Topic #03: Supply Chain Ethics and Environment Ethics

Globalization has made it possible for production to

be outsourced leading to companies with supply

chains that span half the world.

Rise of new ethical issues: Responsibility ofProduction, Labor rights and safety standards,

sustainability in production

How far should companies go to ensure that their

products are ethically sourced?

Arguments in Supply Chain Ethics: Human Rights and

the Condition of Employment in Overseas Factories

Kantian: Ethical obligations and duties of the firm and the

right of workers to equitable pay and fair employment

conditions

When in Rome do as the Romans do is a form of

relativism in Ethics. If companies were to abide by

this principle, the ethical boundaries for operations

in overseas countries would lie in the hands of the

government of these countries.

Such a principle cannot be universalized and

applied across all countries.

Following from Kants Principle of Humanity, unfair

labor contracts and working conditions results in

workers being treated as a means to an end. Their

safety and dignity would be compromised.

Economic process must respect basic human dignity

and human rights Transgression of the second categorical imperative

results in deviant business practices like

sweatshops and pressure cooker conditions.

All companies should ensure fair compensation and safe

working conditions for their employees

Although this would result in higher costs for the

corporation, such a view is deemed necessary as

the basic minimum rights accorded to individuals

employed by the multi-national corporation.

Rule Utilitarianism: Recurring situation as increasin

number of companies engage in global operations

Hat: Fair Labor Association (FLA) apparel indust

certification group.

Desired Outcome: Consumers are aware that the produc

that they buy are made under acceptable workin

conditions. Businesses enjoy cost savings within th

boundaries of ethical labor practices and safe workin

conditions.

FLA members agree to abide by the associations Code

Conduct which prohibits:

Forced labor, child labor

Physical, verbal, sexual or psychological abuse

Discrimination on the basis of gender, race, religion

Unsafe and unhealthy working conditions

Code requires members to:

Recognize and respect the right of employees t

bargain collectively

Pay employees the local or minimum wage Maintain reasonable hours of work and give worke

adequate rest and overtime pay.

To support this desired outcome, companies should ensur

adequate monitoring of factories; promote world trade an

competition, certification of manufacturing operation

through trade organizations, providing aid to improve th

infrastructure and working environment in developin

countries.

Veil of Ignorance: Under the current situation, we observ

that corporations are making considerable profits at th

expense of overworked and underpaid laborers

developing countries.

Inequitable distribution of profits which ar

reinvested to develop the brand name throug

marketing/branding rather than improving workin

conditions of workers.

Going behind the veil, one must bear in mind that h

could be a child laborer in a sweatshop and hence

resources (profits) should be reallocated in

manner that benefits the least member of society.

Virtue Ethics: Identify two extremes and seek to understan

the value in choosing the middle ground:

Two extremes identified would be: (1) Firms seek

achieve profits at all costs exploiting available labo

resources and (2) Strict standards against th

exploitation of labor with regulation and monitoring.

Having extremely cheap products promote

materialism and consumerist mindset. Midd

ground would be sufficient monitoring to ensur

standards are not compromised, consumers lear

the true value of ethically produced goods.


8/10


Environment Ethics

The environment does not exist in isolation as a sphere

separated from human actions and ambition, but is closely

related to development. Many development paths of

industrialized nations are clearly unsustainable and

development decisions (economic or political) will have a

profound impact on the ability to achieve sustained progress.

Pollution: Undesirable or unintended contamination

of the environment by manufacture or use of

commodities. Resource Depletion: Overconsumption of finite or

scarce resources

To be ethical in general means to do the right thing in

everything we do. In relation to the environment, it follows

that we must live in harmony with our fellowmen and with

nature in a way that will bring about happiness to all in the

present and future generations.

Key Issues in Environment Ethics:

Tradeoff between development and economic

growth: Developing countries pursue growth at theexpense of the environment.

Government Responsibility: Short Term v Long

Term (Term of office) Should governments seek the

long term interests of their people or seek to ensure

reelection? (Inter-temporal Decisions)

Cross-border disputes: Environment is a shared

responsibility and resource. Action A from country A

results in B on country B. Who is responsible?

Developing nations cite the historical actions of

developed nations and use it as a justification for

their current actions.

Relocation of Production: Globalization has enabled

multinational corporations to shift production from

one jurisdiction to another. Under whose laws

should the firm operate? Are there any global

standards in doing so?

Summary of Arguments in Environmental Ethics

Kantian: The Kantian view purports that we must act

according to certain moral principles regardless of their

consequences. We have duties that we must fulfill based on

the categorical imperative where a logical person would

agree that it is valid. All humanity has an equal claim to the environment

and has obligations toward it. No one should claim

more than their fair share or do anything that would

have a detrimental effect to another.

However, this strict definition would seem to lean on

the side of zero pollution. We need to balance this

argument with the need to pursue development to

counter the issues of poverty, hunger and

underdevelopment.

Kantian 3 levels of obligations: Cause no harm,

prevent harm and do good

Look at the intentions of the firm in driving its action

Possible Maxims:

Businesses have a responsibility to ensure long-term

growth and sustainable development

Everyone has a right to a clean environment

Based on the notion that the firm is an ongoin

concern and that it needs to operate for th

foreseeable future

Duty of firms to the citizens of the country

ensuring sustainable production

Utilitarianism: Seeks to achieve the greatest happiness fo

the greatest number. Short-term view versus long term view

Short-term view will justify corporation to explo

natural resources as long as it can make a profit fo

both shareholders and stakeholders.

However, this is countered in that resources ar

finite and limited and this act is not sustainable

the long run. Long-term view acknowledges the impact on th

environment and thus the firm will need to weigh i

actions on the various stakeholders, taking in

account present gains as well as the future gain

and costs to future generations.

Consider maximizing future benefits and minimizin

future injury to the environment.

Veil of Ignorance: Rawls proposes a society th

recognizes its members as free and moral individual

Questions of justice arise when equal persons attempt t

advance their interests and come into conflict with othe

pursuing self-interests

Creation of institutions of society that distribute th

benefits and burdens of mutual cooperation don

under the veil of ignorance

Social and economic inequalities are to be arrange

so that they are for the greatest benefit of the lea

advantaged.

As such, there should be fair distribution of benefi

and burdens in relation to the environment. Firm

that benefit from polluting the environment should b

responsible for minimizing the negativconsequences that arise out of doing so.

Firms should also be consistent in operating

different states. Globally recognized corporation

with the necessary resources should take th

initiative to develop a credo or standard of conduc

that guides its supply chain in a manner that

consistent with the values and standards that itse

seeks to uphold.


9/10


Topic #04: Ethics in Advertising and Marketing

Advertising: Paid non-personal communication about an

organization and its products that is transmitted to the target

audience through a mass medium.

Under the umbrella of the ethics of communication

Important Question: extent of the effect on

consumer behavior and the effect of continuous

exposure to advertising

Shift toward an attempt to change perspectives,

attitudes toward certain key issues

Key Elements:

Form of mass communication

Information with regard to a commercialproduct

Element of Choice for the consumer

Justifications for Advertising

Facilitates transactions in the marketplace

Contributes to efficiency of markets

Promotes personal informed choices for consumers

Contentions to Advertising

Deceptive, misleading or false communication

High possibility for manipulation

Exploits consumers by forcing them to buy things

that they do not need and may not want.

Deception of market illiterates (people who are

uneducated over available goods in free market)

Violates principle of Humanity as successful

advertising treats humans as a means to higher

profits and sales rather than as an end in providing

fair utility for enjoyment.

Summary of Arguments on Issues in Advertising:

1. Truth v Deception

Objective of advertising should be to promote product,

provide relevant information to the product and persuade

consumers to buy the product to meet their need.

Increasingly difficult to ascertain the truth of the

statements made in advertisements

Difficult to conclude that there is an expectation

that every factual assertion about the product

must be true to the point of exactitude

If an advertisement makes a verifiably false

claim, which the advertiser knows to be false but

purposely attempts to mislead or deceive, than

the advertisement becomes immoral. (intention)

Not all assertions in advertisements are statements,

some are held to be exclamations, questions or

interjections.

Hard to categorize all the advertisements and

tease out the truth of the statements, use of

metaphors in statements not easily

ascertainable

Subjective nature of advertising also means a wid

spectrum of interpretation and it is difficult to decid

collectively what a false message is and what

true message is.

Most of the information is hidden beneath metaphor

and subtle advertising slogans

Test of Reasonableness: Using the legal conce

of a reasonable man; to distinguish whether th

deception in advertising is due to the advertiseme

itself (verifiably deceptive) or whether it is due to th

personal interpretation of the matter.

Deceptive advertising also includes half-truth

where there is a focus on the unsaid, silent effect.

is often difficult to expect that an advertiseme

conveys the full truth in limited time

Counter-arguments:

Advertising is like poetry and other literary device

and its aim is to influence audiences; affe

perceptions and sensibilities and perhaps even

effect a change of heart. However, unlike poetry, advertisement promises

certain functionality as it involves the sale of

commercial product for consumption. Hence ther

needs to be an element of truth in th

advertisement.

Common proponent for advertising says that the fre

market will regulate unethical advertising an

misinformation as the market has built

mechanisms of control which expose deceptiv

advertisements and bring unethical advertising o

into the light. (Question efficiency of market forces)

2. Promotes False Values

Evolution of advertisements which seem to portray

certain set of values and ideals

Instead of selling a product, advertisers increasing

target a universal need such as the need to b

popular, need to be loved and admired

Product is framed in a manner that appeals to thes

universal needs which may not be grounded on trut

Results in the formation of ideals and soci

stereotypes defining concepts such as beauty an

success

3. Irrational Persuasion in Advertising

Advertising creates wants in consumers and th

shaping of consumer demand fringes on th

violation of consumer autonomy Freedom

Choice

Where do we draw the line in deciding whether

consumer remains rational in making a purchas

decision?


10/10


1

Moral Objection: Persuasion of advertising is not the ethical

contention, but the manipulation and coercion of audiences

under the guise of persuasion; irrational persuasion.

Manipulation: trickery or exploitation, unfair advantage over

people by exploiting deep seated emotions or sense of

persuasion

Arguments against irrational persuasion:

Advertising irrationally persuades by playing onnatural human desires for security, acceptance, self-

esteem etc.

Advertising invokes powerful visual images which

bypasses rational thought processes

Pervasive nature of advertising intrudes into our

everyday life (billboards, newspapers, and internet)

which has a cumulative psychological impact that

undermines our ability to judge as free agents.

Vance Packard: Advertisers draw on motivational

and psychological research to discover

subconscious needs, yearnings and play oncravings that stimulate human desires and emotions

Jeffery Robinson: psychological research helped

advertising companies transform goods into

communicators of meaning, selling back to the

consumer their own intrinsic insecurities

John Galbraith: Advertising was initially supposed to

feed information to existing demand but the form of

irrational advertising has led to the unnatural

creation of demand.

Manipulative advertising challenges the concept of

autonomy, consent and choice in the free market.

Counterarguments:

Consumers have a freedom to choose whether they

are taken in by advertisements

Jerry Kirkpatrik: Advertisers do not have the

obligation to answer or rebut charges of overtly

active imaginations because there is no evidence

that advertisers are motivated as such. Humans are

beings of volitional consciousness who have the

capacity to reason. Advertisements only serve to

make consumers more aware of their needs and

that these needs are already inherent in theconsumers.

Caveat Emptor Principle: Buyer Beware. The onus

is on the buyer to conduct due diligence and

conduct sufficient checks on the purchase before

engaging in a purchase decision.

4. Exploitative Advertising

Advertisement aimed at capturing the attention of

vulnerable sectors:

Children: Unable to make a reasoned judgment

at a young age. Parents disallow, but the

advertisement creates an innate desire in th

mind of the child.

Commercials that promote food high in calories

I want what I cannot have

The Elderly: Advertisers target intrinsic need

and fears such as safety, security, health an

loneliness.

The Addicted: People who have an innate desi

to keep coming back for more.

Especially observed in Alcohol, Tobacco an

Food advertisements where advertisers exploit

need/vulnerability of these individuals whic

may be not be in the best interests of th

consumer.

Summary of Arguments in Advertising Ethics:

Kantian: Looks at the Principle of Humanity and whether th

consumer has been treated as a means to an end.

Deception violates the right of an individual to kno

the truth, also results in people acting unknowingon false beliefs.

Short circuits a persons ability to engage in fre

reasoned choice.

Manipulation and disablement of a persons critic

judgment ability clearly violates the respect due t

every individual

Intent of the advertisement (Puffery or aimed

covey truth)

Truth in advertising

Rule Utilitarian:

Recurring Situation Advertisements and th

communication of information from the manufacturer to th

consumer.

Hat Advertising Authority of Singapore

Desired Outcome Effective advertising which increases th

efficiency of the free market. Consumers make informe

choices when purchasing goods and producers are able

communicate effectively the strengths of their product.

Documents

Session Content & Key Points