Today, in our Business ethics class, we discuss about the meaning of Corporate Social Responsibility.  In the class, we define CSR as how the company takes into consideration its impact to society and environment as it runs its business. We don’t just look CSR as an act of charity. Therefore, CSR is more dependent on company’s daily operations and its employees’ practices. It’s more than just a onetime charity event wherein company just help and feed others for a day. I should be something that is sustainable. The company should analyze its operations, and think of a way to further improve and benefit the society.

We are also presented with the pyramid of CSR. In this pyramid, starting from the base, we have:

1. Economic Responsibilities – This is actually the base foundation, the responsibility of the company to make profit. It’s because how will the company sustain its operation if there are no profits generated? Thus, it is necessary for a company to earn profit and become financial stable.

2. Legal Responsibilities – This responsibility entails adherence to the government rules and regulations. Companies are governed by the government to ensure the protection of its citizens and that the company’s operation is not illegal. Without this, the company will become free to do anything which could lead to abuse of its people and harmful products.

3. Ethical Responsibilities – This refers to the responsibility of companies to be ethical. CSR will not exist if the company and its employees are unethical. Companies should always do what is right and just. They should not cause harm.

4. Philanthropic Responsibilities – This is the top of the CSR Pyramid, which simply implies that this is really the requirement for a company to be considered socially responsible. These responsibilities include contributing to the society, protecting the environment, and helping the society to achieve an improved life.

Moreover in a more modern version of CSR pyramid, sustainability is added. CSR should be sustainable, meaning it should last and continue to be practiced in the long run. In other words, it is not temporary.

One of the examples discuss in class is the operation of Lamoiyan company. Lamoiyan, which is known for manufacturing Hapee toothpaste, is open to hire deaf-mute employees. In fact, 30% of their workforce consists of these people with disabilities. This is actually inspiring because the company is giving opportunities to the disabled, eliminating the usual job discrimination among these kinds of people. This, of course has a great impact to society in terms promoting equality, and this is what true CSR is. We include CSR on the daily operation of the business. It’s not just about charity.

On the contrary to CSR, our case study for today is about the fall of Enron. Enron is used to be one of the top performing and largest company in the US. Its fall started out when it was discovered that they are hiding details on their financial statement. They did not include on their books some of their liabilities, and there are unearned income that has been recorded already as their income. The company also pays money to their external auditors so that these activities will remain hidden. They also have a bad practice of eliminating underperforming employees, and retaining only the best performers. This can actually promote unhealthy competition among peers instead of teamwork. When their unethical practices were discovered, the company started to fall and later on filed bankruptcy. The executives of the company were even put to jail.

This case is indeed a learning experience for both the company and the government. After this incident, government has implemented stricter business policies and accounting principles has been revised. This has a huge effect to all companies, given that they would need to abide now on stricter rules. Other companies should mark this as a bad example, and should do the opposite. There should be transparency and integrity in making the financial statements. External auditors should not be accepting any bribes from its clients.

I agree with the conclusion of the group reporters in the class, wherein in order for Enron to bring back what was lost, they would need to establish new ways of processes and hire new employees. For me, there should be a better compliance and controls team with regards to their financial accounting and activities.  They should also promote ethical values among their employees. Company’s operation is highly dependent on the type of people it has. There should be no conflict of interest between the two parties.

All in all, I realized that doing good business requires good business ethics and CSR. Values are such important things in running the business. If negative values such as greed are planted in the minds of employees, then it will just be like Enron, at the end it falls down.