global ethics, the four way test and world peace
TRANSCRIPT
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Rotary Four-Way Test and Promoting Social Justice through Good Business
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Rotary Four-Way Test
• Of the things we think, say or do• Is it the TRUTH?• Is it FAIR to all concerned?• Will it build GOODWILL and BETTER
FRIENDSHIPS?• Will it be BENEFICIAL to all concerned?
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TRUTHThere is something higher and more universal
than our own will or self-interestSomething we cannot change even if we want toImplication: we are part of a large whole, our
lives are bound up in the lives of others
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FAIR
There is imbalance and a disturbance if we take out too much for ourselves or pay too much attention to our own emotions and needs
Implication: reciprocity and equilibrium are essential in life; extremism brings on negative consequences
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Goodwill/Better Friendships
What others think of us matters.We can prosper more and be happier when we
have good relationships with people who like and respect us.
Implication: Many assets are intangible
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Beneficial to All
If we do live within a larger order, that which is of benefit to more than ourselves improves the order from which we derive our being and our well-being
Implication: Providing Benefits to others unselfishly elevates our sense of well-being and goodness
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GLOBAL CSR MOVEMENTEuropean Definition: “the responsibility of enterprises for their impacts
on society”
To fully meet their corporate social responsibility, enterprises shouldhave in place a process to integrate social, environmental, ethical,human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the
aim of: – maximising the creation of shared value for their owners/shareholders and for their other stakeholders and society at large; – identifying, preventing and mitigating their possible adverse impacts.
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Care About Stakeholders
Four-Way Test can be implemented in business by using it to take care of stakeholders
- Truth tells us that stakeholders are important- Fairness includes interests of stakeholders- Goodwill/better friendships is ethical guide to
good management of stakeholder relationships- Beneficial to all – business practices are win/win,
not win/lose; shared value; avoid negative externalities
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Stakeholders
- Customers – moral compass for capitalism- Employees – moral agents, not parts for a machine- Owners and Investors – fiduciary duties of loyalty
and due care- Suppliers – friends, not foes- Competitors – compete with quality and
innovation, not price- Communities – enhance social capital to enhance
future profitability
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Business
People
Politics, Government, Law and Regulation; Sociology; Psychology; History; Anthropology; Arts and Literature; Economics; Sciences
Ethical Environment of Business
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What is the fair value of an investment in business?
• Quality Income Stream• High net present discounted value• Good capitalization multiplier
Good Corporate Value (Warren Buffet would buy it)
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Today where does most corporate value come from?
Intangible Assets!
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S&P 500 Companies
80% of market value comes from:
Intangible Assets
Source: Monks/Lajoux, Corporate Valuation
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How do you manage risk?-Each risk hides in a relationship - customers - investors - government regulation - employees-Each relationship is an intangible asset of the
business (Assets can Appreciate or Depreciate).-Lowering risk for each relationship enhances the
quality of intangible assets and increases business valuation
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INP
UT
S
$; sustainable
profits; low beta; maximum
value
Reputational capital
Social capital
Finance capital
Physical capital
Human capital
Conversion processes
OUTPUT Goods/services
Customers
Return on Capital
(preserve adequacy of capital inputs)
Theory of the Moral Firm(self interest considered upon the whole)
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Capital Accounts
Capital Accounts are your defense against risk and your resource base for competitive initiatives
Finance CapitalPhysical CapitalHuman CapitalReputation CapitalSocial Capital
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How Can you Measure and, therefore, Manage
Stakeholder RelationshipsAnd all a company’sCapital Accounts?
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ASK QUESTIONS!
Assess the Quality of yourrelationships
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Category 1. Fundame
ntal Duties
2.Custom
ers
3.Employ
ees
4.Owne
rs/Invest
ors
5.Supplie
rs/Partner
s
6. Competit
ors
7. Communities
1. Responsi-bilities of Business
Criterion1.1
Criterion1.2
Criterion1.3
Criterion
1.4
Criterion1.5
Criterion1.6
Criterion1.7
2. Economic and Social Impact of Business
Criterion2.1
Criterion2.2
Criterion2.3
Criterion
2.4
Criterion2.5
Criterion2.6
Criterion2.7
3. Business Behavior
Criterion3.1
Criterion3.2
Criterion3.3
Criterion
3.4
Criterion3.5
Criterion3.6
Criterion3.7
4. Respect for Rules
Criterion4.1
Criterion4.2
Criterion4.3
Criterion
4.4
Criterion4.5
Criterion4.6
Criterion4.7
5. Support for Multi- lateral Trade
Criterion5.1
Criterion5.2
Criterion5.3
Criterion
5.4
Criterion5.5
Criterion5.6
Criterion5.7
6. Respect for the Environment
Criterion6.1
Criterion6.2
Criterion6.3
Criterion
6.4
Criterion6.5
Criterion6.6
Criterion6.7
7. Avoidance of Illicit Operations
Criterion7.1
Criterion7.2
Criterion7.3
Criterion
7.4
Criterion7.5
Criterion7.6
Criterion7.7
Arcturus Risk Assessment Instrument – Criteria Matrix
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The Corporate Improvement Cycle
Performance Improvement
Performance Feedback to Management
Management Action
CRT Assessment
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