The impact of government regulations on business ethics and social responsibility

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The impact of government regulations on business ethics and social responsibility

What is the impact of government regulations on business ethics and social responsibility?

INTRODUCTION

Firms need to differentiate between doing good and doing well, thus the concept of business ethics and corporate social responsibility. Business ethics means that a firm’s management is required to observe morality in their activities (Vilcox and Mohan 2007, p.1). Being socially responsible on the other hand means that the firm should observe moral standards in order to enhance the welfare of society and not to violate its rights (Vilcox and Mohan 2007, p.5).

It has been argued that firms are not willing to observe their social responsibility duties and hence the need for the government to intervene to ensure that not only are they doing well but also doing good for the benefit of society (Trevino And Nelson 2010, p.210). Government regulations on social responsibility have been introduced for firms to observe the triple bottom line that is the effects of firms on the planet, people and profits.

THE IMPACT OF GOVERNMENT REGULATIONS

In Australia, the government introduced carbon taxes for firms on the amount of carbon emissions that they produced. This was a move meant to meet the targets set in Toronto on managing the environment (Creedy 1996, p.21). Even though the taxes were meant to reduce the amount of pollution caused to the environment, the consumer prices were affected because of the increased prices of fossil fuel. This affected the firms’ ability to do well because of the negative responses from consumers on the changes in price. The firms claimed that the government had brought about inequality because of their inability to perform like other companies.

Governments in Australia and other parts of the world are encouraging firms to observe health and safety regulations in order to avoid eventualities such as death. The case of workers being trapped in a mine in Chile, has brought more concern not only to the environment but also on the health and safety of employees (Jimena 2010, pp.8-11). In Australia the government has introduced the ISO 26000 that is aimed to guide firms to embrace more safety procedures while dealing with their employees. Even though the burden of compliance is increasing, this standard has been proposed not to impose strict rules on firms but to ensure that they are achieving greater levels of social responsibility as they strive to improve the lives of people by offering employees means to meet their daily needs.

Smoking has also been banned in public, especially in cars, because of the health risks that it has on non smokers (Desapriya et al 2009, p.1159) and because it pollutes the environment. This is known to be detrimental to firms selling cigarettes because it adversely affects sales. However the firms are also sensitizing the public on the harmful effects of cigarette smoking in order to comply with ethical standards.

In terms of firms’ profits, the government of Australia has emphasized on the need for firms to practice sustainability accounting and to produce reports on their Social responsibility (Davidson 2011, pp.351-366). The firms are being encouraged to provide reports on sustainability on their websites in order for firms’ stakeholders to have an insight on how the firms use their profits for the benefit of the society and its environment. Even though some firms are aiming to show how well they are doing in terms of social consciousness, the regulations by the government are not particularly welcomed because of the need to disclose how profits have been allocated to sustainability accounting (Sciulli 2011, p.47).

CONCLUSION

Government regulations on business ethics and social responsibility essentially have negative effects on the performance of firms because they limit their ability to perform well. However, they are important where the firms’ business ethics conflict with social responsibility and they offer guidance on how firms can do well without affecting their ability to do good to the society.

REFERENCES

Creedy, J. 1996, “Carbon taxation, prices and inequality in Australia”, Fiscal Studies, vol. 17, no. 3, pp. 21-21

Davidson, K.M. 2011, “Reporting Systems for Sustainability: What Are They Measuring?”, Social Indicators Research, vol. 100, no. 2, pp. 351-351-365.

Desapriya, et al, 2009, “Smoking Inside Vehicles should be Banned Globally/Jarvie and Malone Respond”, American Journal of Public Health, vol. 99, no. 7, pp. 1158-1158-9; author reply 1159.

Jimena, J. 2010, “What the World really needs Now”, Canadian Mining Journal, vol. 131, no. 10, pp. 8-8-11

Sciulli, N. 2011, “Government support crucial to sustainability reporting success”, Intheblack, vol. 79, no. 1, pp. 47-47.

Trevino, L.K, & Nelson, K. A, 2010, Managing Business Ethics, John Wiley and Sons.

Vilcox, M, & Mohan, T 2007, Contemporary Issues in Business Ethics, Nova Science Publishers, Inc, eBook Collection, EBSCOhost, viewed 26 August 2011.