South-Western - Management  
Above and Beyond
Topic Ethics and Social Responsibility
Key Words Environmental standards, governmental regulations
InfoTrac Reference CJ109579069
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News Story 

The U.S. has set limits on the amount of the fungicide in imported fish, but it doesn't always test for it. Costco decided to err on the side of safety, and conducts its own tests on the salmon it imports from Chile.

Costco's actions reflect a gradual move toward businesses setting environmental standards around the world, dealing with issues that governments and other bodies have been slow to address. It has become important for companies to have a reputation for integrity, which means they do things that aren't necessarily forced on them by the government, because it's the right thing to do.

Although a number of international groups have set standards, they are voluntary. According to a study published in the journal Management Science in 2000, of the 89 large U.S. firms in the S&P 500 who were involved in manufacturing or "extractive" industries, nearly 60 percent adhered to an internal standard more stringent than those of the countries in which they operated. Notably, the firms that took a harder line had higher market valuations than those willing to exploit regulatory loopholes.

There are several ways companies benefit from their self-regulation. Consumers and shareholders are more likely to support companies they perceive as ethical. U.S. companies accepted for membership in a program launched by the EPA earn a looser leash from the agency with respect to their U.S. operations.

Some industries have met with mixed results with self-regulation, like Internet companies, the alcohol industry, and the brokerage industry. Overseas operations have higher potential for abuse. When international standards do exist, they are voluntary.

Critics say that companies are only cleaning up their acts because of consumer pressure and to avoid legal liability, not because they are concerned about the environment.

Questions
1.

Is staying within the law enough to insure that your actions are socially responsible?

2.

What else influences responsible behavior?

Source "Above and Beyond," The Christian Science Monitor, Nov. 3, 2003, p. 14.
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