Question

1)Why have concerns over pollution become so important for management and directors?

2)How can corporations ensure that their employees behave ethically?

Answer 1

1) Stakeholders increasingly expect that a company's activities are in the best interest of the society and the people. Stakeholders want their companies to work not just to increase their wealth but also their standard of living by keeping the pollution to a level which is well below the environmental guidelines and which is not harmful to the people (ie: responsible for smog, polluted water, acid rain). Also, now it has become the corporate social responsibilty to keep the pollution level well below the guidelines and rules. This helps to increase the goodwill of the company which in turn increase the faith of investors in the company.

2) Corporations can ensure the same by taking various steps and incentives. Following are certain ways by which corporations can esure the same:-

There should be a proper code of conduct within the company which says that employees should behave in a certain way. Employees must be motivated and trained and be given incentives to work hard in the interests of stockholders. Their behavior must be observed to ensure they do not behave illegally or unethically that threaten the trust of stockholders and public in the compny. In many companies employees focus on maximizing their own wealth. In an effort to prevent scandals the Securities and Exchange Commission (SEC), continues to increase regulations that increase transparencies and eliminate conflicts of interest. The SEC’s goal after each major crisis is to prevent the unethical behavior and illegal behavior. Corporations can ensure that their employees behave ethically by creating segregation of duties where appropriate, creating an incentive program that doesn’t encourage unethical behavior, having control systems in place, a proper hiring process, and athorough training process. There should be proper system in place to ensure that such unethical behaviour will be caught. Corporations need to ensure that their employees understand their responsibilities in carrying out their duties and responsibilities.