Bloor Homes Limited: Building Responsibly And Ethically, Essay.

Report to advise the building industry on responsible management

Your assessment will take the form of a report in which you will demonstrate your achievement of module learning outcomes and application of ethical thinking to business decision making.

You will be expected to show that you understand the importance of individual and organisational ethical and social responsibility and that you can think about ethics apply ethical decision making and responsible management thinking in the case you examine. You will show that you can professionally challenge thinking about ethics and corporate social responsibility , have analysed and applied that thinking to your case and that the recommendations you make in the report show your current orthodoxy and present realistic alternatives ethical awareness in finding solutions

The Task

Acting as an Ethics/CSR consultant working for Greenleaf consultants, you will be acting on behalf of a major housebuilding company whereby you will research and assess contemporary ethical and corporate social responsibility issues (examples outlined below) for your client. Having chosen a subject to explore you will research what your chosen company’s current position and policy is, you will examine for the company the pros and cons of corporate social responsibility, research how the company can be informed of their practice through reports and research on the issue, comparison to other companies approaches to the issue and what academic research says can tell us about the issue.
 

Background of Bloor Homes Limited

Bloor Homes Limited is a construction company in the UK. It was founded by John Bloor in 1969. This company also provides assistance in buying and selling of homes.  In the year 2002, the sales reached 1870 and it became the then largest house-building company by one person. In 2016, it became one of the largest privately owned house-building groups in the UK. Thus as a large organization which indulges in construction it requires moral view in relation to environmental sustainability and specifically in relation to low carbon building in the light of pollution and global warming (Bloorhomes.com 2018).

A business organization, in order to survive, needs to focus on certain things other than those that only focus on the production, sales and profit making.  I work for an ethical and CSR consultancy and I have been provided an opportunity by Bloor Homes Limited, to explore the activities, functions and responses of the organization in relation to the responsibilities which builders have to lead low carbon build.  In this report provisions relating to responsible management and CSR have been included in relation to the organization. The report then provides a discussion in relation   to values which are underpinned by ethics in the light of ethical theories on the organization. The report than continues to carry out an in- depth analysis of the issue of Environmental sustainability particularly the responsibilities which builders have to lead low carbon build. In this section the report identifies the stakeholders which may be affected due to the actions of the company. The report then provides an advice to the company in relation to the actions which needs to be taken by them to meet the standards off a responsible and ethical company.

The organization has made references to energy preservation in its sustainability report where it signifies its intent to ensure environmental sustainability (Bloorhomes.com 2018) 

According to Smith (2012) Corporate Social Responsibility (CSR) is an approach by business organizations that aim for the sustainable development by economic, social and environmental benefits to the society that is affected by its functions and all its stakeholders. Tai and Chuang (2014) have stated that CSR is a wide concept and it differs for each country and company. CSR is a broad concept and it addresses various topics like human rights, corporate governance, environmental effects, health and safety, economic contribution and working conditions. Abels and Martelli (2012) provides that Corporate Social Responsibility is necessary for the management of all business organizations, as an organization cannot survive by adversely affecting the society and environment, around which it carries on its functions. Hence, in order to run a business successfully, the management needs to design and undertake proper CSR policies and look into its proper implementation. CSR has been stated to be as an integral part of a business organization and thus the management has to undertake it in order to ensure smooth functioning.

Corporate Social Responsibility (CSR) and Its Concept

As mentioned earlier, CSR is a wide terminology and it includes human rights, corporate governance, environmental effects, health and safety, economic contribution and working conditions. The implementation of CSR in the business policies is a must by all business organizations. With time, the importance of CSR is increasing, as business companies were and are still extremely concerned about their public image and reputation. For running a successful business, it is very much important to hold a good brand reputation and public image. According to Asif et al. (2013) if the brand reputation and the public image of company deteriorate, then it will inevitably harm the marketing performance and position of the company. CSR is a part of the business ethics and it requires a business to take responsibility of the society around it, the environment around it, employees work conditions and all that is related to its functioning, so that all these are not affected negatively due to the business operations. The need for CSR in the present day scenario is increasing, because the globalization of economy has resulted in consistent competition between companies. The better a company can take up CSR, the better it will perform. Advantages of CSR

Calabrese et al. (2013) has stated that there are certain benefits that a company and the society may get if CSR polices are implemented in the desired manner. CSR implementation has certain advantages like enhancing reputation, control over potential risks, Employee satisfaction, Social development and Environmental protection and preservation. On the other had the principles of CSR have been critiqued by Lim and Tsutsui (2012) by stating that CSR may require the organizations to make significant disclosures which may have a negative impact upon the reputation of the organization. In addition it has been argued by Torugsa, O’Donohue and Hecker (2013) that the cost of implementing CSR is not in favor of shareholders interest as the money comes directly from the pockets of the shareholders and the process does not guarantee financial gains which is the primary purpose for which a company is incorporated.

 The shareholders must be prioritized when sharing the benefits of the company, however through the CSR approach priority is provided to others stakeholders rather than the shareholders. In support of arguments against CSR a shareholders approach has been taken by Milton Friedman. According to the Friedman approach an organization should not incorporate the approach of CSR at all within its activities as it does not have any form of social responsibility to the society or the public. This is because the primary concern which an organization has is to increase its profits and as a result the profit to its shareholders. However it is the shareholders who actually have a social responsibility in private capacity. It has been further argued by Friedman in his book “Capitalism and Freedom” that if organization rather than own profit focus on the community it would lead to Totalitarianism.  According to Friedman’s view "There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." (Friedman, M., 2009). 

Importance of CSR and Its Advantages

Ethical decision making is a significant part of good practices in management. When a business organization indulges in the process of ethical decision making it not only ensures ethical compliance but also legal compliance as well as compliance with its obligations towards the society (Bishop and Lee 2017). This section of the paper highlights the importance of ethical decision making to the organization and the management may base their decisions on ethical theories in order to ensure responsible management.

Deontology or Kantianism is an ethical theory which has been provided by Immanuel Kant. According to the theory whether a decision is right or wrong is not dependent upon their consequences rather on the fact that they fulfill or duty on not (Kant 2017). It is provided through the theory that a few specific actions can never be ethically correct even if they result in more happiness as compared to their alternatives. In relation to the theory there are two actions which needs to be considered whenever a decision is to be taken (Ferrell and Fraedrich 2015). These include whether it would be ethical for every person to act in a way which a person wants to act and does the actions of the person are in relation to the goals of humans as a whole rather than personal interest.

According to the theory there is an apex principle which is that of morality which determines the moral duties of a person. It has been provided by Kant that consequences in relation to a decision are not relevant. This has been illustrated by the following example from Kant. Assume that two people got drunk and now both of them wants to drive the car home. One of them gets away with reckless driving as encounters no one on the road. However the other kills a pedestrian. It would be argued by the theory that actions of both these persons are equally wrong irrespective of its consequences (Broad 2014). Thus according to Kant when the managers are taken a decision in relation to the organization they must ask themselves two questions. Firstly would it be ok for them if the decision taken by them would be taken by the mangers of all organizations or all persons in the society. Secondly, are the actions only towards personal interest or the interest of human goals. This will ensure that the managers of Bloor Homes would not indulge in an act which they would not want any other manager to carry put. For instance based on Kant’s theory it would be incorrect on the part of the management to carry out work in an unsustainable manner which would cause degrading effect to the environment as it would not be right at all if managers carry out work in an unsustainable manner.

Criticisms of CSR and the Shareholders' Approach

On the other hand the theory of Utilitarianism provides that whether an act is ethically correct or not depends upon the consequences of the Act which is against the view provided by the Kant (Baron 2017). This means that if an act generates happiness for maximum number of people it would be regarded as morally correct. A decision through which utility is maximized is considered as an ethically correct decision. According to the supporters of this theory the purpose of the morality is to ensure a better life from humans by increasing the number of good things such as happiness and pleasure and reducing bad things such as pain and sufferings (Newman and Clarke 2016). Thus based on this theory also if the managers have to take a decision they have to ensure the happiness of all humans. For instance where a decision is to be taken in relation to carbon emission an ethically correct decision would be the one which maximizes the happiness of all the stakeholders involved in the decision. Thus both the theories for and against consequentialism provide for a decision by the management which is in favor of ensuring environmental sustainability and low carbon emissions.

According to Oldfield (2018)  the government has been condemned by planners, Green groups and house builders for scrapping out plans in relation to making all new homes in UK carbon neutral. In 2006 ex chancellor Gordon Brown had announced the Zero Carbon Policy through which it would have been ensured that most of the new building was able to generate energy on the site itself through the use of renewable resources such as solar or wind power for the purpose of ventilation, lighting and heating. The program has been scrapped as it was considered as an unnecessary burden on the house building industry. It has been provided through the purpose of the Climate Change Act that at least 80% reduction in relation to carbon emission from homes have to be achieved by the year 2050. The issue of global warming no longer a issue which is of great concern but has become a issue of grave concern. The rise in the average global temperature is posing a significant risk to the overall environment of the earth. In addition to the environmental issues there are also financial issues which result out of using non renewable energy in the construction industry such as higher bills, more dependence on fossil fuels and high quantity of imports from countries like Russia. 

Ethical Decision Making and Kantianism

The issue is therefore of utmost importance and needs to be addressed with urgency. It can be argued that incorporating these obligations may enhance the cost involved in the construction industry and place an unnecessary burden on the organization. However addressing issues such as global warming and climate change is also the need of the hour. As analyzed by Brown and Forster  (2013) consumers now days prefer to be associated with those organization which have active indulgence in the matters relating to environmental protection. The housing industry contributes to more than one third of the total green house emission contributed by the UK to the atmosphere.   The functions of the construction business involves the manufacturing of materials and the construction process, including the end use of buildings lead to the emission of harmful green house gases like water vapor, CO2, nitrous oxide, methane and other harmful pollutants from the synthetic chemicals used in the construction process. These cause air pollution and affect the environmental sustainability. There may be many challenges which the organization may face in relation to the issue. In one had it has the duty of providing appropriate return to its shareholders and on the other hand it also have the responsibility of protecting the environment and the society who are also its stakeholders from pollution and sufferings. The organization must be able to develop a balance between both sides of its obligations in order to be able to function both efficiently and ethically. There are several other organizations in the UK who have faced the same issue in relation to the environment and shareholders. The strategies adopted by few of these organizations are illustrated in the following paragraph.

According to Infrastructure Intelligence (2018) 30 leading infrastructure companies in UK have contributed towards saving significant amount of carbon emission. Twenty Nine large companies across the sectors of manufacturing, utilities, rail and construction have in total saved 8 million ton of carbon dioxide equivalent over the last 6 years. A range of techniques has been displayed by companies like United Utilities and Anglian Water which includes implementation of smart Technology, modernizing feet, encouraging the whole supply chain for the reduction of emission and using renewable energies. These results have been independently verified through the Carbon & Energy Management and Reduction Scheme. It has been noted that although these companies face significant problem in relation to the cost of implementing the latest technology for the reduction of carbon emission they have been able to come to a breakeven point in relation to such cost in a very short period of time as the reputation of these companies have significantly been enhanced which has a considerable positive impact on its customer base. According to reports from Infrastructure Intelligence (2018) these companies have gain significant number of new investors which have increased the financial capability of these companies. The situation clearly signifies that where the companies have intention of ensuring protection of the environment and the benefit of the society as a whole they are also being provided with additional financial support and reputation which is very beneficial for the companies in the long run. 

Ethical Decision Making and Utilitarianism

There are other construction companies in UK that focus on environmental sustainability for the CSR implementation. Many companies use policies based on the Ambient Air quality Directive, which came into force from 2008. This directive sets legally binding limits for concentration in outdoor air of major air pollutants and affects the public health and can also lead to the ozone layer depletion, leading to environmental pollution.

Various stakeholders of the organization are affected this issue. The information in relation to such stakeholders is provided below.

Stakeholders Map

Source: Created by Author

Stakeholders and effects of the issue

Source: Created by Author

The report has notified the clients about the value of ethical decision making towards good management practices. The report has also indentified to the management of Bloorhomes the advantages and disadvantages of CSR as well as the Friedman view in relation to the concept. The issue which the organization faces in relation to ensuring profit making and indulging in low carbon build at the same time has to be addressed in the light of CSR and Ethical approaches so that a balance is established between the goals of the organization. It has been seen that companies who face similar issues have been able to address the situation and gain out of it in the long run. My advice to the organization in the light of the issue would be as follows.

The organization has to take into consideration the problem which is present in relation to the carbon emission from the constriction process. The issue is affecting various stakeholders of the organization. The problem is not only harmful to the society but also to the future of the organization as where the bills become higher the demand for sustainable housing would increase and those companies which have an already established framework in relation to environmental sustainability and low carbon emission would be able to benefit out of it. The organization must ensure that their future decisions are based on ethical theories. The decision making process is not required to be done based on any one theory but a few theories have to be considered and compared to derive the best possible outcome. The organization should indulge in long term planning. As one of the largest business organization in construction business the company can afford to invest in a long term plan where taking into consideration sustainability would enhance the reputation and profits off the organization.

Conclusion 

This report, therefore analyzing both the views where it has been stated that a company cannot solely survive on profits and profit earning should not be the ultimate aim of the business organizations (CSR approach) and  the only motive of the company is making profit and the social responsibility is of the shareholders (Friedman’s View). However the primary finding of this report is that a company may ensure good practices in relation to management by the consideration of values which have been underpinned by ethics.  Ethical decision making by the management not only ensures that the organization is able to act on moral principles but also that they are able to achieve their objective of making profit and providing returns to the shareholders. It is the duty of the organization to ensure the well-being of all its stakeholders and thus it is required to create a balance between their needs.  The organization where their act on ethical values ensures that is an act as a responsible corporate citizen and its reputation in the society is enhanced which subsequently ensures profit generation 

References

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Asif, M., Searcy, C., Zutshi, A. and Fisscher, O.A., 2013. An integrated management systems approach to corporate social responsibility. Journal of cleaner production, 56, pp.7-17.

Baron, J., 2017. Uncertainty and Probability within Utilitarian Theory. Diametros, (53), pp.6-25.

Bishop, D.L. and Lee, D.S., 2017. Business Ethics: Ethical Decision Making and Cases (Asia Edition).

Bloorhomes.com. (2018). Why Choose Bloor Homes?. [online] Available at: https://bloorhomes.com/why-bloor [Accessed 21 Mar. 2018].

Broad, C.D., 2014. Five types of ethical theory (Vol. 2). Routledge.

Brown, J.A. and Forster, W.R., 2013. CSR and stakeholder theory: A tale of Adam Smith. Journal of business ethics, 112(2), pp.301-312.

Calabrese, A., Costa, R., Menichini, T., Rosati, F. and Sanfelice, G., 2013. Turning Corporate Social Responsibility?driven Opportunities in Competitive Advantages: a Two?dimensional Model. Knowledge and Process Management, 20(1), pp.50-58.

Ferrell, O.C. and Fraedrich, J., 2015. Business ethics: Ethical decision making & cases. Nelson Education.

Friedman, M., 2009. Capitalism and freedom. University of Chicago press.

Infrastructure Intelligence. (2018). UK infrastructure firms reduce carbon emissions by 30%. [online] Available at: https://www.infrastructure-intelligence.com/article/oct-2016/uk-infrastructure-firms-reduce-carbon-emissions-30 [Accessed 21 Mar. 2018].

Kant, I., 2017. Kant: The metaphysics of morals. Cambridge University Press.

Lim, A. and Tsutsui, K., 2012. Globalization and commitment in corporate social responsibility: Cross-national analyses of institutional and political-economy effects. American Sociological Review, 77(1), pp.69-98

Newman, G. and Clarke, R.V., 2016. Rational choice and situational crime prevention: Theoretical foundations. Routledge.

Oldfield, P. (2018). UK scraps zero carbon homes plan. [online] the Guardian. Available at: https://www.theguardian.com/environment/2015/jul/10/uk-scraps-zero-carbon-home-target [Accessed 21 Mar. 2018].

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