Importance of Ethics and Csr in Ryanair

Introduction

In 21 centuries, business environment and social issues relevant to social responsibility and sustainability are getting more significant and they are highly concerned by many consumers, especially for the business sector. The goal of business cannot be separated from the society and environment while short-term economic gains can be pursued, the failure of accounting for longer-term social and environmental impacts could make those business practices unsustainable (UNITAR, 2013) Therefore, Corporate Social Responsibility (CSR) has dramatically grown in the recent years. Companies from USA and UK who were listed in the Fortune Global 500 have spent $15.2bn a year on Corporate Social Responsibility activities. (Smith, 2014) This can indicate that CSR is becoming an integral part and a standard business practice in business. (Smith, 2014) Ethics is a fundamental part for business. In an organization, ethics can be set as principles that lead the firm in its policies, programs and decisions for the business. The ethical behavior a company behave to conduct business can have great influence on the reputation, optimal capacity and bottom line of the business. (Kelchner, 2014)

In this report, Ethics and CSR within two selected companies- Ryanair and Easyjet will be critically reviewed and the impact and importance of CSR and Ethics to these two selected companies will also be analyzed with a series of examples and academic resources. At the last part, the future CSR for two selected companies will be analyzed and some recommendations will be advised.

Literature review on Ethics and CSR

Ethics

Ethic is concerned with what is good for a good life and how to live a good life. This term is derived from the Greek word ethos which means habit, custom, disposition or character. (BBC, 2014a) It refers to well-founded standards of right and wrong that used as guideline to guide what people ought to do. (Velasquez et al, 2014) It is usually in terms of rights, obligations, norms, values, rights, responsibilities, sharing and fairness. Being ethical is more than just understanding the roles and principles but also need to know how ethics were developed and elaborated through experience of their application. (Naylor, 2004) There are different kinds of ethical theories which derived from ethics. For instance Deontology which defines as ‘concerned with what people do, not with the consequences of their actions’. (BBC, 2014) It deals with the nature of action instead of the result of actions; Teleology, According to Fisher (2009, p.125), Teleology means the rightness or goodness of an action can only be judged by it consequences instead of the nature of the action, it determines the ethics of an act by the result or output of the decision; Virtues, it indicates that a right act is the action a virtuous person would do in the same situations, it majorly emphasis on whether the virtue or moral character of the person is carrying out an act rather than at ethical duties and rules, or the consequences of an act. It does not just deal with the wrongness or rightness of actions but also used as a guideline to the characteristic and behavior a good person will try to achieve. (BBC, 2014)

In this business world, there is a special form of ethic called business ethics. Business ethic is moral principle that leads a business to the ethical way they should behave. Acting in an ethical way includes distinguishing between right and wrong and then make the appropriate choice. It is easy to identify unethical business practices, for example, firms should not use child labor just in order to cut the cost and should not get involved in bribery. (BCS, 2014) An ethical business can increase confidence of stakeholders and also help constituting the great ethical brand image and reputation. (BBC, 2014) Most importantly, Ethics and CSR are very closely linked and inseparable.  

CSR

CSR is the abbreviation of Corporate Social Responsibility. There are many definitions for CSR and the definition that more commonly recognized and used is from The European Commission. According to The European Commission (2011), it defined Corporate Social Responsibility as ‘a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis’. Simply say, Corporate Social Responsibility refers to companies taking responsibility for their impact on society. As evidence suggests, CSR is gradually significant to the competitiveness of firms. (European Commission, 2011) It can be beneficial to firms in many aspects such as risk management, cost savings, wider access to capitals, customer relationship, Human Resource Management (HRM)  

According to The European Commission (2011), Renewed EU Strategy has indicated that in order to meet the standard of corporate social responsibility, companies should adopt a process to integrate social, ethical, environmental, human rights and consumer concerns into the operations of business and core strategy in collaboration with stakeholders, with the aim of achieving following points:

• -maximizing 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.              (European Commission, 2011)

In the past, what organizations have been trying to do is to maximize the profits. However, with the changes of the business environment, the role of organizations has remarkably changed and they are an intrinsic part of social life. (Karaibrahimolu, 2010) According to Fallon from Business News Daily (2014), there are three types of corporate social responsibility. The first one is Environmental CSR, no matter how big or small the business size is, they will always have carbon footprint. If organizations are accepting responsibility for the environmental impacts and willing to help reducing pollutants, it is considered to be a win-win situation as organization has built up a good ethical image and society was benefited. (Fallon, 2014) The second one is Philanthropy: firms are also practicing CSR by donating to charities. Whether organizations involve of giving out money or time, this sort of ethical behavior can also cause a win-win situation. The last one is Ethical Labor Practices: organizations show their Corporate Social Responsibility by treating their employees fairly and ethically. Research shows that consumers would react on firms very quickly if firms are found operating sweatshop or violating ethical labor practice, brand reputation and image will be ruined in no time. (Fallon, 2014) From above point of views, one fact can be seen that ethic and CSR are intrinsic part for each other.