In his interview before the 13 th World Human Resource Conference, Henry Mintzbe
ID: 447549 • Letter: I
Question
In his interview before the 13th World Human Resource Conference, Henry Mintzberg said that an ethical leader is one “who cares about the consequences of his actions.” He speaks of externalities – “if you can’t pin it on me, I don’t have to care about it. … These days, with global warming and everything else, there is no such thing anymore as an externality.” How does this impact the ethical responsibility of today’s corporation? Do externalities still exist, and if so, give an example. How are corporations held accountable for externalities, if at all?
Explanation / Answer
With materialism and greed creeping in every domain of our lives ,corporations are also becoming lesser concerned about the larger society. They are only concerned about their short term profits to maximize the shareholders returns and increase the stock price at the cost of society and environment. In today's era , it has become more important that the corporations should become more ethically responsible to the betterment of the society.
Given the ever decresing quality of environment today, corporates should be assigned individual responsibility to share the burden of betterment of the environment. Various externalities still exist in today's era . Example - The Vox Wagon emission scandal of 2015 is one of the biggest examples of how even big companies are disregarding laws and are only concerned about their short term profit generation. The negative externality out of this case could be higher environmental pollution. Other example is British Gas Oil sill in ocean which could prove fatal for the fishes and environment. Some of the organizations dump their toxic wastes into nearby rivers to save the costs of their treatment . This action can increase their profitability but is very harmful to the river organisms and the local economy which is dependent on the river ecosystem.
Even though it is very difficult to quantify the externality of the actions of corporations,but law makers have still tried to hold Corporations accountable for some of the externalities by various laws and bills. Few examples are - There are laws that comanies should not dump their wastes in environment before treating them for toxics. Also, there is Carbon credit concept where the emission limit is already decisded per company . Heavy penalties are levied if they exceed the emission limit. There are some NGOs and pressure groups too who look into these kind of unscruplous activities of the organizations and report it to the government and general public.