Business Ethics, Social Responsibility and Sustainability
What this domain tests
The exam tests ethical decision-making, the difference between legal compliance and ethics, CSR obligations and sustainability in business.
Core rules
- Business ethics concerns honesty, fairness, transparency, respect for stakeholders and avoidance of harm.
- Common issues include bribery, misleading advertising, unsafe products, unfair labour practices, privacy and intellectual property violations.
- CSR is a company's responsibility toward society; under Section 135 of the Companies Act, 2013, specified companies must spend 2% of average net profit of the preceding three years on CSR.
- The CSR threshold covers companies with net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more.
- Sustainability balances profit with environmental and social outcomes; the triple bottom line is people, planet and profit.
Worked example
A small factory can save ₹50,000 a month by dumping dye waste into a river. The owner instead installs a treatment unit costing ₹40,000 a month. Reasoning: the saving is private gain, but the pollution imposes a cost on the community; the ethical and sustainable choice avoids harm and protects long-term reputation and legal standing.
Traps
Do not equate CSR with charity or donations only. Do not say everything legal is ethical. Do not treat sustainability as only tree planting. Do not ignore stakeholder harm.