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abderrahman_repor2.docxBusiness Ethics and Sustainability
The Savola Group, Saudi Arabia 7
Introduction
Business ethics and sustainability go hand in hand. Broadly defined, sustainability is “the capacity to endure” (Dvorakova & Vallisova, 2015, p.145). However, the term is used in contemporary business contexts to refer to the company’s long-term plan of achieving sustainability in human development that takes into consideration economic development and the protection of the environment (Dvorakova & Vallisova, 2015). Sustainability is a good example to study business ethics for any company. In other words, it is interesting to see how companies stick to business ethics as they struggle to survive in a competitive market. In many cases, companies violate ethics and good practices to ensure their economic survival. The argument underlying this paper is that business ethics and sustainability mutually affect each other. There is no sustainability without ethics. To test this argument, we have applied the nine principles of sustainability to the Savola group, Saudi Arabia. These nine principles include many ethical aspects that can be used to measure the company’s ethical stand.
Theoretical Part
To improve corporate performance, companies should apply the principles of sustainability. Achieving a sustainable development requires companies to integrate the nine principles of sustainability in its strategic plan. This report discusses the application of the principles of sustainability in The Savola Group (hereafter Savola), Saudi Arabia. Savola is an established group that operates in four different sectors: foods, retail, plastics and investments. The group has been in the market for 38 years now, which makes it a suitable case study for the principles of sustainability. The company’s website suggests that the Savola adheres to the nine principles of sustainability.
Business sustainability has dominated academic research over the last two decades. In response to globalization, which has eliminated trade barriers, companies around the world are working hard to find ways not only to maintain their present success, but also to ensure their survival in the future. In its broad sense, sustainability can be defined as “Meeting the needs of the present without compromising the ability of future generations to meet their needs.” (Dvorakova & Vallisova, 2015, p.146). There are nine principles of sustainability set by scholars. These are: ethics, governance, transparency, business Relationships, financial Return, community Involvement / Economic Development, Values of Products and Services, employment Practices, Protection of the Environment.
Measuring the ethical commitment of companies can be done in a variety of ways. On the whole, experts seem to agree that a company’s sense of ethics is reflected in its commitment to community service, its business value and its environmental policy (Magari, 2008). In their attempt to maximize profit, companies might violate or overlook some of these ethical considerations. This is particularly true when the company’s major activity relates to crude oil and nuclear powers. Governments around the world are trying to tighten their control over such companies because of the potential harms they can cause to the environment.
Incidents of environmental violations by these companies are abundant. The Deepwater Horizon oil spill of BP in the Gulf of Mexico in 2010 is a good example. Journalist and politician Chrystia Freeland wrote an interesting article in the Washington Post to question the social responsibility and the ethical standard of BP after this spill. the article sets to study corporate ethical behavior in the light of Social Corporate Responsibility (SCR) theory. Convinced that the ultimate aim of any corporation is to make money, the author expresses her disagreement with the CSR expression. According to the writer, it is the role of the government to ensure the ecological sustainability at the local and international levels alike (Freeland, 2010). To this end, the government should control and interfere in the activities with any corporation in the oil and nuclear industries.
This report is an attempt to look at business ethics from the point of view of sustainability. It applies the nine principles of sustainability to the Savola group in order to see how ethics and sustainability affect each other. Savola is an old group in Saudi Arabia, and it is our conviction that thanks to the company’s commitment to business ethics, Savola has managed to achieve business sustainability for more than 38 years.
Practical Part
An overview of the Savola Group
An analysis of Savola with regard to these nine principles
1. Ethics: Savola assumes its responsibility towards, society, stakeholders and the environment. Its adherence to ethics is clearly mentioned in its vision statement which is published on their website. The statement goes “At Savola, ethical principles – honesty, conscientiousness, caring justice and self-control – shape the way we do business” (Savola Website, 2016). The corporate values of the company also reflect their ethical commitment.
2. Governance: The commitment of Savola to corporate governance is best illustrated by the fact that in 2011, the group ranked second in terms of governance. The Pearl Initiative report (2012) states that Savola ranked as the second top company in the MENA for Corporate Governance (p.29). Savola was a pioneer in the Middle east by adopting corporate governance as early as 2003. Governance at Savola can be seen in the composition of its board, which is made up of 11 members, all of whom are independent non-executive. The only executive member is the Group’s Managing Director.
3. Transparency: Since 2007, Savola has been releasing its financial and non-financial reports on a regular basis. The 2011 report, for instance outlines not only the opportunities for success, but also the inherent risks. This testifies to the group’s proactive transparency about strategic issues. Moreover, on the website of the group, there is a “transparency screen” where they publish up-to-date information on the ownership of stakeholders, investment funds and the management structure of the group (Savola Website, 2016). The website indicates that the information in this screen is updated monthly.
4. Business relationship: The group engages in fair business practices with its partners. The website of the company states that they are preferred by their partners because they have shares in big Saudi companies, such as Almarai, Herfy and Kinan , they succeeded to vary their assets, lower their risks and increase profits.
5. Financial return: The website of the company states that in 2015, Savola made SAR 1.79 billion profits with an average of SAR 3.36 per share. This is an indication that the government compensates its shareholders with financial return.
6. Community involvement/economic development: The CSR strategy of the group states its responsibility to improve society. Savola holds good relations with consumers and stakeholders. They launched many projects to raise awareness of consumption and decrease food waste.
7. Value of products and services: Savola has shares in many of the top leading companies in the Kingdom, such as Al Maraii, Herfy and Panda. This reflects its commitment to the quality of its products and services. The presence of the group in more than 30 countries around the world is another indication of its adherence to the value of products and services, which is mentioned in their statement of mission.
8. Employment practices: This is reflected in the CSR strategy, which states that they offer their employees “world-class” benefits plan and a Management Trainee Program.
9. The Environment: Their participation in protecting the environment is also stated in their CSR strategy which indicates that they promote recycling and waste reduction.
Conclusion
The study of the nine principles of sustainability has allowed us to see the degree of ethical commitment of the group. Savola is a leading investment group in Saudi Arabia. It has been present in the local market since 1979. The expansion of the group into more than 30 countries worldwide indicates their commitment to achieve sustainability in business. The website of the group has evidence of the company’s adherence to the nine principles of sustainability. Some of this evidence is found in their statements of mission and vision, some in their CSR strategy and some in their annual reports. The group has shares in many leading companies in the kingdom, such as Al Maraii and Herfy, which indicates its continuous growth and sustainability. Savola’s statement of vision reflects the company’s awareness and respect of business ethics. It is clear that this respect of ethical values has helped the company to survive and to grow.
References.
Dvorakova, L., I., & Vallisova, L., I. (2015). Implementation of Sustainability Principles Into Systems of Business Management - Linking Sustainability to Business Strategy. Natsional'Nyi Hirnychyi Universytet.Naukovyi Visnyk, (6), 143-149. Retrieved from https://search.proquest.com/docview/1767618443?accountid=142908
Freeland, C. (2010). What's BP's social responsibility? The Washington Post. Retrieved from: http://www.washingtonpost.com/wp- dyn/content/article/2010/07/16/AR2010071604070.html
Magari, M. (2008). Implementing strategic sustainability planning processes: Lessons from three US cities (Order No. 1457461). Available from ProQuest Dissertations & Theses Global. (304467023). Retrieved from https://search.proquest.com/docview/304467023?accountid=142908
Pearl Initiative (2012). Accountability and Transparency. Pearl Initiative Series on Corporate Good Practices. Retrieved from: http://pearlinitiative.org/mediafiles/articles/doc-70-20160502030022.pdf
Savola Website (2016). https://www.savola.com/en
