Virtually all larger corporations have established ethics codes which set out the company's values, ethics, objectives and responsibilities. The company's code of ethics is designed to serve as a guide to proper business conduct for all employees. With regard to project selection and capital budgeting, we have focused on the quantitative considerations in the decision process. However, decision makers need to keep in mind that nonfinancial considerations may be important elements in project selection. How does a company's code of ethics apply to project selection and capital budgeting? For most companies, ethical considerations are mainly focused on the reduction of potential risk associated with a project. For example, a company might be concerned with employees being familiar with the regulatory and procurement laws to avoid criminal and civil sanctions for not performing according to those regulations. However, another way to incorporate non financial considerations into capital project evaluation is to take into account the likely effects of the decisions on non shareholder stakeholders. Your textbook uses the example of Chipotle's decision on sourcing food which is better tasting, better for the animals, better for the environment and better for the farmers. The article in your textbook closes with the statement that Chipotle's focus on doing "the right thing" has resulted in increased sales and higher stock prices. Of course, this article was based on the years before the events involved in food poisoning. 

Requirement: 

Identify a company that has taken into consideration the effect of its decisions on non shareholder stakeholders. 

Discuss the decision and the effects of the decision on the stakeholders and the environment. 

Answer rating: 100% (QA)

Patagonia Balancing Profit with Environmental Responsibility Patagonia a leading outdoor apparel company exemplifies a company that considers the impa... View the full answer