The Energy Cooperative and the Clean Power Company are facing some tough decisions ethically and legally. Both companies are going to be faced with large consequences from the decisions made. From a legal standpoint, wrong choices possibly will result in fines and penalties, and possibly imprisonment. From an ethical standpoint, poor decisions will affect profitability, public perception, investor relations and much more. Concern: The Energy Cooperative is a non-profit organization (501C3), as well as providing a discussion forum for alternative energy companies. The Energy Cooperative is held in high regard by both the general public and people in the field of energy. They have an obligation to protect themselves from anything that could be detrimental to their reputation, or anything perceived as being less than above board. There is a board of directors that meets by conference call once each month. The board members are self employed consultants with no allegiance to any particular company. They must sign a statement to the effect before they are appointed. They receive a nominal fee for directing their affiliate and being on the board of directors. Besides their own personal consulting business they are also communicating with potential clients for Energy Cooperative. One of the directors has asked approval for the directors to use their position within the cooperative while conducting their private business dealings. Legal: As a director, when you solicit clients for their own purpose while doing business as the board of directors for Energy Cooperative, a conflict of interest arises. A conflict of interest occurs “where a personal interest is sufficiently connected with public or professional duties that it results in a reasonable apprehension that the personal interest may influence the exercise of professional or public responsibilities. Conflicts of interest can arise for directors when they or their friends of family stand to benefit financially from the actions of the board of directors, or when a director serves two or more organizations that may have adverse interests. As conflicts of interest can be both direct and indirect, directors must be vigilant in thinking about and identifying possible personal conflicts of interest" (Company Law, 2012). A second issue is misrepresentation. When a director calls as a director of the cooperative, he is misrepresenting his position to each client he calls. The Cooperative should have no business dealings with the personal clients of the board members. The personal clients may feel that the cooperative supports their interest when they do not have any desire to. “Incompatibility of professional duties and personal interests has led Congress and many state legislatures to enact statutes defining conduct that constitutes a conflict of interest and specifying the sanctions for violations. A member of a profession who has been involved in a conflict of interest, might be subject to disciplinary proceedings before the body that granted permission to practice that profession” (Conflict of Interest, 2012). “Despite the legal implications of an act, an act could be labeled ethical if it produced the greatest good for the greatest number of people compared to other alternative acts. Therefore, decision-making that follows utilitarian thought looks to the consequence of the act to determine whether the decision was ethical” (Kaplan, eGuide, Chapter 1, p.6). Recommendation: I recommend that the directors, who are board members, be responsible for their job which is to gain clientele for the energy programs that Energy Cooperative has available. If they choose to do otherwise, it will be perceived as a conflict of interest and the directors potentially may be sued by Energy Cooperative. The directors have fiduciary obligations whereby they must safeguard the interests of the company’s stakeholders. The corporation should be managed for the benefit of its stakeholders – its customers, suppliers, owners, employees, and local communities. Stakeholders: The directors by serving themselves, potentially will bring on legal troubles for themselves and Energy Cooperative which will result in costly fines. As long as the directors abide by all laws, the stakeholders will have the time to concentrate on the energy programs and its clientele. Economic: Energy Cooperative could potentially lose money, if the directors introduce their own consulting business to potential clients. The clients may decide to do business with the directors own company and leave Energy Cooperative out of the picture. Recommendation: The main goal of the directors is to concentrate on getting clients for Energy Cooperative. The directors should focus on their own business interests on their own time. Stakeholders: Losing money for Energy Cooperative would be the affect on the stakeholders regarding their concern. If they do not have enough money, they would potentially have to layoff staff and this would hurt consumers by not having enough people to what is called “cold” calling. Also, if not enough clients are recruited, some of the programs may need to be deleted. If the directors concentrated on gaining the potential clients for Energy Cooperative, the stakeholders would be affected by increased profits. Ethical: An ethical viewpoint would be to only solicit clients on behalf of Energy Cooperative. If the directors used their own consulting business it would be misleading the potential clients. It would not be fair to the Energy Cooperative. It would only be fair if the directors spoke on behalf of them and the energy program. The directors should not speak on behalf of their own personal business enterprises. John Rawls justice theory is a good example here. “Ethical theories that did not include the concept of personal justice would place society, or the good of the corporation, in front of the fairness and justice that all individuals deserve” (Kaplan, eGuide, Chapter 1, p.7). Another ethical theory might suggest that the directors are ethically self-centered – they are only interested in their own concerns and do not believe they are hurting the Energy Cooperative. Under John Rawls theory of justice, “the end does not justify the means if someone has been treated unfairly or if an injustice has occurred” (Kaplan, eGuide, Chpater 1, p.7). Recommendation: I would recommend that the directors not use their time to solicit clients for their own personal gain, but that they are fair and just to the Energy Cooperative. They should understand that they are working on behalf of a large corporation, Energy Cooperative, and Energy Cooperative is depending on each of them to gain clients for their energy programs. Stakeholders: If the board of directors acts unethical, that would have a negative affect on the stakeholders. Corporations must be honest and they must also let their stakeholders know the board is working on their behalf. After all, stakeholders are very important – they are what keep a business going. “A business that neither recognizes its stakeholders nor plans for the impact the business’ decisions will have on those stakeholders is a business that has a higher risk of experiencing crisis, public criticism, and lower profitability. Businesses do not exist in isolation. They should not pretend that they are not part of a community, nor should they pretend that their actions do not have an impact on those with an interest in the business. Business leaders can endanger the survival of their organization, and cause harm to the community, by ignoring these responsibilities” (Kaplan, eGuide, Chapter 2, p. 4). It would be unethical for the board of directors to use their reputation of the cooperative in a way that is not available to all members – this would have a negative affect on the stakeholders by having a board that do not have a good sense of integrity nor a good conscience. Philanthropy: The programs that Energy Cooperative has created would benefit the community with their energy bills; and also show the community ways in which to become more energy efficient. Not only does this show corporate responsibility, but it also is a tool to help the environment for present and future human beings. Businesses have a responsibility to give something back (Kaplan, eGuide, Chapter 2, p. 4). Introducing these energy cooperative programs and working on getting the buy in from the customers is the job of the directors. Again, the director’s must keep their own personal gains out of this – after all, they are working on behalf of the Energy Cooperative, not their own personal companies. Recommendation: Directors should not be discussing their own personal businesses when they are working for the Energy Cooperative. Saving money and taking care of the environment are options that the Energy Cooperative is giving the community. When clients become confused, they have a tendency to quit programs. This type of situation mainly results in clients leaving with a negative understanding of the corporation. Negativity like this spreads like a wild fire. In the end, the Energy Cooperative may end up with a poor reputation. Stakeholders: When unethical practices within an organization are made public, the organization looses clients and the stakeholders are the ones that are affected. The director’s focus should be that of the energy programs. The stakeholders will then gain clients and the programs made available will continue for the consumers. Concern: The Clean Power Company of Cincinnati, OH produces an energy regulating device that automatically regulates the use of power sources in homes and businesses. They recently purchased 500 acres of land in the Dominican Republic next to the Chavon River. The seller, Teltac Corporation, has agreed to put in roads, septic systems, and water lines. Electrical power and sewer line installation will be up to Clean Power. Teltac informed Clean Power that there should be no problems running sewer lines directly into the river as it is clean and large and can absorb the waste. Pursuing this action would be detrimental to the community and to the school which Clean Power will build to help with the overcrowding, the lack of basic necessities, technology, and space for the students which are problems the community is experiencing. When they make the move, there are layoffs of U.S. employees to consider, the ecological of the new plant facility, and its role as a corporate neighbor at home and overseas. Legal: With the laying off of Cincinnati workers, the Workers Adjustment and Relocation Notification (WARN) Act requires a 60-day notice be given to employees before the location closes (Kaplan, eGuide, Chapter 5, p.5). Clean Power must look into the Dominican’s environmental protection laws. Dumping of waste into the Chavon River may be illegal. The waste should be handled through a treatment facility to sanitize the waste in the proper way. Dumping of the sewer waste into the river will also cause diseases. Contaminated water that leaks into the soil spreads infections and other serious illnesses. Water is a natural resource and other life forms besides humans rely on water for survival (e.g. vegetation, marine life, the ecosystem, wildlife, and humans) (Kaplan, eGuide, Chapter 4, pp.3-4). Recommendation: Clean Power must look into the Dominican’s environmental protection laws. Incorrectly disposing of the sewer waste could get Clean Power fined or even the facility shutdown. Being proactive and assessing the correct regulations will allow enough time to incorporate a waste treatment facility at the new site. Being proactive will also help in keeping the Altos de Chavon complex looking like a tropical paradise. Stakeholders: If Clean Power disposes of the sewer wastes into the Chavon River, the stakeholders will be affected by the contaminated water and soil. The environment, the company, and the community are all stakeholders. Clean Power must be responsible and dispose of the sewage correctly. By doing so, will ensure a cleaner environment. Economic: Clean Power’s energy regulating device that automatically regulates the use of power sources in homes and businesses is economically saving the community money. However, by running the sewer lines into the Chavon River, they potentially face having to pay large fines if contaminated. In order to cover the cost of the potentially large fines, the company would then be forced to increase their client’s monthly usage charges which could prove to be way too expensive for many of the clients. The stakeholders will lose out and potentially if it affects Clean Power in too negative of a way, the plant may be forced to shut its doors. Recommendation: I would recommend Clean Power to invest in a sewage treatment system The start up is expensive – however, in the long run, the stakeholders and everyone will be glad it was done. Installing the right equipment upfront will help ensure that the business is less likely to be subject to liability. The right equipment will also help ensure that no injuries due to toxic substances exist (Kaplan, eGuide, Chapter 4, p.6). Sewage treatment is the process of removing contaminants from wastewater and household sewage, both runoff (effluents) and domestic. It includes physical, chemical, and biological processes to remove physical, chemical and biological contaminants. Its objective is to produce an environmentally safe fluid waste stream (or treated effluent) and a solid waste (or treated sludge) suitable for disposal or reuse (e.g. farm fertilizer) (E. Fink, personal communication, August 1, 2012). The objective of sewage treatment is to produce a disposable effluent without causing harm to the surrounding environment, and also prevent pollution (E. Fink, personal communication, August 1, 2012). Stakeholders: If there were to be an issue with the sewage contaminating the Chavon River, it will certainly be costly to the stakeholders. As an example, a temporary shutdown or even the closure of the plant would have a great impact on the community and the employees who lost their jobs. Not only would people be out of a job, and this would also affect the Altos de Chavon complex who relies on tourism, but it would present a great burden on the community for the clean up by most likely raising taxes. Ethical: With the closure of the Cincinnati plant, there will be an adverse impact on the city that is reliant on the Clean Power. After five years of operation, Clean Power has become a part of the community in which they reside. The environment as a stakeholder casts a broad net; it includes the earth itself and everything on it, including human beings. All humans can be considered environmental stakeholders because of our reliance on the environment for our continued existence (Kaplan, eGuide, Chapter 4, p.2). Within the environmental right is the human right theory. “Environmental rights are human rights, as people's livelihoods, their health, and sometimes their very existence depend upon the quality of and their access to the surrounding environment as well as the recognition of every person in every community has the right to health, and to a safe and healthy environment” (Mohammad, 2011). If Clean Power should decide to dump the sewage into the Chavon River, they will affect each community member of their right to clean water and a clean environment. Water is a fundamental basic need for all living creatures and vegetation. In John Locke’s theory of rights view, these rights are “God-given and were present at the birth of each individual. He believed that individuals could take into consideration and protect the rights of others and still make decisions that benefited themselves” (Kaplan, eGuide, Chapter 1, p.5). Recommendation: In order to maintain the tropical paradise existence of the Chavon River and keep the community healthy, Clean Power must ensure the safety of the river water by implementing good governance and environmental ethics within their company. The traditional knowledge on the environmental issues is very important and quite relevant. It makes sense as to the preservation and conservation of the environmental ethical issues. By doing so, generations to come with continue to enjoy the beauty of the surrounding lands. Stakeholders: There are stakeholders in Cincinnati. They would include the employees that are counting on the income to support their families as well as the fulfillment gained by their jobs, their families who are looking for a continuation of the standard of living to which they have grown accustomed, and the stores that rely on the money spent by the employees. A contaminated river from sewage can only mean the stakeholder’s bottom dollar will be affected severely. This will mean a great loss not only to the community but also to the environment. The school will no longer be safe for the school children. The contaminated water will eventually seep into the land where people live, vegetation and wild life will be threatened and harmed, not to mention the Altos de Chavon tourist area. All will result in health issues for the people now and for future generations. Philanthropy: Philanthropic concerns include the building of the new school and that it is safely built for the children in the community along the Chavon River. While such ventures may be part of a company’s corporate social responsibility program, this should not be the only venture. Another possible venture would be Clean Powers use of solar panels which they use to generate their own power, thus conserving environmental resources. Energy is an expensive component of the production process. Clean Power must continue to come up with new renewable resources wherever possible in the future that will benefit the community. Renewable resources have lower emissions – all good for the environment and keeping the local community healthy. The employees of Clean Power should also have an impact on their community. A program could be started which enables full-time employees to contribute up to 40 paid volunteer hours per year to the communities. It would be a way of supporting an ethic of citizen service to the community and to the environment. Clean Power should also help the employees left behind in Ohio with re-training programs provided by a local outreach service (Kaplan, eGuide, Chapter 2, p.3). In an effort to displace fewer employees in Cincinnati, they should establish a call center in Cincinnati to provide customer service to their U.S. customers. This would accomplish several issues such as maintaining some jobs in Cincinnati, as well as ensuring that the customer had a source of information that would not suffer from a language barrier or added cost of overseas telephone communications. Recommendation: Clean Power must be a supportive entity in the community. If it means installing a sewage treatment facility to ensure the river stays clean, they should do it right away. By going the extra mile in the beginning, the community will continue to be supportive of their future efforts and ideas. Stakeholders: Any negativity publicity, etc. is going to affect the stakeholders and in turn will affect the community as a whole. No longer will Clean Power be seen as a good corporate citizen, nor will there be continuous growth of the surrounding communities. Conclusion: The Energy Cooperative and the Clean Power company are showing corporate governance and corporate social responsibility by doing their share by conserving energy and rebuilding a neighborhood. Many ethical considerations come up each day in the effective running of a business. Whether one is the owner of a company, a manager, or an employee, the actions they take have a dramatic impact on the various stakeholders. When good ethical decisions prevail, the company benefits, the community benefits, and the other stakeholders benefit. When a “win-win” mindset occurs, everyone stands to gain, and the minimization of losses takes place. By following the recommendations contained herein, the losses from tough decisions can have a smaller negative impact.