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Chap 28 Environmental Ethical Issues

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28 views23 pages

Chap 28 Environmental Ethical Issues

Uploaded by

Vic Shah
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chap 28:

Environmental &
Ethical Issues
What are Business Ethics?

• Business ethics refers to the set of moral principles that guides a company's conduct.

• These principles govern every aspect of the company's operations, including its interaction with the
government and other businesses, its treatment of its employees and its relationship with its customers.
Watch this video &
note down the
important aspects of
each video:

• https://www.youtube.com/
watch?v=0v7f0KeNpv8

• https://www.youtube.com/
watch?app=desktop&v=flm
gHTJ4puc
How do
Businesses
impact the
Environment?
What are some examples
of how business activity
impacts the environment?

• Aircraft jet engines damage the


atmosphere
• Pollution from factory chimneys
reduces air quality
• Waste disposal into rivers

• Transportation of goods by ship and


trucks burns fossil fuels such as oil
• Emission of CARBON leads to
GLOBAL WARMING
WHAT IS GLOBAL WARMING?
• Gradual increase in the overall temperature of the earth’s
atmosphere, caused by increased levels of carbon dioxide, CFC’s and
other pollutants in the atmosphere.

https://education.nationalgeographic.org/resource/climate-101-cause-
and-effect/
Should
Businesses be
concerned
about the
Environment?
What are Pressure Groups?
• A pressure group is made up of people who want to change
business (or government) decisions by taking action, such as
organising consumer boycotts.
• Pressure groups such as Greenpeace and Earth First! have tried
to block up businesses’ waste pipes or organise consumer
boycotts.
What are externalities?
• An externality is a cost or benefit caused by a producer
that is not financially incurred or received by that
producer. An externality can be both positive or
negative and can stem from either the production or
consumption of a good or service.
• Most business activities – such as locating a factory or producing
goods and services – lead to many different costs and benefits. It is
important to distinguish between private costs and benefits and
external costs and benefits.
• Let us have a look:
• Case study: Chemical firm expands
• Private costs of an activity are the costs paid for by a business or the
consumer of the product. Private benefits of an activity are the gains to a
business or the consumer of the product.
• External costs are costs paid for by the rest of society, other than the
business, as a result of business activity. External benefits are the gains to
the rest of society, other than the business, as a result of business activity.
• Social cost = external costs + private costs.
• Social benefit = external benefits + private benefits.
Sustainable
development

• Sustainable development
means trying to achieve
economic growth but
without damaging the
environment and society
for future generations.
What can you observe in these pictures?
Sustainable
development: What
can business do?

• 1 Use renewable energy – by fitting solar panels or


buying energy that uses renewable sources such as
wind or tidal power.
2 Recycle waste – by re-using water and other products
that would otherwise be wasted or disposed of, total
use of resources is reduced.

• 3 Use fewer resources – lean production (see Chapter


18) is about managing production so efficiently that the
minimum quantity of resources is used.

• 4 Develop new ‘environmentally friendly’ products and


production methods, for example, replacing drink cans
and bottles with biodegradable packaging that will not
damage the environment.
How and why Business might respond to
environmental pressures and opportunities?

1. Consumers:

An increasing proportion of consumers are becoming concerned


about the environment. Businesses obviously want to sell goods
profitably. If sales of a product fall because consumers think it is
harmful to nature, then the
business may have to quickly change its products or its production
methods.
2. Pressure Groups

Pressure group activity is likely to change business actions when:


• it has popular public support and receives much media coverage
• Consumer boycotts result in much reduced sales for the business
• the group is well organised and financed.

Pressure group activity is unlikely to result in a change in business actions when:


• what the firm is doing is unpopular but not illegal, such as testing drugs on
Animals.
• The cost to the business of changing its methods is more than the possible cost
of poor image and lost sales
• The business sells to other businesses rather than to consumers – public
pressure will be less effective.
3. Government

Governments can make business activities illegal. For example:

• Locating in environmentally sensitive areas such as national parks


• Dumping waste products into rivers or the sea – though it is sometimes
• Difficult to prove which business is responsible for this
• Making products that cannot easily be recycled.
Pollution permits
• Pollution permits involve giving firms a legal right to
pollute a certain amount e.g. 100 units of Carbon
Dioxide per year. ▪ If the firm produces less pollution it
can sell its pollution permits to other firms.

• What are CLEAN Business V/s DIRTY FACTORIES?

What does the government do to control the level


of pollution?
ETHICAL ISSUES A BUSINESS MIGHT
FACE
• Should businesses ever:
• Take or offer bribes to government officials or people working for other
businesses, for example, to gain secret information?
• employ child workers, even though it might not be illegal in some countries?
• buy in supplies that have led to damage to the environment, for example,
wood
obtained from cutting down rainforests?
• agree to ‘fix high prices’ with competitors?
• pay directors large bonuses and owners of businesses large profit pay outs
at
the same time as reducing the workforce?
• These are all examples of ethical decisions that many businesses
have to face up
to very frequently.

• The two most extreme views are:


1 ‘As long as a business does not deliberately break the law then
any decision it
makes is acceptable. Businesses want to make profits, after all.’

2 ‘Even if certain activities are not illegal, it is unethical and therefore


wrong to
do them despite any increase in profits that might occur.’
HOW DO BUSINESSES REACT TO
ETHICAL ISSUES
• Assume a large multinational clothing business – Company X – bought clothes
from a factory in a low-income country. The managers of Company X know that
the factory employs child labour – it is not illegal to employ workers as young as
12 years old in the country it is based in.

• Another business – Company Y – only buys clothes from suppliers who


guarantee not to employ children and pay reasonable wages and offer good
working conditions. Company Y managers check that suppliers keep to these
standards. What is the potential impact on Company Y of this ethical decision?
• What are potential benefits and potential limitations of ethical
decisions on Company Y?

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