Business Ethics,

Social and
Environmental
Responsibility
UNIT 6
What are ethics?

Ethics are personal beliefs related to an individual’s view of

what’s morally right or wrong.

Business ethics are moral rules and standard that help

people make business decisions. This involves choosing
legal, decent and honest courses of action.

Ethics and social responsibility are linked as businesses

should treat all stakeholders in a way that is just and fair.
Unethical business practices

► Bribery/corruption
► Child labour/exploiting cheap labour
► Unsafe products
► Testing on animals
► Pollution/illegal dumping
► Overcharging e.g. medicines

The Ugly Truth About Unethical Business Practices [2020] (myva360.com)

Four in 10 companies willing to make unethical decisions to keep firm afloat (irishtimes.com)
Reasons for unethical business
behaviour
Why act unethically?

► Profit
► Greed
► Fear – poor performance may equal job losses/pressure
to reach targets
► Lack of leadership – poor guidance from management
that act in a similar way

* A whistle blower is a stakeholder that publicly discloses

unethical business practice – the person that ‘tells’ *
Garda whistleblower Maurice McCabe : ‘There’s more accountability now’ (irishtimes.com)
Ways of encouraging ethical
business behaviour
Code of ethics

To avoid unethical behaviour

some businesses have a
formal code of ethics in
place.

This is a set of guidelines to

assist decision-making and
outline expected behaviour
of the business and
employees.
Code of ethics

Challenges
► Decreased productivity:
Time and resources have to used to develop and update the code
of ethics

► Slow decision-making
Employees might be afraid to make decisions in case they act
unethically, this can mean missed opportunities

► Poor industrial relations

Employees may not feel trusted to make ethical decisions
Social/ethical responsibility

Corporate social responsibility (CSR) ensures businesses take into

account the impact of their decisions on stakeholders.

Businesses have responsibilities towards all their stakeholders

► Investors
► Employees
► Consumers
► Suppliers
► Government
► Local community etc.
Social/ethical responsibility to..

Employees:
► Fair wage for the work done – reflect qualifications and
contribution to work. They should allow for a reasonable
standard of living.
► Healthy and safe working conditions – necessary
materials provided e.g. working in a freezer –
appropriate clothing
► Do not tolerate bullying/discrimination in the workplace
► Observe legislation – tax, health and safety etc.
► Be respectful of employees and their rights
Social/ethical responsibility to..

Consumer:
► Provide good quality goods and services – Consumer Protection
Act 2007/Sale of Goods and Supply of Services Act 1980
► Charge a fair price – based on consumer reliance, average
income and the balance of making a profit
► True and decent advertising

Investors:
► Provide a fair return on investment (when possible)
► Transparency and honesty in all matters e.g. risk of their
investment
Social/ethical responsibility to..

Suppliers
► Pay a fair price for goods from suppliers
► Pay in full and in time
► Avoid using suppliers that pollute the environment or exploit workers

Government:
► Pay all taxes due, in full and on time
► Comply with Irish laws
► Use grants for government agencies as intended
► Obey all legislation
Social/ethical responsibility to..

Local community:
► Consult/inform them of relevant issues e.g.
building work disruptions
► Invest money in local community
► Source from local community suppliers when
possible
► Provide local employment
► Avoid all types of pollution
Environmental responsibility

Businesses have a responsibility to conduct activities without

damaging the environment i.e. air, land and sea

Areas of key focus:

► Pollution
► Ozone depletion
► Waste disposal – plastic very topical (potential exam Q)
► Natural resources
► Habitat
► Agricultural issues
Environmental responsibility

Pollution:
► Vehicle and factory emissions can result in acid rain,
damaging forests and woodlands – affecting our air CO2
levels
► Pollution of chemicals and effluent in seas and rivers by
pharma and agriculture in particular harms our water
systems and wildlife
► REPS (Rural Environmental Protection Scheme) aims to
reward farmers that conduct farming activities in an
environmentally friendly way. They aim to improve water
systems, flora and fauna and wildlife habitats.
Environmental responsibility

O-zone depletion:
► Damage to the o-zone layer has the potential to
increase climate change, global warming, skin
cancer and damage micro-organisms vital for
food production
► CFC gases (found in aerosols, fridges and air-
con) damage the o-zone a lot
► We are required to reduce our o-zone emissions
through the Kyoto Protocol (1997)
Environmental responsibility
Waste disposal:
► Ireland traditionally relies on landfill but is becoming
more environmentally and economically sustainable
► ‘reduce, reuse, recycle’
► Increased use of incinerators over landfill
► Keep cups – discount on coffees
► Supermarkets not selling plastics plates/cups – all
biodegradable
► Mc Flurrys in paper packaging
► Metal straws, re-useable water bottles in schools etc
https://www.youtube.com/watch?v=_mHsLCb7gSI
Environmental responsibility
Natural resources

► Irish
government’s ‘Better Energy’ programme
provides subsidies for households that improve their
energy efficiency – reduces impact on environment
and creates jobs e.g. installing solar panels
►A subsidy paid to people who buy/install renewable
energy for their homes
► We need to focus on the long term impact of society
on the environment e.g. reduce fishing quotes =
more jobs, however we will run out of fish
Natural resources

► Reducing availability of oil for example, will

increase the price but decrease the demand –
making people make better choices

Things made from oil:

https://www.ranken-
energy.com/index.php/products-made-from-
petroleum/
Natural resources

Habitat:
► Destroying natural habitats leads to species becoming
extinct and damaging our air quality
► This is often done to build roads and for palm oil etc
https://www.youtube.com/watch?v=1BCA8dQfGi0
https://www.youtube.com/watch?v=oA10-oZi4Xc

Agriculture:
► The use of pesticides and chemicals in food is damaging
land and resulting in genetically modified foods – a big
cause of debate
Environmental responsibilities of
businesses
Environmental responsibilities of
businesses
Characteristics of an environmentally
responsible business
Characteristics of an environmentally
responsible business
They can do this by:
► Having environmental audits
► Minimising pollution – e.g. have electric fleet cars
► Promoting recycling
► Developing a green culture in their business e.g.
give staff keep cups and have no paper cups in
cafeteria
► Using sustainable / renewable raw materials where
possible e.g. recycled paper
Characteristics of an environmentally
responsible business
Environmental audits:
► Independent assessment of the businesses impact
on the environment
► Make recommendations
► Environmental Impact Assessment – done before
giving a project permission to set up to see what
impact it will have on the environment
► Environmental Protection Agency (EPA) – enforced
and monitors business activities and can prosecute
those than pollute excessively
Characteristics of an environmentally
responsible business
Sustainable raw materials:

https://www.google.com/search?q=body+shop+sustainability&sxsrf=ACYBGNSARzmQ-
Arrlc9_4gwcSIkLB4ra5A:1572784316373&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjyhvGThs7lAhUFu3EKHftDBUEQ_AUIEigB&biw
=1366&bih=625#imgrc=4owFN2YTiKUIDM
Meeting ethical, social and
environmental responsibilities
Benefits
1. Efficiency
More cost effective - installing solar panels, expensive at first but
then ‘free’ hot water e.g. insulating your house/double glaze
windows
2. Reduced costs (in some ways)
It costs more to dump materials than recycle/compost
3. Improve employee moral/productivity
Employees that are paid fairly will be more productive and happy –
reduce turnover and costs involved and absenteeism
Meeting ethical, social and
environmental responsibilities
Benefits
4. Customer loyalty
Customers like to support businesses that do good and
may boycott those that done e.g. Nestlé palm oil/Nike
child labour
It can also be a marketing tool – e.g. Body Shop had a USP

5. Less likely to face ‘green taxes’

Taxes on environmental costs e.g. plastic bag levy, carbon
tax
Meeting ethical, social and
environmental responsibilities
Costs
1. Buying new machinery/equipment/ technology is
expensive
However, probably more efficient

2. Environmentally friendly materials cost more

e.g. Fairtrade – will you pass on this cost to your consumer?

ReCrafted | These Are Clothes Made From Other Clothes - YouTube

Meeting ethical, social and
environmental responsibilities
Costs
3. Providing better pay conditions is expensive
May also have to pay suppliers a more fair price for raw materials

4. Investors
Ethical businesses are open and honest – this may rescue the
amount of money investors are willing to invest

5. Staff training
Staff must be trained to ensure they understand the vision of the
company and their ethical and environmental responsibilities.
Impact on a company example –
BP oil spill
https://www.youtube.com/watch?v=KBF-43--ptA