2.2 Ethical And Environmental Considerations Flashcards
What are Ethics?
Ethics in business can be defined as; moral principles (for example, knowing right from wrong) that govern business behaviour or the conducting of an activity
What is Ethical behaviour
Ethical businesses operate to meet the wider needs of their stakeholders, and try to act in a way that is honest and fair.
For example; Fairtrade organisations try and meet the needs of their employees and suppliers
Ways a business could become more ethical
Possible ways include:
• Paying workers higher wages
• Improved working conditions
• Reducing pollution
• Buying Fairtrade supplies/agreeing to pay more to suppliers
• Donations to the community
• Reducing packaging
What is fair trade?
Fairtrade is about better
prices, decent working
conditions, local sustainability, and fair terms of trade for farmers and workers in the developing
world.
Companies have to pay sustainable prices (never lower than the market price).
How is modern slavery prevented?
The UK has Modern Slavery laws:
Any business that has a global turnover of £36m or more and supplies goods or services in the UK will have to publish an annual slavery and trafficking statement in a “prominent” place on its website every year.
The statement must highlight what steps are being taken to ensure there is no slavery in any part of the business.
What are the benefits of trading ethically?
A business may get increased sales from their reputation of ethical trading - increasing sales revenue.
Businesses that trade ethically tend to have more loyal and motivated staff.
If consumers trust a brand to be ethical, this can mean competitive advantage for the business.
What are the drawbacks of trading ethically?
Having to be an ethical trader may mean the business is unable to maximise profits for the shareholders.
Moving production into some countries where child labour and poor health and safety are the norm may be very expensive for the business to put right.
What is a trade-off?
A trade-off is a compromise between one thing and another.
There has to be a trade-off or compromise between making a profit and being ethical.
What is the Trade-off between ethics and profit
Ethical behaviour – such as paying fair wages - can be more expensive for the business (meaning lower profits)
However:
Customers are demanding more ethical products and the business may be able to use this as their USP or to market their products
What are examples of environmental considerations
• Traffic congestion
• Recycling
• Waste disposal
• Noise pollution
• Air pollution
How do businessses try to reduced traffic congestion
Business tries to reduce the packaging so that more products can be transported in fewer lorries
What rules help to reduce air pollution?
If a business is likely to pollute the air they must gain a permit to trade, if you do not it could be six months in prison and a £20,000 fine.
What are the benefits to a business of trading with the environment in mind?
Businesses can use their green credentials to market their products, it can be the USP for the product
Investing in greener energy can result in a cost saving eventually
There is a huge “green market” for products which meet customers needs for greener living
What are the drawbacks of a business trading with the environment in mind?
Greener products may involve more expensive production methods, this could mean the goods are more expensive for customers.
Items like solar panels can mean a huge investment at the start, which can push up the costs in the business.
Ways a business can be more environmentally friendly
Producing goods with less packaging; Using solar energy; Online marketing – less paper than leaflets; Using conference call instead of travelling to a meeting; Buying vehicles of the business with less co2
emissions
