Chapter 28 - Enviromental And Ethical Issues Flashcards
Social responsibility
When business decisions benefit stakeholders other than shareholders such as deciding to protect the enviroment
Environment
Natural world
Global warming
Gradual increase in overall temperature in the earths atmosphere caused by the rising levels of carbon dioxide and other pollutants
Pressure groups
People who act together and want to change a business/government’s decisions/force them to adopt certain policies by taking action (eg. Boycotting)
CSR
Corporate Social Responsibility
How can business activities impact the environment (4)
-Improper Waste disposal pollutes rivers and seas
-Transporting goods burns fossil fuels which emits carbon and contributes to global warming
-Pollution from factory chimneys reduce air quality
-Aircraft jet engine emissions damage the atmosphere
Externalities def. and list (6)
Way of looking at the wide impact of business decisions
Private costs and benefits
External costs and benefits
Social costs and benefits
Private costs
Costs paid for by a business or the customer of the product
Private benefits
Gains to a business or the consumer of a product
External costs
Costs paid for by the rest of society as a result of business activity
External benefits
Gains to the rest of society as a result of business activity
Sustainable development
Development which does not put the living standards of future generations at risk
Achieve economic growth in a way that doesn’t harm future living standards
Why should businesses be concerned about environmental issues (5)
-Business activity can permanently damage the environment
-Consumers are becoming socially aware demanding “environment friendly products)
-businesses may be targeted by pressure groups
-Businesses have a social responsibility
-Using non-renewable resources raises prices and leaves less for future generations
Why should businesses NOT care about environmental issues (6)
-Expensive
-Government should pay to clean up pollution
-Lower sales due to higher prices
-Could make firms uncompetitive and sales go to non-environmentally friendly places anyway
-Prices increase to pay for the environmentally friendly policies
-Some believe business activity does not cause permanent damage
Social cost
Private + external costs
Social benefit
Private + external benefit
What can businesses do for sustainable development (4)
- use renewable energy
- recycle waste
- develop environmentally friendly products + resources
- use fewer resources (through efficiently managing production
Cost benefit analysis
When governments evaluate social costs and social benefits to approve or refuse business schemes
Consumer boycott
When customers decide not to buy from businesses that do not act socially responsible
Ethical issues and controversies (5)
- Bribes
- Child workers (legal in some places)
- Fix high prices with competitors
- Supplies that damage the environment (rain forest wood)
- Pay directors large dividends and owners profit payouts while reducing the workforce
Main influences that make business respond to environmental responsibilities (3)
Conumers
Governments (passing laws)
Pressure groups
How do customers make businesses respond to environmental pressures
They buy the goods, so they can just boycott
Create bad publicity
Businesses should care about what customers think
Force businesses to change production methods
How do pressure groups make businesses respond to environmental pressures
Generate public support and media attention leading to customer boycotts and low sales. Works when the group is well organised and financed
How does the government make businesses respond to environmental pressures
Through implementing legal controls such as pollution permits, making it illegal to locate in environmentally sensitive areas, to dump waste products into seas/rivers and stopping people from making unrecyclable products
Benefits of making ethical decisions (5)
- Consumers may be against certain activities and buy from competitors instead
- Good publicity >Bad
- Long term profits could increase
- Easier to recruit the best workers and raise capital from investors
- less risk of legal action
Limitations of making ethical decisions (5)
Higher costs (adults get payed more)
Need to set prices higher to cover costs
Some people only care about prices causing sales to fall
- Short term profits may fall
- What if the children’s family needed the money
