Environmental and Ethical Issues (Copy)
- Social responsibility
- A business thinking about its responsibility to the entire society and community, instead of just its shareholders.
- A business activity makes impacts on the environment, such as by pollution
- Different types of environmental impacts
- Emissions from vehicles
- Pollution
- Waste disposal issues
- Fossil fuels burn in transport causing global warming
- Should a business worry about the environment and cut its profits to protect it?
- Yes
- Global warming is a holistic issue
- Scarce natural resources used up will not be replaced as fast by the nature
- Permanent damage to the environment
- Socially aware consumers
- Pressure groups can cause problems for the business
- No
- Expensive
- Prices may have to be increased to finance environmentally friendly policies
- Uncompetitive and loss of sales
- High prices drive away consumers
- Owners require proof that any permanent environmental damage has occurred
- Yes
- Externalities
- Private costs: Costs to the direct producers and consumers of a business
- Private benefits: Benefits to the direct producers and consumers of a business
- External costs: Costs to the third parties of the business that are not involved directly in production and consumption
- External benefits: Benefits to the third parties that do not directly consume or produce the product.
- Sustainable development
- Development that ensures economic growth while protecting the future society and ensuring no damage to the environnment
- How?
- Use renewable energy
- Recycle waste
- Less resources consumed with lean production
- Environmentally friendly products and production methods
- How can businesses respond to environmental pressures
- Consumers
- Change production to meet consumer requirements
- Pressure Groups
- Effective against businesses
- Can cause consumer boycotts
- Pressure groups are less effective
- When the actions are unpopular but not illegal
- Costs of changing methods is more than any lost customers
- B2B businesses
- More effective when
- Better media coverage
- consumer boycotts
- Well organized and well financed groups
- Consumers
- Legal controls over business activity that affect the environment
- Not allowing location in environmentally sensitive areas
- Openly dumping waste or untreated waste not allowed
- Banning products that can not be recycled easily
- Financial penalties can be imposed by government on businesses
- Pollution permits, where payment required after a certain level of pollutioin
- Business either pays fine on exceeding the limit or purchase additional permit from other clean businesses that are not making as much pollution
- Additional taxes can be imposed on factories making a lot of pollution
- Ethical issues faced by a business
- Extreme cases
- As long as no law broken, all actions are ok.
- Even if not illegal, a business should avoid unethical activities
- Extreme cases
- How businesses can respond to ethical issues
- Benefits of ethical decisions
- Consumer preference
- Good publicity and free promotion
- Long-term profits
- Workers and investors may prefer it
- Less chances of any legal issues and actions
- Problems
- Employment can fall
- Short-term profits fall
- Consumers may only care about low prices
- Higher costs due to ethical decisions
- Workers may not receive as much good payment.
- Benefits of ethical decisions
