Business Ethics What is Business Ethics

Business Ethics

What is Business Ethics? • The ethical relationship between businesses and consumers • The ethical relationship between businesses and their employees • The impact of globalisation on the environment and society in general

Main issue: the purpose of business • Is it all about making money – unbridled capitalism? • Or do businesses have moral responsibilities towards their stakeholders?

Social responsibility • The business philosophy that states that businesses have a duty and an obligation to its stakeholders. It emphasises that business should behave as good citizens. • They should consider the effects of their activities on society as a whole on the stakeholders.

Stakeholders? Management Employees Share holders The Business Government Customers Local Community Environment Suppliers

Stakeholders • Shareholders Generate profits and pay dividends • Customers provide good quality products at reasonable prices. Safety, honesty, decency and truthfulness • Employees health and safety at work, security, fair pay • Suppliers pay on time, pay fair rates for the work done, provide element of security • Local Community provide employment, safe working environment, minimise pollution and negative externalities – provide external benefits? • Government abide by the law, pay taxes, abide by regulations • Management their aims versus those of the organisation as a whole • Environment limit pollution, congestion, environmental degradation, development, etc.

Goldman Sachs • THE 10 -HOUR TORTURE SESSION OF GOLDMAN SACHS EXECUTIVES BY US SENATORS ON TUESDAY 27 TH APRIL 2010 DISCLOSED A VERY BASIC DISAGREEMENT BETWEEN THE WORLD'S MOST POWERFUL INVESTMENT BANK AND THE WORLD'S MOST POWERFUL LEGISLATURE. • http: //www. bbc. co. uk/blogs/thereporters/robertpeston/2010/04/goldman_consequences_of_the_s e. html http: //news. bbc. co. uk/1/hi/business/8645945. stm •

Goldman Sachs • • GOLDMAN SACHS TRIED TO EXPLAIN, TIME AND AGAIN, THAT MARKET MAKING - IN ITS VIEW - OPERATES OUTSIDE OF ANY ETHICAL OR MORAL UNIVERSE: THE ROLE OF GOLDMAN'S MARKET MAKERS IS TO PROVIDE A PRODUCT TO GROWN-UP INVESTORS, NOT TO ENDORSE THAT PRODUCT IN ANY WAY. IN THAT SENSE GOLDMAN VIEWS ITS MARKET MAKERS AS AMORAL (THOUGH, OF COURSE, NOT IMMORAL).

Relationship between Business and Consumer • Originally this simply meant not conning the consumer to buy something he/she didn’t need. • Quality, safety, price and good customer service. • Open All Hours.

Relationship between Business and Consumer • But now the consumer wants to see social responsibility from the businesses it buys from. Eg – Good treatment of employees – Putting back into the community – Environmental concern (think recyclable packaging etc) – Not using sweat shops etc

Relationship between Business and Consumer • http: //news. bbc. co. uk/player/nol/newsid_6 210000/newsid_6219900/6219990. stm? b w=bb&mp=wm&news=1&nol_storyid=621 9990&bbcws=1 Tesco, Asda & Primark found selling products made in sweat shops. Dec 2006

HW • Research companies that use sweat shop workers, or some other unethical practice. What have consumers made of it? • Bring in information to next lesson.

Relationship between Business and Consumer • http: //www. ethicaltrade. org/resources

Relationship between Business and Consumer • The Body Shop was perhaps the first British company to realise this and become an ethical business. • http: //www. thebodyshop. co. uk/_en/_gb/val ues-campaigns/index. aspx

Relationship between Business and Consumer and Employee • Likewise, the Co-op http: //www. cooperative. coop/ethicsinaction/

Relationship between Business and other Stakeholders • Nestle are cleaning up their act? • http: //www. icmrindia. org/c asestudies/catalogue/Bus iness%20 Ethics/BECG 03 2. htm • http: //www. babymilk. nestl e. com/ • http: //www. thetimes 100. c o. uk/case-study-business-principles-action ---nutritional-labelling--7263 -2. php

Social Responsibility • Also BT & Child. Line http: //www. bitc. org. uk/resources/case_stu dies/afe 1184_btchildline. html • DHL http: //www. dp-dhl. com/en/responsibilityonline_report_2010. html

A New Industrial Revolution? • William Mc. Donough (architect) and Prof Dr Michael Braungart (Leuphana University of Lüneburg, Germany) • “Cradle to Cradle” • Developed tools to design eco-effective products and business systems. • A new paradigm of business ethics.

A New Industrial Revolution? • While current strategies of eco-efficiency seek to reduce and minimize the unintended negative consequences of processes of production and consumption, the concept of eco-effectiveness is that we need to achieve a fully sustainable system of consumption and production. • Based on the successfully interdependent nature of biological systems.

A New Industrial Revolution?

A New Industrial Revolution? • So, when you’ve finished with your i. Pod you return it to Apple for them to reclaim and reuse. • You effectively ‘rent’ consumables, you don’t buy them. • It would ensure that companies make things that last, and that what you use is reused properly. • http: //www. braungart. com/vision. htm • http: //www. mcdonough. com/cradle_to_cradle. ht m

A New Industrial Revolution? • This essentially is the link between business and environmental ethics. • Because, in short, good social responsibility includes a concern for the environment’s sustainability.

A New Industrial Revolution? • Ray Anderson, Interface. http: //www. youtube. com/watch? v=OUG 4 JXE 6 K 4 A http: //www. youtube. com/watch? v=Ik. Wd 3 c. Mo 0 y. A http: //www. inc. com/magazine/20061101/green 50_industr ialist. html http: //www. interfaceglobal. com/Sustainability/Our. Journey. aspx http: //www. gpiatlantic. org/conference/proceedings/ander son. htm http: //www. ted. com/index. php/talks/ray_anderson_on_th e_business_logic_of_sustainability. html

Summary • Business Ethics reflects the relationship between a business and its stakeholders. • Major issues surround the treatment of employees and consumers – ie social responsibility. • The other major issue is sustainability.

Task • Read p 247 f of Oliphant re the ethical stances to business ethics. • Create a diagram that links up each ethical stance with the areas of consumer, employee and environment.

Task • Plan an essay about environmental or business ethics. • Suggested format: • “______ is the best approach to _____ ethics” • Write the essay for next week.