Business (9225) | Ethical and environmental considerations

👋 Welcome to Ethical and Environmental Considerations!

Hey future business guru! This chapter is super important because it looks at the conscience of a business. It's not just about making money; it's about *how* you make that money.

As part of the "Influences on Business" section, we will explore how things like honesty, fairness, and looking after the planet force businesses to change their decisions, affecting everything from production costs to customer loyalty. Don't worry if this seems tricky at first – we’ll break down these big ideas into simple steps!

🎯 Section 1: What are Ethics and Morals in Business?

1.1 Defining Ethics

Ethics refers to the moral principles and values that guide a person's or business's behaviour. Simply put, it’s about figuring out what is right and what is wrong.
Analogy: Your personal ethics tell you not to cheat on a test. Business ethics tell a company not to cheat its customers or suppliers.

• Ethical Behaviour: Actions considered morally correct (e.g., paying a fair wage).
• Unethical Behaviour: Actions considered morally wrong (e.g., lying about a product’s quality).

1.2 Key Ethical Issues for Businesses

Businesses constantly face choices where they must balance profit with morals. Key areas include:

1. Treatment of Employees: Are they paid fairly? Are working conditions safe? (E.g., ensuring factory workers are not overworked).
2. Supply Chain: Where do materials come from? Are the suppliers using child labour? (E.g., ensuring cocoa beans are sourced ethically).
3. Product Safety and Honesty: Are products safe? Are the marketing claims truthful? (E.g., not lying about the health benefits of a food item).

Key Takeaway: Ethical behaviour is a voluntary moral choice that influences reputation and customer trust.

🎯 Section 2: Corporate Social Responsibility (CSR)

2.1 What is CSR?

Corporate Social Responsibility (CSR) is the idea that businesses should consider the interests of society and the environment, not just their shareholders (owners). It means going above and beyond what the law requires.
Did you know? Companies that practice strong CSR are often seen as 'good citizens.'

CSR generally means a business is responsible to a wide range of stakeholders:

• Customers: Providing safe products and good customer service.
• Employees: Providing good training, safe workplaces, and fair contracts.
• Local Community: Reducing noise and traffic, or sponsoring local events.
• The Environment: Reducing pollution and waste (we cover this next!).

2.2 The Influence of CSR on Business Objectives

Adopting a CSR policy changes what a business aims for.

• Objective Change: Instead of just "Maximize Profit," the objective might become "Maximize Profit Sustainably and Ethically."
• Decision-Making: A socially responsible business might choose a slightly more expensive supplier if that supplier treats its workers better (prioritizing ethics over minimum cost).

Key Takeaway: CSR is about businesses acting as responsible members of society, benefiting more than just the owners.

🎯 Section 3: Environmental Considerations and Impact

3.1 The Business Impact on the Environment

Every business activity uses resources and creates waste. When businesses don't care about their environmental impact, they create negative externalities (harmful side effects for society).

Common negative impacts include:

• Pollution: Chemical waste polluting water; smoke polluting the air (e.g., factory exhaust).
• Resource Depletion: Using up non-renewable resources like oil or minerals too quickly.
• Waste Disposal: Creating large amounts of landfill waste from packaging or faulty products.
• Noise Pollution: Loud machinery or heavy delivery traffic affecting local residents.

3.2 What Businesses Can Do: Minimising Environmental Damage

To be environmentally responsible, businesses can adopt strategies to minimise their carbon footprint (the total amount of greenhouse gases they produce).

1. Recycling and Waste Reduction: Using less packaging, or ensuring waste materials (like plastic, glass, or paper) are properly recycled.
2. Energy Efficiency: Using renewable energy (like solar panels) or simply turning off lights and machinery when not in use.
3. Green Production: Designing products that last longer or use fewer toxic materials (e.g., a car company producing electric vehicles instead of petrol cars).

Memory Aid: Think of the three R’s: Reduce, Reuse, Recycle!

🎯 Section 4: Sustainability and Business

4.1 The Importance of Sustainability

The concept of sustainability is critical for long-term business survival and global wellbeing.

Sustainable Development means meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.

Analogy: If you eat all the seeds today, you won't have any left to plant for a harvest tomorrow. A sustainable business ensures it leaves resources for the future.

4.2 Sustainable Business Practices

A sustainable business focuses on using resources that can be naturally replaced (renewable resources).

• Using wood from managed forests where new trees are constantly planted.
• Switching production processes to use wind or solar power instead of coal.
• Reducing water usage in manufacturing processes.

Key Takeaway: Sustainability is future-proofing the business and the planet. It means thinking long-term, not just short-term profit.

🎯 Section 5: The Influence and Impact of Ethical and Environmental Decisions

This is where we tie everything back to the "Influences on Business" section. Acting ethically and responsibly has a massive influence, both good and bad, on a business's bottom line.

5.1 The Positive Impact (The Benefits)

Choosing the ethical or green route often boosts performance, especially in the long run:

• Improved Reputation: Customers often prefer to buy from businesses they trust and admire. This can lead to increased sales and market share.
• Attracting Better Employees: People prefer working for ethical companies, making recruitment and retention easier (and cheaper!).
• Investor Confidence: Banks and investors are more likely to fund a stable, responsible business that avoids big scandals.
• Customer Loyalty: Customers might stay loyal even if a competitor offers a slightly cheaper product, because they support the business's values.

5.2 The Negative Impact (The Costs and Challenges)

Unfortunately, being ethical often costs more in the short term, which is why some businesses resist change.

• Increased Costs: Ethical suppliers (e.g., Fairtrade) often charge more than unethical ones. Using advanced pollution-control technology is expensive.
• Higher Prices: If production costs rise, the business may have to charge higher prices, potentially losing price-sensitive customers.
• Time Consumption: Implementing new sustainable processes (like getting certified as carbon neutral) takes significant time and management effort.
• Marketing Challenges: Businesses must prove their claims are genuine (avoiding "greenwashing"—pretending to be green without real effort).

Key Takeaway: Ethical and environmental decisions are crucial influences. They might raise costs initially, but they are essential for long-term reputation and survival.

🎉 Chapter Summary: Influences on Business

You now understand that external pressures (like public concern about the environment) and internal moral choices (like adopting a CSR policy) force businesses to adapt and change their objectives. Good job making it through this crucial chapter!