Business EthicsBusiness 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?

Shareholders

Management

Employees

Government

Suppliers

Environment

Local Community

Customers

The Business

Stakeholders• ShareholdersShareholders

Generate profits and pay dividendsGenerate profits and pay dividends

• CustomersCustomers provide good quality products at provide good quality products at reasonable prices.reasonable prices.Safety, honesty, decency and Safety, honesty, decency and truthfulnesstruthfulness

• EmployeesEmployees health and safety at work, security, health and safety at work, security, fair payfair pay

• SuppliersSuppliers pay on time, pay fair rates pay on time, pay fair rates for the work done, provide element for the work done, provide element of securityof security

• Local CommunityLocal Community provide employment, safe working provide employment, safe working environment, minimise pollution environment, minimise pollution and negative externalities – and negative externalities – provide external benefits?provide external benefits?

• Government Government abide by the law, pay taxes, abide abide by the law, pay taxes, abide by regulationsby regulations

• Management Management their aims versus those of the their aims versus those of the organisation as a wholeorganisation as a whole

• EnvironmentEnvironmentlimit pollution, congestion, limit pollution, congestion, environmental degradation, environmental degradation, development, etc.development, etc.

Goldman Sachs

• THE 10-HOUR TORTURE SESSION OF GOLDMAN SACHS EXECUTIVES BY US SENATORS ON TUESDAY 27TH 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_se.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_6210000/newsid_6219900/6219990.stm?bw=bb&mp=wm&news=1&nol_storyid=6219990&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/values-campaigns/index.aspx

Relationship between Business and Consumer and Employee

• Likewise, the Co-op http://www.co-operative.coop/ethicsinaction/

Relationship between Business and other Stakeholders

• Nestle are cleaning up their act?

• http://www.icmrindia.org/casestudies/catalogue/Business%20Ethics/BECG032.htm

• http://www.babymilk.nestle.com/

• http://www.thetimes100.co.uk/case-study--business-principles-action---nutritional-labelling--7-263-2.php

Social Responsibility

• Also BT & ChildLine http://www.bitc.org.uk/resources/case_studies/afe1184_btchildline.html

• DHLhttp://www.dp-dhl.com/en/responsibility-online_report_2010.html

A New Industrial Revolution?

• William McDonough (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 iPod 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.htm

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=OUG4JXE6K4A http://www.youtube.com/watch?v=IkWd3cMo0yA http://www.inc.com/magazine/20061101/green50_industrialist.html http://www.interfaceglobal.com/Sustainability/Our-Journey.aspx http://www.gpiatlantic.org/conference/proceedings/anderson.htm http://www.ted.com/index.php/talks/ray_anderson_on_the_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 p247f 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.