Topic 12 – Ethical and

Environmental

Higher Business Management

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Learning Intentions / Success Criteria

Learning

Intentions

Ethical and

environmental

Success Criteria

By end of the topic you will be able to

describe and discuss:

• the costs and benefits of fair trade

activities

• the costs and benefits of environmental

responsibility

• the costs and benefits of ethical

operations

• waste management and control, factors

influencing waste management. 2

Ethical Issues

• Operations, in conjunction

with the marketing

department, need to

consider how their

products impact on ethics

and the environment.

• By ensuring both are

considered, an

organisation will ensure

they meet the CSR

objectives.

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Advantages/Disadvantages of being

Ethical Advantages

• Awards can be granted

for being ethical, which

can be used for

promotional purposes.

• Businesses with an

ethical reputation can

attract customers and

quality staff who agree

with their principles.

Disadvantages

• Audits are needed to ensure

standards are met and

maintained, which may be

time consuming.

• Decision-making could be

more complex and time

consuming as many possible

solutions may not be

appropriate because they are

not ethical.

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Philanthropy

• Philanthropy means having a ‘love for humanity’.

• In other words, giving to those in need.

• This could be through charitable donations, giving away

goods or setting up a charitable trust as part of the

organisation.

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Animal Welfare

• The moral considerations of an organisation need not only

refer to how people are treated, increasingly these

concerns are also around the treatment and wellbeing of

animals.

• This might include the conditions that animals are kept in,

the way are handled, animal testing and the use of animal-

derived ingredients.

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Fair Trade

• Fair trade is when suppliers of raw materials receive a

guaranteed and fair price for their goods.

• Fair trade also ensures that employees in the supply

chain are treated fairly.

• Organisations are encouraged to use suppliers that are

part of the Fairtrade Foundation.

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Advantages/Disadvantages of Fair

Trade Advantages

• Businesses are awarded the Fair trade

mark on their products, which can

appeal to customers.

• Stocking fair trade goods demonstrate

the retailer’s ethical commitment to

its customers.

• Businesses that are fair trade have a

positive impact on the producers of

the raw materials with which they

work and have a better relationship

with the supply chain.

Disadvantages

• Losing a Fairtrade

mark after gaining

one will result in

bad publicity.

• Fair trade products

are often more

expensive.

• The business has a

more limited choice

of suppliers.

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Environmental Issues

Organisations should do their bit to help the

environment.

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Advantages/Disadvantages of being

Environmentally Friendly Advantages

• The organisation plays a part in

looking after the environment that

will hopefully sustain their activities

for the future.

• Having a positive effect on the

environment will ensure the

organisation gains a positive

reputation.

• Awards can be granted for being

‘environmentally friendly’, which can

be used for promotional purposes.

• Rewritable energies save costs in the

long run as fuels such as oil, petrol or

gas don’t need to be paid for.

Disadvantages

• Investment in environmentally

friendly measures will be

expensive in the short-term,

e.g. installing solar panels.

• New procedures may have to

be adapted to be more

environmentally friendly,

which can take time.

• Most environmentally friendly

procedures rely on the natural

environment, which may not be

sufficient, e.g. lack of wind,

solar energy, etc.

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Carbon Footprint

This refers to

the impact that

using fossil

fuels, such as

oil and gas,

has on the

environment.

Examples of ways that organisations can prove

their commitment to reducing their carbon

footprint are:

• using alternative sources of ‘renewable’

energy, such as solar and wind, for example

to power premises.

• using low emissions vehicles or EVs (electric

vehicles) for deliveries and company cars.

• using altogether more environmentally

friendly methods of distribution can be used.

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Sustainable Raw Materials

Being

sustainable

by

replacing

raw

materials

that they

have used

with new

ones.

Examples of ways that organisations can prove their

commitment to this are:

• replanting raw materials that are used in production,

for example, Velvet toilet roll’s commitment to

replace three trees for every one that it uses.

• reusing or recycling materials to be used in

production.

• using resources responsibility, for example,

sustainable fishing limits the amount of fish that can

be caught in an area to allow the fish to breed and

naturally replenish.

• utilising renewable energies.

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Waste

• Try to minimise wastage by ensuring employees are trained, ensuring

machinery is kept in good condition and by not overstocking.

• However, providing training and maintaining machinery could be

expensive.

• This would reduce the company’s profitability.

• It is important in maintaining a good reputation that businesses do not

simply ‘dump’ waste materials that could harm the environment, or send all

their waste to landfill.

• They have to make sure that they reduce the amount of waste that is

produced as well as ensuring they dispose of it in an environmentally

friendly way.

• Sometimes a business might call on the services of a specialist waste

disposal company to dispose of certain types of waste.

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Packaging

Packaging of

products should

be designed to

be as

environmentally

friendly as

possible.

Ways that packaging could be

environmentally friendly include:

• being reusable – packaging that can be

reused again, for example, ‘bags for life’.

• being recyclable – packaging that can be

recycled into something else, for

example, plastic containers into scarves.

• being biodegradable – using packaging

that can break down easily. Plastic bottle

caps take 400 years to decompose.

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