Topic 12 Ethical and Environmental Higher Business Management 1
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. 3
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. 4
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. 5
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 animalderived ingredients. 6
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. 7
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. 8
Environmental Issues Organisations should do their bit to help the environment. 9
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. 10
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. 11
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. 12
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. 13
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. 14