Ethical and environmental considerations (OCR GCSE Business): Revision Notes

6.1 Ethical and environmental considerations

Ethical Considerations in Businesses

Ethical considerations involve making decisions that are morally right. This includes how businesses treat their workers, suppliers, and customers, as well as their sourcing of materials and marketing decisions.

Ethical Considerations in Business

Treatment of Workers

• Pay workers a fair wage.

• Provide safe working conditions.

• Ensure workers don't work overly long hours.

• Do not discriminate against workers based on gender, race, or disability. Sourcing of Materials

• Avoid buying from businesses that exploit their labour.

• Buy from suppliers who do not produce in a sustainable way (unless this cannot be avoided). Treatment of Suppliers

• Avoid late payment of money they owe.

• Avoid driving small suppliers out of business by overusing their services.

• Pay prices that are fair to the supplier. Treatment of Customers and Marketing Decisions

• Be careful not to overcharge customers.

• Avoid making false claims about goods or services.

• Do not endanger customers by selling dangerous products or providing unsafe services.

Impact of Ethical Considerations on Businesses

Ethical behaviour can have both advantages and disadvantages for businesses. Ethical practices often result in higher costs but can lead to long-term benefits such as customer loyalty and brand reputation.

Advantages

• Motivated Workforce: Workers treated ethically are more productive.

• Customer Loyalty: Ethical practices can attract and retain customers.

• Brand Reputation: Businesses known for their ethical standards may attract investors.

Disadvantages

• Higher Costs: Ethical practices, such as fair wages and sustainable materials, can increase costs.

• Complex Supply Chains: Ensuring all suppliers adhere to ethical standards can be challenging and costly.

Environmental Considerations in Businesses

Environmental considerations involve actions businesses take to minimise their negative impact on the environment. This includes sustainability, waste disposal, pollution, and climate change.

Sustainability

Definition: Using resources in a way that does not deplete them for future generations.

Example:

• Using renewable energy sources like wind and solar power.

Impact:

• Positive: Long-term cost savings, improved public image.

• Negative: Initial high investment costs.

Waste Disposal

Definition: Properly managing and disposing of waste to minimise environmental impact.

Examples:

• Recycling programmes, reducing waste production.

Impact:

• Positive: Reduced waste disposal costs, compliance with environmental regulations.

• Negative: Potentially higher operational costs to implement recycling processes.

Pollution

Definition: Reducing emissions and contaminants released into the environment.

Examples:

• Switching to electric vehicles, reducing industrial emissions.

Impact:

• Positive: Healthier environment, potential tax incentives.

• Negative: Costs associated with upgrading technology and processes.

Climate Change

Definition: Addressing the effects of global warming through sustainable practices.

Examples:

• Reducing carbon footprint, using eco-friendly materials.

Impact:

• Positive: Contribution to global efforts to combat climate change, enhanced corporate responsibility image.

• Negative: Higher costs associated with sustainable practices and materials.

Impact of Environmental Considerations on Businesses

Environmental practices can affect business costs, sales, taxes, and profits. Businesses that adopt environmentally friendly practices often benefit from cost savings in the long term, increased sales from environmentally conscious consumers, and avoidance of fines for non-compliance.

Advantages	Disadvantages
Cost Savings: Reduced energy and waste disposal costs.	Higher Production Costs: Eco-friendly materials and processes can be more expensive.
Increased Sales: Attracting environmentally conscious consumers.	Investment in New Technology: Upfront costs for implementing green technologies.
Tax Benefits: Potential tax breaks and subsidies for environmentally friendly practices.