Ethical, Social and Enviromental Responsibilties in Business (LC 2026) (Leaving Cert Business): Revision Notes
Business Environmental Responsibility
Businesses today face increasing pressure to operate in ways that protect our environment. This responsibility extends beyond simply following the law - it involves actively working to reduce negative environmental impacts whilst creating long-term value for society.
Ireland's main wealth-generating industries - electronics, agriculture, tourism and services - all depend on a healthy environment to thrive. However, when businesses fail to act responsibly, they face increased costs through government green taxes and potential damage to their reputation.
Green Taxes Definition
Green taxes are charges levied on activities that harm the environment, designed to encourage more environmentally friendly business practices.
Key environmental issues affecting businesses
Modern businesses must address four main environmental challenges that directly impact their operations and costs.
Energy efficiency
Companies need cleaner production methods and improved energy efficiency to remain competitive. This involves switching to renewable energy sources, encouraging transport-sharing schemes among employees, and sourcing raw materials locally to reduce transportation emissions.
Business Success Story: Marks and Spencer
UK retailer Marks and Spencer has saved over £750 million by implementing three key strategies:
- Reducing energy consumption across stores and operations
- Improving packaging efficiency to minimise waste
- Cutting transportation requirements through local sourcing
Waste management
Businesses can significantly reduce their environmental impact by minimising waste and developing better disposal methods. The "4 Rs" approach provides a framework: Reduce, Reuse, Recycle and Recover.
Companies should encourage sorting systems for paper, tins, glass and other containers. Many businesses are replacing single-use plastics with biodegradable alternatives.
Sustainable Innovation: Innocent Drinks
Irish company Innocent Drinks demonstrates environmental leadership by using recycled and plant-based plastics for their bottles, significantly reducing their environmental footprint.
Pollution control
Preventing harmful emissions requires comprehensive planning across all business operations. Factory emissions must not pollute the air, chemical waste must not contaminate water sources, and noise levels must be minimised.
Companies can invest in machinery that reduces environmental impact and prevents chemical disposal through drains.
Manufacturing Innovation: Ford Motor Company
Ford's manufacturing plants exemplify pollution control by:
- Recycling paint fumes as fuel for energy generation
- Designing Focus and Escape car models to be 80% recyclable
- Implementing comprehensive waste reduction systems
Sustainable development
Sustainable Development Definition
Sustainable development means economic growth that meets current population needs without wasting resources for future generations or causing permanent environmental harm.
Businesses should adopt sustainable approaches when using natural resources, particularly given climate change concerns. Companies like Nike demonstrate this by using renewable energy sources in manufacturing and creating products from recycled materials.
Characteristics of environmentally responsible businesses
Environmentally conscious companies share six key characteristics that demonstrate their commitment to environmental protection.
Honesty and openness
Responsible businesses maintain transparency about their environmental impact. They willingly allow examination of their practices because they have nothing to hide. When environmental incidents occur, they take responsibility - as Kerry Ingredients UK did in 2014 when they paid fines following a pollution incident in a local river.
Culture of consultation and advice
These businesses actively consult with all stakeholders when developing environmental policies. They seek up-to-date information on environmental issues and work closely with the Environmental Protection Agency (EPA) for guidance and support.
Promotion of awareness and training
Companies promote environmental awareness by including environmental policy statements in their mission statements and educating employees about environmental issues.
Employee Engagement: Electrolux
Swedish home appliance maker Electrolux demonstrates environmental leadership by:
- Providing funding and resources to employees for sustainability initiatives
- Supporting projects that address United Nations Sustainable Development Goals
- Creating a culture of environmental responsibility throughout the organisation
Sustainable product design
Environmentally responsible businesses create durable products that reduce energy consumption and waste. They avoid toxic materials, develop cleaner manufacturing processes, and design products with recyclable components.
Mobile phone manufacturers are increasingly designing devices with replaceable batteries and repairable components, though consumer demand for new technology often conflicts with these sustainability goals.
Environmental policies
Companies integrate environmental considerations into all policy decisions. These might include reducing air pollution, recycling waste, conserving energy and water, and supporting sustainable development initiatives.
Industry Transformation: Denim Manufacturers
The denim industry, as one of the garment industry's biggest water polluters, shows how companies can transform:
Levi Strauss & Co: Pledged to reduce water consumption by 50% by 2030
Wrangler: Developed water-free dyeing processes to eliminate water waste in production
Compliance with the law
Responsible businesses exceed minimum legal requirements by conducting regular environmental audits and maintaining environmental management standards like ISO 14000 certification.
Environmental Audits
Environmental audits are systematic studies that assess a business or project's impact on the environment, examining what is produced, how it's produced, and how it's disposed of.
Large-scale projects typically require Environmental Impact Assessments (EIA) before receiving planning permission. An EIA involves the planning authority assessing an Environmental Impact Statement (EIS) prepared by the project developer.
The Environmental Protection Agency (EPA)
The EPA plays a crucial role in supporting business environmental responsibility in Ireland. Established in 1993, it operates independently under the Department of Communications, Climate Action and Environment. The EPA handles environmental planning, education, monitoring, and regulation of Ireland's carbon emissions.
The agency has identified six key goals for greater environmental responsibility in business:
- Limiting and adapting to climate change
- Maintaining clean air
- Protecting water resources
- Sustainable use of natural resources
- Protecting soil and biodiversity
- Integration and enforcement of environmental laws
Biodiversity Definition
Biodiversity refers to the number and variety of different species that can survive and interact with each other in a given ecosystem.
Benefits and costs of environmental responsibility
Environmental responsibility creates both advantages and challenges for businesses.
Benefits
Reduced operational costs: Eliminating unnecessary waste lowers ongoing expenses. Simple actions like turning off lights when not in use can significantly reduce energy costs.
Enhanced reputation: Strong sustainability credentials provide excellent public relations opportunities, helping businesses attract loyal customers, dedicated staff, and interested investors.
Improved long-term prospects: Sustainability reduces dependence on non-renewable resources compared to competitors and helps "future-proof" businesses against rising costs and potential penalties.
Costs
Audit expenses: Environmental Impact Statements and regular environmental audits require significant time and money for research and reporting.
Equipment investment: New equipment for reducing fossil fuel consumption, improving recycling, and better waste disposal requires substantial short to medium-term investment, such as solar panel systems.
Staff training costs: Training, rewarding, and providing resources to employees for environmental initiatives involves considerable financial investment.
The triple bottom line approach
Many organisations now use the triple bottom line model to evaluate their success more broadly than traditional accounting methods.
Triple Bottom Line Definition
The triple bottom line is a UN-approved model for sustainable business that considers social and environmental performance alongside financial results. Instead of one bottom line (profit), there should be three: profit, people, and the planet.
This approach encourages businesses to consider their impact on society and the environment, not just their financial performance. Remember the "Three Ps" - Profit, People, and Planet.
Key Points to Remember:
- Businesses face four main environmental challenges: energy efficiency, waste management, pollution control, and sustainable development
- Environmentally responsible companies demonstrate six key characteristics: honesty, consultation, awareness promotion, sustainable design, environmental policies, and legal compliance
- Environmental responsibility offers benefits like reduced costs and better reputation, but requires investment in audits, equipment, and training
- The EPA supports Irish businesses in meeting environmental responsibilities through guidance and regulation
- The triple bottom line approach encourages businesses to consider profit, people, and planet in their decision-making
- Remember the "4 Rs" for waste management: Reduce, Reuse, Recycle, Recover
- Remember the "Three Ps" for triple bottom line: Profit, People, Planet