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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