Business Ethics Sustainability: Social and Ethical Dimensions PDF

Business Ethics Sustainability: Social and Ethical Dimensions Dr. Rudaba UL MULK [email protected] Learning Objectives Relate sustainability to ethical decision making and social responsibility Examine global environmental issues related to the atmosphere, water, and land...

Business Ethics Sustainability: Social and Ethical Dimensions Dr. Rudaba UL MULK [email protected] Learning Objectives Relate sustainability to ethical decision making and social responsibility Examine global environmental issues related to the atmosphere, water, and land Review environmental legislation related to sustainability Compare renewable energy sources that provide alternatives for sustainability Evaluate business responses to sustainability related to green marketing and greenwashing Provide strategic directions for implementation of sustainability Defining Sustainability Sustainability – The potential for the long-term well-being of the natural environment, including all biological entities, as well as mutually beneficial interactions among nature and individuals, organizations, and business strategies Sustainable development – Meeting the needs of the present without compromising the ability of future generations to meet their own needs, with an emphasis on the natural environment  How Sustainability Relates to Ethical Decision Making and Social Responsibility Sustainability falls into the social responsibility domain of maximizing positive and minimizing negative impacts on stakeholders. Sustainability relates to ethical decision making. – Ethical awareness is the ability to perceive an issue or dilemma involving principles, values, and appropriate behavior. – Business decisions about sustainability will be assessed as right or wrong by stakeholders. A company with a sustainability agenda or a corporate social responsibility (CSR) report can create long-term favorable stakeholder responses. Sustainability, social responsibility, and ethics should not be used interchangeably.  How Sustainability Relates to Ethical Decision Making and Social Responsibility Socially responsible activities can create competitive advantages. Both positive and negative information about products and organizations is more available. Organizations can use their products and brand identity to create social value, quality, and consumer loyalty. Companies use their sustainable and socially responsible decisions to differentiate their firms and promote their products.  How Sustainability Relates to Ethical Decision Making and Social Responsibility  The Three Pillars of the Triple Bottom Line 1. People (Social Responsibility) This pillar focuses on the social impact a business has on people, including employees, customers, suppliers, and the community. 2. Planet (Environmental Responsibility) Emphasizes the need for businesses to minimize their ecological footprint. 3. Profit (Economic Value) While TBL broadens the definition of success, financial viability remains essential.  How Sustainability Relates to Ethical Decision Making and Social Responsibility Ethical Decisions Affect Sustainability as a Component of Social Responsibility  Global Environmental Issues Atmospherics Air pollution typically arises from three different sources: – Stationary sources such as factories and power plants – Mobile sources such as cars, trucks, planes, and trains – Natural sources such as windblown dust and volcanic eruptions Climate change – The long-term variation in average weather patterns – Kyoto Protocol – An international treaty meant to control global greenhouse gas emissions by having countries voluntarily reduce national outputs – Coal is an area of an argument; some countries use cap-and-trade.  Global Environmental Issues Water Water pollution is one of the biggest contributors to illnesses in developing countries. For some corporations, the sustainability of water has become a major consideration. Some parts of the globe are increasingly worried about water quantity.  Global Environmental Issues Land Land pollution – dumping of residential and industrial wastes, strip mining, poor forest conservation Waste management – dumping of waste into landfills- Electronic waste (e- waste) has become a big problem) Deforestation – forests (covering >30% of the planet) are being destroyed Biodiversity – increasing pressure on wildlife, plants, and their habitats Genetically modified (GM) organisms – Created through manipulating plant and animal DNA to produce a desired effect such as resistance to pests and viruses, drought resistance, or high crop yield  Environmental Legislation Environmental Protection Agency (EPA) The agency’s mission is to “protect human health and the environment” by working to ensure that: – Efforts to reduce environmental risks are based on reliable scientific information. – Federal laws related to protecting human health and the environment are administered and enforced fairly, effectively, and as intended. – Factors such as natural resources, human health, and economic growth are considered in establishing environmental policy.  Environmental Legislation Environmental Regulations Clean Air Act – regulates atmospheric emissions Endangered Species Act – protects endangered species and their habitats Toxic Substances Control Act – tracks industrial chemicals – food color, toxic chemicals used in makeups and pharmaceutical drugs, using radium in paint for coloring the wristwatch dials Clean Water Act Pollution Prevention Act – Leadership in Energy & Environmental Design (LEED) – A certification program that recognizes sustainable building practices and strategies Food Quality Protection Act  Alternative Energy Sources Wind Power Its use has already taken off in many countries. Experts believe wind energy could meet 20% of the nation’s energy needs. Restructuring the nation’s power grids to efficiently transmit wind-generated power will take huge investments. Widespread adoption of wind power is slowed by the high cost of turbines as well as limitations on an outdated national power grid.  Alternative Energy Sources Geothermal Power Geothermal energy comes from the natural heat inside the Earth, which is extracted by drilling into steam beds. This heat can be harnessed to produce electricity or provide direct heating. Advantages Disadvantages Provides a constant source of Expensive heat Geothermal drilling sites are Dependable source of energy not readily available Emits fewer carbon emissions everywhere than coal-powered plants  Alternative Energy Sources Solar Power Solar power is energy harnessed from sunlight. It is captured using solar panels or mirrors that convert sunlight into electricity or heat. Advantages Disadvantages 100% renewable energy Expensive Can be converted into electricity Inefficient compared to through the use of either photovoltaic traditional fossil fuel–generated cells (solar cells) or solar power plants energy Infrastructure for mass production of solar panels is not in place  Alternative Energy Sources Nuclear Power Nuclear power is energy produced through nuclear reactions, typically in a process called nuclear fission. Advantages Disadvantages Pollution-free Danger associated with nuclear Cost-competitive meltdowns and radioactive waste disposal Less competitive with other sources of electricity due to the engineering and time, as well as regulatory requirements Critics are concerned with the safety of nuclear power plants and the disposal of waste  Alternative Energy Sources Hydropower Hydropower, or hydroelectric power, is energy generated by harnessing the movement of water. Advantages Disadvantages Largest form of renewable Destruction of wildlife and energy human habitats when valleys Decreases greenhouse gas are flooded using dams emissions and air pollution Disrupts the life cycles of aquatic life  Business Response to Sustainability Issues Most businesses use environmental, social, and governance (ESG) factors to report air, land, and water sustainability issues. Better environmental performance can increase revenue in three ways: – Better access to certain markets – Differentiation of products – Sale of pollution-control technology Environmental Initiatives: Carbon Reduction: Many businesses are taking steps to reduce their carbon footprint by shifting to renewable energy sources, improving energy efficiency, and reducing waste. Sustainable Product Design: Companies like IKEA and Nike are designing products with sustainability in mind, using recycled materials, and creating products that are easier to repair or recycle.  Social Responsibility: Fair Labor Practices: Companies are increasingly focused on improving the working conditions and wages of workers in their supply chains – e.g., H&M Community Engagement: Businesses are also focusing on contributing positively to the communities where they operate- e.g., Ben & Jerry's for its commitment to climate change racial equality.  Governance and Transparency: Ethical Governance: Businesses are adopting transparent practices and improving governance to ensure accountability. This includes clear reporting of environmental, social, and governance (ESG) metrics e.g., Unilever and Starbucks- ESG Stakeholder Engagement: Businesses are now considering the interests of a wider group of stakeholders, including employees, customers, and local communities, rather than just focusing on profits.  Sustainability Reporting and Certifications: Green Certifications: To demonstrate their commitment, many companies seek certifications such as LEED (Leadership in Energy and Environmental Design) for building sustainability or B Corp certification for meeting high standards of social and environmental performance. ESG Reporting: Companies are increasingly disclosing their sustainability performance through annual reports or sustainability reports, providing transparency on their efforts to meet environmental and social targets  There are no companies that are truly 100% sustainable, as achieving full sustainability across every aspect of a business (environmental, social, economic, and governance) is incredibly challenging. Why 100% Sustainability Is Difficult ? Supply Chain Complexities Carbon Emissions Resource Usage Sourcing materials Energy use Transportation emissions Waste management Positive Links Between Environmental and Economic Performance Source: Stefan Ambec and Paul Lanoie, “Does It Pay to Be Green? A Systematic Overview,” The Academy of Management Perspectives 22, 4 (2008): 47.  Business Response to Sustainability Issues Green Marketing Green marketing – A strategy involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment Greenwashing Greenwashing – Misleading a consumer into thinking a good or service is more environmentally friendly than it really is  Strategic Approaches to Environmental Issues  Strategic Implementation of Environmental Responsibility Recycling Initiatives Recycling – The reprocessing of materials—especially steel, aluminum, paper, glass, rubber, and some plastics—for reuse Food waste can be used to create renewable energy. Companies and local and regional governments are finding ways to recycle water.  Strategic Implementation of Environmental Responsibility Stakeholder Assessment Requires acknowledging and actively monitoring the environmental concerns of all legitimate stakeholders Must have a process in place for identifying and prioritizing the many claims and stakes on its business and for dealing with trade-offs related to the impact on different stakeholders – No company satisfies every claim. – Managers need to conduct research, assess risks, and communicate with stakeholders about their respective concerns. Not all stakeholders are equal. Includes a willingness to acknowledge and openly address potential conflicts.  Strategic Implementation of Environmental Responsibility Risk Analysis Through industry and government research, an organization can usually identify environmental issues that relate to manufacturing, marketing, consumption and use patterns associated with its products. It is possible to assess the environmental risks associated with business decisions. – The real difficulty is measuring the costs, benefits. Many environmental decisions involve trade-offs for various stakeholders’ risks.  Strategic Implementation of Environmental Responsibility The Strategic Environmental Audit Audit of efforts, report the results to all interested stakeholders Organizations may use globally accepted standards. – ISO 14000 – A comprehensive set of environmental standards that encourage a cleaner, safer, and healthier world developed by the International Organization for Standardization Evaluation of a firm’s environmental, social, and governance (ESG) programs is important.