Ethics vs Profit

The people who never chose it

You already know that a business has stakeholders, and that different groups want different things from it. This topic takes one particular group and asks a harder question about them. Look at the five environmental impacts your specification names: traffic congestion, recycling, waste disposal, noise and air pollution. Every one of them lands on somebody who is not the business's customer and not its employee. Nobody living on the road to a distribution depot chose the lorries. Nobody living near a plant chose the noise. They are not buying anything, they are not being paid, and in most cases they have no say at all in what the business decides. That is exactly why this sits in a topic about ethics rather than in a topic about costs. When the people bearing a consequence are not the people a business answers to, a question arises that the accounts cannot settle. Hold that, because it also explains the other half of this topic: acting ethically usually means taking on a cost for the benefit of somebody who cannot make you.

Words for the two halves

Five terms this topic uses. You have met stakeholders already, so it appears here only as a reminder of who is in the picture.

Match the impact to who bears it

Which five does your spec name

Revising from a general business textbook, you find long sections on carbon footprints and global sustainability. What does your specification actually name under environmental considerations?

• Five specific local impacts: traffic congestion, recycling, waste disposal, noise and air pollution
• Climate change and the business's contribution to global warming
• Sustainability in general, across supply chains and materials
• The environmental laws a business must obey

Costs the business, costs the neighbours

The trade-off runs in both directions, and a good answer says so. Set out the case each way before you judge.

Which two are named impacts

Select the TWO that your specification names as environmental considerations for a business.

• The congestion caused on local roads by the business's vehicles
• How the business deals with the waste its operations produce
• The business's contribution to global climate change
• Whether the business uses sustainable materials throughout its supply chain

When doing right pays

It is worth being careful here, because this topic can be answered badly in two opposite ways. One bad answer says a business should always do the ethical thing because it is right. That is a moral claim rather than a business one, and it will not score, because the question asks about a trade-off and you have not weighed anything. The other bad answer says a business should only act ethically when it increases profit, which sounds hard-headed but is just as unexamined, and it misses that some costs are worth carrying whatever the return. The honest position is in between and it is more interesting than either. Some ethical choices cost money and bring nothing measurable back, and a business may still make them. Some cost money and pay for themselves, because customers choose the business, staff stay longer, or the waste that is no longer produced no longer has to be paid for. And some are simply cheaper once you count what going wrong would cost. So the useful question is not whether ethics and profit conflict, but where in a particular decision they conflict and by how much. That is a judgement, which is what the marks are for, and it is why an answer that lands entirely on one side of this has usually not done the work.

The trade-off in words

Your specification names five environmental impacts: traffic _____, recycling, _____ disposal, _____ and air pollution. What they have in common is that they fall on people who are neither the business's customers nor its _____, which is why they raise an ethical question rather than only a financial one. Acting more ethically often means accepting a _____ now for a benefit that may be slower to arrive, or may not arrive at all.

The answer that only preaches

Four sentences from an answer about a business decision. Select the ONE that makes a moral claim instead of weighing the trade-off.

• Restricting deliveries to daytime hours would reduce noise for nearby residents but slow distribution.
• Better waste separation costs more to run, though it may reduce disposal charges over time.
• The business should obviously do the right thing, whatever it costs.
• Some customers may choose the business because of the change, though that is hard to measure.

Order the questions to ask

A business is considering a change that would reduce its impact on the surrounding area. Put the questions into the order that reaches a judgement rather than an opinion.

• Which of the named impacts does this change actually affect?
• Who bears that impact at the moment, and do they have any say?
• What would the change cost the business, and when?
• What might it bring back, in customers, staff, savings or avoided problems?
• How certain is each side of that, and which is easier to measure?
• State the recommendation and the reason, acknowledging what it costs

A judgement on an ethical choice

A question describes a business whose lorries add to congestion and noise on residential roads near its site, and asks whether it should change its delivery arrangements. Here is an answer that would score well. The impacts named here are traffic congestion and noise pollution, and both fall on local residents, who are neither customers nor employees and have no direct say in the decision. That is what makes this an ethical question rather than only an operational one. Restricting deliveries to daytime hours would reduce both impacts, but it would cost the business: fewer available hours may mean more vehicles, later arrivals, or paying for a different arrangement with suppliers. Against that, there are returns that are real but harder to measure. Good relations with neighbours make future planning permission easier to obtain, complaints take management time the business could spend elsewhere, and some customers do take a business's local reputation into account. On balance the change is worth making if the operational cost is modest, because the costs of poor local relations tend to arrive later and in less controllable forms. If the cost is severe enough to threaten the business, a partial change, such as restricting only the earliest deliveries, would capture much of the benefit for less. Notice what that answer does. It names the impacts the specification names. It identifies who bears them and why that matters. It gives both sides honestly, including that one side is harder to measure. And it recommends something, with a condition attached.

Weighing it up for a firm

A business is deciding whether to invest in better waste separation and recycling. Take the decisions in order.

• What should you establish before considering the cost at all?
• The change costs money now. What is the honest way to treat that?
• Somebody argues it will pay for itself through customer goodwill. How should you handle that?
• How should the recommendation be phrased to earn the marks?

Judge the ethical choice

"A business should always put profit first." Evaluate this statement, using the ethical and environmental considerations from this topic, and reach a judgement.

• Name the five environmental impacts your specification lists
• Explain what those five have in common, and who bears them
• Explain why that makes them an ethical question rather than only a financial one
• Give two ways acting more ethically can cost a business
• Give two ways it can pay, and say which of your points is harder to measure
• Explain why an answer that only preaches would not score
• Explain why an answer that only counts profit would not score either
• Reach a judgement on the statement, with a reason and any condition attached