🌱 Ethical Objectives and CSR
Big Idea: Ethical objectives mean doing the right thing — treating people fairly, being honest, and minimising harm. CSR (Corporate Social Responsibility) means voluntarily going beyond legal requirements to benefit society and the environment.
Common ethical issues in business
- Fair treatment of workers — paying fair wages, safe conditions, reasonable hours
- Honest marketing — not making false claims, transparent pricing
- Environmental responsibility — reducing pollution, waste and carbon footprint
- Ethical sourcing — ensuring supply chains don't use child labour or exploitation
- Data privacy — protecting customer information
- Animal welfare — avoiding unnecessary animal testing
A clothing brand discovers its supplier uses child labour in factories overseas. The ethical objective is to switch to certified suppliers — even if it costs more — because exploiting children is wrong regardless of the financial benefit.
What is CSR?
CSR is when a business voluntarily takes actions to benefit society and the environment beyond what the law requires. It's about being a good corporate citizen.
- Reducing carbon footprint — using renewable energy, reducing emissions
- Supporting local communities — sponsoring events, providing jobs, volunteering
- Ensuring ethical supply chains — auditing suppliers for fair labour practices
- Providing fair wages — paying above minimum wage when possible
- Being transparent — publishing reports on environmental and social impact
- Charitable giving — donating money or resources to causes
Why businesses adopt CSR
- Reputation — ethical businesses attract customers and positive media coverage
- Customer loyalty — consumers increasingly prefer ethical brands
- Employee motivation — workers are more engaged when they're proud of their employer
- Investor interest — socially responsible investing (SRI) is growing
- Risk management — ethical practices reduce the risk of scandals and lawsuits
CSR can help profits long-term — it's not just charity. Customers prefer ethical businesses, employees are more motivated, and the brand is strengthened. This is sometimes called 'doing well by doing good'.
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What happens when ethical issues arise?
When a business behaves unethically, the consequences can be severe and long-lasting.
- Reputation damage — negative publicity spreads fast, especially on social media, and can take years to recover from
- Loss of stakeholder trust — customers stop buying, employees lose pride, investors lose confidence
- Financial impact — fines from regulators, legal costs, falling sales, and declining share price
- Staff morale drops — employees don't want to work for a company seen as unethical
- Recruitment difficulties — talented people avoid controversial employers
- Boycotts — organised customer campaigns can dramatically reduce revenue
Short-term vs long-term impact
- Short-term: immediate sales drop, media scrutiny, potential fines
- Long-term: damaged brand reputation, difficulty attracting talent, regulatory oversight
- Recovery is possible but requires genuine change, not just PR statements
In exam answers about ethical impacts, always link back to the specific business and identify which stakeholders are affected. 🎯
A major food company is found to have misrepresented the ingredients in its products. Short-term: sales crash as customers switch brands. Long-term: the brand struggles to rebuild trust even after reformulating products and increasing transparency.