<6.2 ENVIRONMENTAL & ETHICAL ISSUES>

--6.2.1 CONCERNS & ISSUES--

--ENVIRONMENTAL ISSUES--

--IMPACT OF BIZ ON THE ENVIRONMENT--

POLLUTION / EMISSIONS from the burning of FOSSIL FUELS during the FACTORY PRODUCTION PROCESS worsens air quality and CONTRIBUTES TO GLOBAL WARMING.
NOISE POLLUTION created during the PRODUCTION PROCESS can disturb RESIDENTS nearby.
THE DUMPING OF WASTE can POLLUTE rivers and seas.
THE TRANSFER OF GOODS creates EMISSIONS.

AND SO ON...

--TASK--

Find REAL WORLD EXAMPLES (Images, newspaper articles, infographics etc... for at least THREE of the impacts above and paste an image with the link into your digital handbook.

E.g For example the Bhopal disaster in India in 1984 was a tragic example of how buisness activity can create dangerous pollution in the environment.

Add to this padlet

--HIGHER PRICES vs SOCIAL RESPONSIBILITY--

--TASK--

In your role as SPOKESPERSON for the Student Council write an imaginary e-mail to the HEAD OF THE SCHOOL CANTEEN, using at last THREE of the ARGUMENTS FOR SOCIAL RESPONSIBILITY listed above demanding that they;...
- - - - i) STOP USING DISPOSABLE PLASTIC CUTLERY IN THE CANTEEN
        ii) REPLACE THEM WITH REUSABLE STAINLESS STEEL VERSIONS
        iii) ONLY SERVE FOOD FROM FREE-RANGE, ORGANIC, and FAIR-TRADE SUPPLIERS.
      - Justify why each demand is necessary, in terms of its negative impact on the environment.

Attn: Head of School Canteen Re: Your environmental responsibilities

'Dear Sir/Madam, as a concerned student I would like to draw your attention to how your business activity is currently impacting our school environment. Firstly,...'

Using the ARGUMENTS FOR THE PROFIT MOTIVE listed above create a REPLY letter, explaining the CONSEQUENCES for the STAKEHOLDERS such as CONSUMERS, SHAREHOLDERS, OWNERS, and EMPLOYEES if they were to implement these changes.

Attn: Head of Student Council Re: Your requests

'Dear Head of Student Council, we really appreciate your informative message related to our business activities at your school. We, however can't at this stage meet your requests for the following reasons, firstly,..."

--EXTERNALITIES--

--'NEGATIVE' EXTERNALITIES--

ALL BUSINESS ACTIVITY creates PRIVATE COSTS for firms, such as WAGES, RENT, etc.... however this activity may also create EXTERNAL COSTS to SOCIETY, which are called 'NEGATIVE EXTERNALITIES OF PRODUCTION' and are defined as follows:

"EXTERNAL COSTS occur when the actions of PRODUCERS give rise to NEGATIVE SIDE-EFFECTS THAT IMPACT THIRD PARTIES who are not part of these activities and who RECEIVE NO COMPENSATION"

Examples include the COST OF HEALTHCARE incurred by NEARBY RESIDENTS who become sick from NOXIOUS FACTORY EMISSIONS, and who RECEIVE NO COMPENSATION from the polluting firms.

FULL COST = PRIVATE COST + EXTERNAL COST

--'POSITIVE' EXTERNALITIES--

ALL BUSINESS ACTIVITY creates PRIVATE BENEFITS for firms, usually in the form of PROFITS, however, this activity may also create EXTERNAL BENEFITS to SOCIETY, which are called 'POSITIVE EXTERNALITIES OF PRODUCTION' and are defined as follows:

"EXTERNAL BENEFITS occur when the actions of PRODUCERS give rise to POSITIVE SIDE-EFFECTS THAT IMPACT THIRD PARTIES who are not part of these activities and who PAY NO COMPENSATION"

Examples include the BENEFIT OF VACCINATIONS enjoyed by UNVACCINATED CITIZENS who HAVE LESS CHANCE OF CATCHING COVID-19 even though they do not PAY COMPENSATION to the VACCINATED.

FULL BENEFIT = PRIVATE BENEFIT + EXTERNAL BENEFIT

--TASK--

TASK: Imagine TES wishes to open a NEW CAMPUS near Taipei 101. Do a cost : benefit analysis. Do you think the benefits outweigh the costs?

--SUSTAINABLE DEVELOPMENT--

SUSTAINABLE DEVELOPMENT refers to a level of development that: "MEETS THE NEEDS OF THE PRESENT GENERATION WITHOUT COMPROMISING THE ABILITY OF FUTURE GENERATIONS TO MEET THEIR OWN NEEDS"
In other words, the level of output today should only be sufficient to meet demand rather than over supply (e.g, overfishing), so as to minimise waste and allow certain resources to regenerate (e.g sustainable forestry) as well as use renewable energy sources instead of finite natural resources, such as wind and solar energy.

--TASK--

CREATE a simple poster like the one below using a well-known business of your choice as the subject, then APPLY the 4 methods that a business can use to show that it is concerned about sustainable development. For example, OFS has installed Solar panels on the sports block roof to generate electricity (renewable energy)

--TASK--

Explain two ways BCK could contribute to sustainable development. 6

--PRESSURE GROUPS--

ENVIRONMENTAL PRESSURE GROUPS refer to unofficial special interest groups that seek to influence (By 'Putting pressure on') Government policy in a particular direction regarding environmental concerns/issues.
These groups aim to RAISE AWARENESS OF EXTERNAL COSTS created by producers, and GARNER PUBLIC SUPPORT for their cause in order to FORCE CONSUMER BOYCOTTS, and FORCE FIRMS TO CHANGE THE PRODUCTS they produce or the PRODUCTION PROCESSES they use or FACE LOSING CUSTOMERS and ultimately PROFITS.
The success of this pressure depends on the following:
- - Must have PUBLIC SUPPORT.
  - The fall in sales is SIGNIFICANT.
  - The pressure group is DETERMINED, ORGANISED, and FINANCED.
  - Whether the firms are doing anything ILLEGAL.
  - Whether the cost of change is greater than the loss of sales.
  - Whether the firm sells to other businesses rather than the public.

--TASK--

FIND AN EXAMPLE of a well-known environmental PRESSURE group that has been successful at CHANGING PUBLIC OPINION, and one that has been less successful and explain why this is.

--TASK--

Identify and explain two reasons why P & P might respond to the pressure group and change what the company is doing.

--LEGAL CONTROLS--

LEGAL CONTROLS come in TWO CATEGORIES:-

1) LAWS that PROHIBIT (MAKE ILLEGAL/BAN) certain business activity.
- - Making certain areas 'protected'.
  - Making it illegal to dump waste.
  - Banning the production of certain goods e.g. CFCs.

2) FINANCIAL PENALTIES that firms must pay for wrongdoing.
- - Firms must pay for permits to pollute certain levels.
  - Carbon taxes per metric tonne of CO2 emitted.

--TASK--

With reference to the P&P paint, what do you think they could consider if the government was to implement strict legal controls and fine them for the pollution they are creating? What will happen to their costs of production? Why do you think the Government would be reluctant to fine them?

--ETHICAL ISSUES--

--CONFLICTS BETWEEN PROFITS & ETHICS--

ETHICAL ISSUES refer to SUBJECTIVE SITUATIONS in which PRINCIPLES of RIGHT and WRONG vary.
If decisions are made that APPEAR UNETHICAL TO THEIR MAIN CONSUMER BASE then the firm may face BOYCOTTS of their products and ultimately LOSE REVENUE, and PROFITS.

--EXAMPLES--

Buy from a supplier which uses CHILD LABOUR? ZARA TESCO
GIVE BONUSES despite having to LAY OFF WORKERS? LINK
RAISE PRICES of NECESSITIES ('GREEDFLATION')? LINK LINK
Hire workers on ZERO-CONTRACT HOURS? LINK

--TASK--

FIND AN EXAMPLE of a well-known incident in which BUSINESS ETHICS have been called into question.

--TASK--

Q. Identify and explain two possible ethical issues that AH should consider. 8

--RESPONSES TO ETHICAL ISSUES--

Faced with possible boycotts firms can respond in various ways:

Buy from ethicl suppliers

CSR

--LINK: WORLD'S MOST ETHICAL COMPANIES--

--REVISION MATERIALS--

--2 MARKERS--

--4 MARKERS--

AHP Identify and explain two ways in which AHP might have an impact on the environment.

--6 MARKERS--

--8 MARKERS--

(DH) Explain the externalities of each of the following: The external cost of large amounts of rubbish left on the beach, The external benefit of a new motorway from Main City to Downtown.
(DDC) The Government is expanding the public sector provision of health care including dentist clinics (see Appendix 1). Identify and explain two external benefits to the rest of society of this increased provision of health care for poor families. 8
(DADS) The Government wants to encourage people to get fit and become healthier (see Appendix 3). Identify and explain two possible external benefits of an increase in the number of dance studios. 8
(P&P) Identify and explain two reasons why P & P might respond to the pressure group and change what the company is doing. 8
(AH) Identify and explain two possible ethical issues that AH should consider. 8

--12 MARKERS--

(MF) Consider the possible external costs and external benefits resulting from MF’s new product. Recommend whether the Government should encourage MF to produce this new product. Justify your answer. 12
(P&P) P & P production results in external costs as outlined in Appendix 3. Consider the external costs and external benefits of the production of paint by P & P. Recommend whether the Government should take any action. Justify your answer. 12

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