Ethical Practice in a Global Context
Business Management and Enterprise (Year 12) - Environments (U4)
Ethical practice means that a business is operating while considering the rules and standards for good conduct and practice. It refers to conduct that is compatible with domestic legislation, international conventions and a company’s own ethical principles.
International Labour Organisation (ILO), in relation to child labour
The ILO was established in 1919 as part of the Treaty of Versailles, and brings together governments, employers and workers of 187 member states. They aim to set labour standards, develop policies and devise programmes promoting decent work for all people.
The ILO’s main aims include promoting rights at work, encouraging decent work, enhancing social protections and strengthening dialogue in work-related issues.
Decent work includes the aspirations of people in their workling lives, including rights, voice, recognition, fairness, personal development and more.
International labour standards are legal instruments set by the ILO’s constituents. They set out basic principles and rights at work. The eight conventions are below:
The Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87)
The Right to Organise and Collective Bargaining Convention, 1949 (No. 98)
The Forced Labour Convention, 1930 (No. 29) (and its 2014 Protocol)
The Abolition of Forced Labour Convention, 1957 (No. 105)
The Minimum Age Convention, 1973 (No. 138)
The Worst Forms of Child Labour Convention, 1999 (No. 182)
The Equal Remuneration Convention, 1951 (No. 100)
The Discrimination (Employment and Occupation) Convention, 1958 (No. 111)
An example of a project by the ILO is the ‘Clear Cotton Project on Child Labour and Forced Labour’. This project supports Burkina Faso, Mali, Pakistan and Peru, by contributing to a sustainable cotton, textile and garment value chain, free of child and forced labour. It involves reviewing regulatory framework and collaborating with governments.
The Minimum Age Convention 1973 (No. 138) sets the general minimum age for work at 15 years (13 for light work). The minimum age for hazardous work is 18 (16 under certain strict conditions). It provides the possibility of setting the minimum age at 14 (12 for light work), where the economy/educational facilities are insufficiently developed.
The Worst Forms of Child Labour Convention, 1999 (No. 182) requires members to eliminate all forms of child labour, such as slavery and sale of children, which are likely to harm the health, safety or morals of children. It requires states to provide the necessary and appropriate assistance for the removal of child labours. Member states must ensure access to free, basic education and if possible, vocational training for children removed from the worst forms of child labour. It defines a child as anyone under 18.
Child labour refers to the exploitation of children through any form of work. It is a violation of fundamental human rights and has been shown to hinder children’s development, which could lead to lifelong physical and psychological damage.
There are approximately 152 million children worldwide that engage in child labour.
Child labour is most prevalent in the agricultural sector, accounting for 71% of child labour (this equates to about 108 million children).
From 2000 to 2016, child labour has fallen by around 94 million children.
The standards set by the ILO aim to reduce child labour.
Corporate Social Responsibility (CSR)
CSR refers to a firm’s ethical responsibilities towards its stakeholders. It can be viewed as a business’ "conscience" and helps govern their operations and decision-making.
CSR encompasses all the ethical responsibilities a business owes to all its stakeholders. This refers to their conduct with regard to ethical principles - such as honesty, fairness and equity.
A stakeholder refers to any individual, group or entity that is influenced by or influences a business. These responsibilities may come into conflict in the short- and long-term.
Examples of stakeholders who can influence a firm can include the following:
Shareholders may pressure management to change their social stance.
Government legislation aims to embed societal values in law to reconcile the differing needs of stakeholders.
Local communities want business aid and firms want community support.
Ethical guidelines can be used to help a business make decisions.
Reactive approaches are when a business responds to changes/restrictions. A proactive approach is when the business shows initiative and ‘goes above and beyond’.
The following are basic ethical guidelines (reactive to proactive):
Obey the law
Tell the truth
Show respect for people
Treat others as one wants to be treated
Utilitarianism - doing the greatest good to the most people and the least harm to the least
Do no harm
Practice participation, not paternalism (paternalism involves restricting the freedom of subordinates)
Always act when you have responsibility
Publicity approach – when a decision is made, do so knowing that in the future, those affected by the decision may know everything that you know currently
Business operations that consider environmental sustainability will keep in mind the needs for future generations.
Businesses must consider their impact on the environment at each stage of the production process. The production cycle refers to the input stage (carbon footprint, sustainable resources, ecological inputs), the production stage (energy mix, carbon capture, recycling) and the output stage (packaging, life cycle, transportation).
The carbon footprint is the total set of greenhouse gas emissions caused by an organisation, event, product or person. Businesses can measure their footprint and attempt to offset their carbon emissions. The carbon footprint acts as the KPI for environmental sustainability.
Businesses should be environmentally sustainable for the following reasons:
Ethical responsibility as consumers of finite resources
Responsibility to stakeholders, such as the community
The destruction of ecosystems will affect the business' ability to operate
Moral responsibility to be good corporate citizens
MNCs should be role models for good practice
Cost of non-compliance with environmental standards is very high
A business can practice sustainability in the following ways:
Compliance with regulations
Proactive application of best practice standards
Carbon abatement - the reduction of the amount of CO₂ that is produced. Fossil fuel-based carbon abatement technologies (CATs) enable fossil fuels to be used with substantially reduced CO₂ emissions.
Application of new green technologies
Co-funding of R&D into environmentally friendly technologies
Carbon offsets (credits) - A generic term for a tradable permit representing the right to emit a pre-determined unit of carbon dioxide (or the equivalent amount of a different greenhouse gas).
Developing carbon neutral operations
Move to a cleaner energy mix
Consider the lifespan of the product
The Kyoto Protocol is an international treaty which extends the 1992 United Nations Framework Convention on Climate Change. It commits state parties to reduce greenhouse gas emissions, based on the scientific consensus that global warming is occurring and that human-made CO₂ emissions are driving it. This forces firms and governments to act more sustainably and care for the environment.
The Paris Agreement is a legally binding international treaty on climate change. It was adopted by 196 parties in Paris, on 12 December 2015 and entered into force on 4 November 2016. Its goal is to limit global warming to well below 2 degrees Celsius, compared to pre-industrial levels. Under The Paris Agreement, each country contributes to this goal through their Nationally Determined Contributions.
Nationally Determined Contributions (NDCs) are non-binding national plans highlighting climate actions, including climate-related targets for greenhouse gas emission reductions. It also includes policies and measures that governments look to implement to achieve the targets of The Paris Agreement. It refers to how much a country can emit.