9. Ethics, the Environment & Business

Why have ethical and environmental considerations become increasingly important to businesses?

Because consumer concerns can quickly damage a business or brand reputation, making it essential for businesses to act responsibly to maintain consumer trust and loyalty

Why are ethical and sustainable practices essential for businesses?

Many business stakeholders demand greater accountability and transparency, even though they may be costly

How can ethical and environmental practices impact a business's profitability?

They can add value to a company's brand, potentially increasing its profitability by appealing to conscious consumers and enhancing its reputation

How can implementing ethical practices affect a company's profit margin?

Using sustainable materials and ensuring fair labour conditions, for instance, can increase costs for a company. For example, H&M faced criticism for sweatshops and responded by adopting ethical practices, which, while improving its reputation, also impacted its profit margin

How can responding to environmental criticisms impact a company's profit margin?

When companies, like McDonald's, respond to environmental criticisms (e.g., deforestation due to palm oil production) by adopting sustainable practices (e.g., sourcing sustainable palm oil), it can increase costs. While these ethical actions improve the company’s reputation, they may negatively impact the profit margin due to the higher costs associated with sustainable sourcing

What are pressure groups?

Organisations that seek to influence public policy or business practices

How did pressure groups, like Greenpeace, influence a company’s marketing mix?

Pressure groups, like Greenpeace, pushed companies, such as Nestlé, to change their practices, such as sourcing sustainable palm oil. In response, Nestlé had to adapt its marketing mix by changing packaging and labelling to reflect its commitment to sustainability. The company also had to invest in advertising campaigns to communicate this message to customers, which increased its costs