A-Level OCR Religious Studies - Ethics - Business Ethics

What are stakeholders?

Individuals or groups who can affect or are affected by the actions of an organisation.

What are shareholders?

Those who own and make money from shares in limited companies.

Who was Milton Friedman?

Neoliberal US economist supporting laissez-faire capitalism.

What did Friedman say about social responsibility?

- 'The social responsibility of a business is to increase profits'.

- Businesses are not obliged to provide extra care to workers or society.

- As long as a business is in free competition without fraud or deception or law-breaking, it is fine and has no extra responsibility.

How could Friedman's position on social responsibility be justified?

Profit benefits the economy and citizens if you follow trickle-down theory so it may still be helping society.

What do supporters of Friedman liken taking money for CSR to?

Stealing from shareholders.

What is CSR?

Corporate social responsibility - the voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations.

How much has the UN committed to ethical investments?

£34t.

What is Freeman's quote on business responsibility?

"The basic idea is...businesses should create value for customers, suppliers, employees, communities and financiers."

- Pro-CSR.

Examples of internal stakeholders.

- Employees

- Managers

- Owners.

Examples of external stakeholders.

- Government

- Society

- Suppliers

- Customers.

Compare Friedman and Freeman's views on profit and stakeholders.

Friedman: Company > Profit > Shareholders

Freeman: Company > Stakeholders > Profit

What can ethical responsibilites do to corporations?

Oblige them to do what is right even if not legally compelled to.

How would utilitarians approach CSR?

- Consequences for the greatest good.

- Could be interpreted via profit/maximising income for society or for greater CSR in society.

- Greatest good should set selfish interests of business aside to work in stakeholders' interests.

- Utility maximised for stakeholders e.g. employment rights.

How would Kantians approach CSR?

- Doing one's duty to be moral.

- Maxim of not lying - businesses must be transparent.

- Workers and stakeholders should not be a means to an end.

- Companies should ensure good working conditions and a balance of employee/company interest.

What are some issues with Kantian ethics and CSR?

- Isn't all employment a 'means to an end'? Therefore it kind of has to treat people that way or it wouldn't work.

- What if 'duty' is rationally deduced to be profit instead of emotional tendencies to be responsible to society?

What are issues with applying utiltiarianism to CSR?

- How do we quantify majority happiness?

- Could this allow tyranny of the majority?

- When we start quantifying human life and ethical considerations, we end up in dilemmas like the Ford Pinto.

What is the background of the Ford Pinto?

- Ford rushed production to keep up with Japanese competition.

- Major fault where gas tank position left it vulnerable to collision with fire that could engulf the passengers.

- This was technically legal as legislation said tank should only be intact under 20mph.

How did Ford judge whether the Pinto should be sold?

- 12.5 million estimated to be sold with £11 to redesign per, which would cost £137 million.

- Based on quantifying value of human life, the results of the possible death would only cost £49 million.

- Therefore according to a utilitarian approach, it would be better to release it with the fault than to fix it. There would be lots of suffering for a few rather than widespread costs for everone.

How may the Ford Pinto case not be utilitarian?

- Giving life and death monetary value may not fit with hedonic calculus e.g. purity, intensity and fecundity.

- Were higher and lower pleasures or rule-utilitarian approaches considered?

How is Body Shop an ethical business?

- Certified B-Corp (highest standard of social/enviornmental performance, balance of profit & responsibility.

- Promotes social justice, fairtrade & youth programmes.

- No animal testing, 100% vegan by 2023.

- Supply-chain transparency - zero tolerance of rights infringements.

Why are some concerned with Body Shop now?

- After sale to L'Oreal and other companies, most recently an Australian investment firm, some worry it is too capitalistic and less focused on CSR for its own sake.

- 82 stores closed and went into administration in 2024. Did it trade off success and secure jobs for ethics?

What is Laughing Man Coffee?

- Hugh Jackman

- Supports local community & children

- Good working conditions

- Transparent supply chain

- High prices.

What would Kant say about Laughing Man Coffee?

It is putting the people and community first - categorical imperative.

What are benefits of good ethics in business?

- Better image.

- Tap into new target demographics.

- May give a Unique Selling Point that increases profitability.

- Supports rights and better for employees.

What are drawbacks of good ethics in business?

- Added consumer costs.

- Just 'hypocritical window-dressing'?

- Doesn't override rights abuses and previous bad ethics.

- May not actually benefit those with the most suffering.

- Higher overheads.

- False expectations.

What was the Nestle milk scandal?

- Sold powdered milk for babies in developing countries with little clean water.

- Encouraged hospitals to give this milk fore free.

- Once babies on milk, they no longer have breast milk.

- Nestle then started charging for the milk, mothers couldn't pay and didn't have any more breastmilk, plus no clean water.

- Accusations of crime & genocide.

How many were killed as a result of Nestle baby formula in countries without clean water?

10,870,000

What are concerns around Nestle child labout?

- Accusations of slavery and child trafficking.

- 2.1 million children in West Africa still harvest cocoa in dangerous conditions.

- In 2019, Nestle 'couldn't guarantee' child labour wasn't being used.

How is Nestle still a highly successful business?

447 factories in 189 countries with 300,000 workers. A utilitarian may say that this provision of jobs outweighs deaths caused.

What does Julian Baggini say about CSR?

CSR pressure today is mostly business-focused and around profit so doesn't guarantee real ethics.

What would Kantians and Utilitarians say about the motivation behind CSR?

Kantians: Good-will - if CSR is out of profit it is bad, but if it is out of genuinely helping the community it is good.

Utilitarians: If consequences are good, motivation is irrelevant.

Why may CSR be hypocritical window-dressing?

- It seems to help the business' profit in the long run.

- May just be for perception.

- May not be altruistic, just to attract new customers e.g. Pride month branding.

- Often for PR e.g. Ben & Jerries being eco but now sourcing from some questionable farms.

What is a quote on why CSR by some corporations may be meaningless in the face of prior injustices.

"Jeff Bezos wants to start a school for kids whose families are underpaid by people like Jeff Bezos".

What is a worry of businesses even if they do have CSR policy?

They are often anti-union, do not protect workers and do not pay taxes - just having CSR doesn't fix this.

What is a quote around doing good vs prior harm in CSR?

"We don't need you to do more good, we need you to do less harm".

Why may CSR not be hypocritical window-dressing?

- Many CSR actions do not benefit profit and may even have negative impacts on profit e.g. Body Shop.

- Large pressure to act ethically - can we really call them hypocritical with this societal pressure?

- It can't just be window-dressing if they are accountable to law around rights & responsibility.

- Some do good for workers too e.g. Cadbury building schools & parks for workers.

- Duty does not equal profitability.

- Many companies who make the most money do not have large CSR e.g. Apple. A potential loss is often accepted for greater good.

What is whistle-blowing?

Calling attention to wrongdoing, including ethical issues within a business.

Why can whistle-blowing be a punishing experience?

- Duty of loyalty within a business.

- Complicity for those who don't whistle-blow.

What did Edward Snowden do?

- Leaked US and UK government security.

- Employee of NSA In US.

- Found the NSA monitored lots of citizens. Exposed as was worried of government surveillance.

- Fled to Hong Kong then sought asylum in Russia due to fears.

- Would be considered a criminal in US due to threats to national security.

Why could Friedman's views be used against the case of someone like Snowden?

"Employee has direct responsibility to his employers"

- May have contracts/NDAs which whistle-blowing breaks.

- Conflicts of interest.

What is the Enron whistle-blowing case?

- 7th biggest US corporation lost money after 1997. Tried to hide losses to avoid stocks falling.

- Overvalue concerns after 2001 - prices fell and insiders cashed out.

- 20,000 jobs lost after bankruptcy filed.

- Some executives imprisoned or fined.

- Former VP Sharon Watkins was previously fired for raising fraud concerns.

What was a worry in the US around the Enron scandal which disadvantaged whistle-blowers?

No legal protections or rights for corporate whistle-blowers who may be fired or mistreated.

What did Sharon Watkins say about her situation at Enron?

"The isolation is momentous when you've spoken truth to power."

Why is whistle-blowing good?

- Necessary feature of modern business.

- Ethics centring on openness.

- Accountability.

- Limits corruption potential.

Criticisms of whistle-blowing?

- Company-sensitive info may be revealed, could unfairly help rivals.

- Does company have moral right?

- Damage to whistleblowers lives/reputations.

- Could cause job loss.

- Universality of morality?

- Just a publicity stunt?

What are questions around a Kantian position on whistle-blowing?

- Honouring contracts?

- Universal maxim of anti-corruption?

- Who is our duty to?

- Moral good of exposing lawbreaking?

What are questions around a Utilitarian position on whistle-blowing?

- Utilitarian would consider wider society beyond the narrow concerns of business.

- Maximising good from revealing information.

- Societal benefits as whole.

What does globalisation result in?

- Increased trade, greater dependence on global economics.

- Freer movement of goods, people, services, capital.

- TNCs operating in LICs.

- Creates wealth but maintains inequality gap.

How many restaurants does McDonald's have in how many countries?

30,000 restaurants, 119 countries.

Positives of globalisation?

- New jobs and skills.

- TNCs provide wealth and foreign currency.

- Money can improve education, health, infrastructure etc.

- Cultural connectivity.

- Increased awareness and cooperation on global issues.

- Increased awareness of global events.

Negatives of globalisation?

- Operates in interest of rich at poor's expense.

- Money doesn't always go into the local community.

- TNCs can use big economies of scale to put locals out of business.

- Absence of enforced laws often allows unsustainable and unethical TNC activity.

What happened in Rana Plaza?

- Illegal floors added to weak structure.

- Cracks noticed but ignored. Plaza collapsed

- 5 factories in the plaza.

- 1,100 dead.

Why were factory owners responsible in Rana Plaza?

- Illegally built floors.

- Forced workers to work even when building cracks noticed.

- Murder charges pressed by authorities, including Sohel Rana.

Why were the government responsible in Rana Plaza?

- Corruption and failure to enforce compliance.

- Focused on keeping costs low above upholding building codes.

- Removed tariffs allowing more TNCs.

- Politicians protecting unethical business owners.

Why were TNCs responsible in Rana Plaza?

- Used cheap labour. Do not pay well for orders.

- Forced lower costs.

- Did not give effective compensation.

- Too focused on profit over human life.

What is the Nike sweatshop scandal?

- Indonesian sweatshops paying $1.25 daily (1990s).

- Forced workers to live in 9x9 concrete boxes surrounded by sewage, shared bathrooms.

- Wage was too low to live on so many worked overtime and long hours.

- Refused interviews with investigators despite claiming they have 'nothing to hide'.

Why was Nike scandal bad environmentally?

- Burned waste clothes and leftover materials with toxic fumes.

Why couldn't workers speak out in Nike scandal?

- Forced to stay quiet to outsiders and investigators at threat of violent and armed bosses, local mafia and hired security.

- Banned unionising.

- Torture and imprisonment of labour rights activists.

Why do many find Nike's actions unjust from a money POV?

Willing to spend $100,000,000 on Tiger Woods endorsement while paying workers next to nothing.

What does Baggini say about ethical decisions as disadvantage to shareholders and whether businesses should expect extra costs?

"While it would be too much to insist that a company put itself out of business by insisting on moral purity, if a business is not prepared to suffer any costs from having an ethical policy, it has no rights to claim to be an ethical business."

How may utilitarianism protect employers rights against shareholders?

There are more employees than shareholders typically, so for the greatest good for the greatest number (utility principle) they should be preferred.

How could utilitarianism allow unethical acts like bribery, slavery etc. in business when improperly applied?

As there are more customers than employees, it could be seen as justifiable to do anything so customers are kept happy with cheap goods.

If the hedonic calculus or utilitarian rules were followed properly, this could be avoided.

Why would Kant reject the idea of business responsibility mainly being on shareholders?

This would be treating the workers as a means to an end - this is not imagining yourself in a kingdom of ends.

What for Kant is more important than profit?

Duty to moral maxims.

What does Singer believe about ethical business decisions?

They need to weigh interests of all stakeholders, not just shareholders.

How would Mill's context lead him to reject Nike sweatshops?

He, alongside Bentham, was a social reformer and so would be appalled at treatment of workers. Mill supported safe working conditions, holidays & education.

Why do some utilitarians support globalisation?

The net benefits may outweigh the deficit and damage caused, as it brings the greatest happiness for the greatest number.

Why do some utilitarians reject globalisation?

It certainly isn't fulfilling 'higher pleasures' even if fulfilling lower material ones. This is because it leads to deforestation, environmental destruction and harms our welfare & happiness.

Why would Kant strictly oppose the Nike sweatshops?

If acting in a kingdom of ends, safe working conditions, a decent wage and no child labour would be required. Nike have not behaved as law-making individuals in a kingdom of ends and have used people as means to end for the sake of profit, so haven't followed duty and have prioritised hyp. imperative over cat.

Why may the teleological nature of utilitarianism disadvantage it when applied to business ethics?

It is based on consequences and predicting results, not the actions themselves which cause these results. This may limit how helpful it is in certain situations.

Why may the complexity of the hedonic calculus damage utilitarianism's success as an approach to business ethics?

It is impractical to apply to every business decision and may be swayed/used subjectively for ulterior goals e.g. Pinto scandal.

Why may utilitarianism be too flexible for business ethics?

As there are more customers than employees, it could potentially justify any actions so customers are kept happy with cheap goods.

Why is universalising acts a good approach to ethical business?

It would prevent lying, cheating, stealing and exploiting as to not treat people as a means to an end.

Why may conflicting duties limit the efficacy of Kantian Ethics when approaching business?

Duties to shareholders vs duties to customers may conflict - Kant doesn't prove a clear way to manage overlapping maxims. Similarly, is the business accountable to the workers or the customers?

What is negative vs preference utilitarianism?

Negative - Promoting the least amount of harm for the greatest number. This may be a stronger theory as greater harms have more consequences than greater goods, preventing these could improve ethics e.g. in stopping sweatshop exploitation.

Preference - Defines good as the fulfilment of preferences. This could be misused to justify preference of customers over ethical treatment of workers.