Ethics, Environment & Sustainability
Doing the Right Thing — at a Price
When Primark found in 2013 that a factory in Bangladesh it bought clothes from had collapsed, killing more than a thousand workers, it faced a choice: keep paying the lowest price for garments or spend more to audit suppliers and improve conditions. When BrewDog set out to cut the carbon footprint of its Ellon brewery, it paid for biogas and anaerobic digestion plants. These are classic examples of ethical behaviour — doing what stakeholders consider fair and honest, even when it costs more.
Acting ethically usually raises costs — higher wages, better-sourced materials, environmental clean-up — but can also raise revenue and loyalty by winning customers who care. Exam questions on ethics usually ask you to weigh both sides.
The Ethics-Versus-Profit Trade-off
A trade-off is where a business must give up something in one area to gain in another. Paying a UK living wage above the legal minimum raises staff costs — but can cut staff turnover and training costs, and build brand reputation. Switching to recyclable packaging raises material costs — but can attract new customers and avoid future regulation.
Sometimes the ethical choice is profitable in the long run. The outdoor brand Patagonia built its entire identity on environmental responsibility — even running a ‘Don’t Buy This Jacket’ ad — and grew faster than rivals. But in the short run, ethical choices can hit profits and test shareholders’ patience.
In 2015 Volkswagen was caught fitting ‘defeat devices’ to hide the true emissions of its diesel cars. The scandal, known as ‘dieselgate’, cost the firm over thirty billion dollars in fines and lost sales, and damaged its brand for years. In 2020 the UK fashion retailer Boohoo faced accusations that its Leicester suppliers paid staff far below the minimum wage — its share price dropped sharply and the company commissioned an independent review.
The message is clear: unethical shortcuts can generate short-term profit, but when the media, regulators or customers find out, the long-term cost usually outweighs the gain.
Environmental Considerations
Every business decision has an environmental footprint. Operations generate traffic congestion (think of Amazon vans on every street), noise and air pollution, and waste that ends up in landfill. Consumers, councils and governments increasingly expect businesses to act on this. Supermarkets charge at least 10p for carrier bags; Starbucks and Pret offer discounts for reusable cups; Deliveroo is testing electric bikes and cargo cycles for last-mile deliveries.
Recycling is now a standard cost of doing business. Costa Coffee runs cup-recycling schemes; Tesco takes back soft plastic at its stores. Pollution is regulated too — firms that breach emissions rules face fines, and vehicles in UK clean-air zones pay daily charges.
Sustainability means meeting today’s needs without using up resources future generations will need. Global warming has pushed governments to set net-zero targets, which ripple down into business decisions: electric vans, energy-efficient buildings, carbon-offset schemes.
Scarce resources are a further concern. Fish stocks, rare earth metals for electronics, and fresh water are all finite. Businesses that rely on them need long-term plans — otherwise their own inputs run out. McDonald’s, for example, has committed to sourcing fish only from certified sustainable fisheries, protecting its future supply chain.
Costs and Benefits of Ethical and Green Behaviour
Costs include higher-priced raw materials, staff training on new procedures, investment in cleaner technology, and the risk that ethical decisions are used as marketing without real change — known as greenwashing. Customers and regulators are quick to spot and punish this. In 2022 the UK’s Competition and Markets Authority opened investigations into whether major fashion retailers’ ‘sustainable’ labels were accurate.
Benefits include stronger brand reputation, the ability to charge premium prices, better staff retention (employees want to work for responsible firms), and early compliance with future laws. When governments later tighten rules, ethical firms do not need to scramble.
Environmental impacts of business activity include traffic congestion, noise and air pollution, waste sent to landfill, and the use of scarce resources. Sustainable practices aim to reduce each of these without shutting the business down.
Ethics and sustainability are no longer optional extras. They shape what materials a firm uses, how it hires, what it dares to claim in adverts, and how quickly it can react when a new law lands. Businesses that plan for them early pay less and earn more loyalty than those forced to react under pressure.