Ethical & Environmental Considerations
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 committed to cutting its carbon footprint, it invested in land restoration and renewable energy. 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. An OCR answer will always weigh both sides.
Treatment of Workers
Ethical treatment of workers covers pay, safety, hours, and dignity at work. Paying above the legal minimum wage raises staff costs but often cuts turnover and training bills. John Lewis pays a share of profits to all staff (called ‘partners’) — the scheme has run since 1929 and is one of the reasons staff retention is so strong. In 2020 Boohoo was accused of buying from Leicester suppliers paying far below the minimum wage; the share price dropped sharply and the company commissioned an independent review.
Treatment of Suppliers
Businesses choose how hard to push the firms that supply them. Ethical treatment means paying a fair price, paying on time, and checking that suppliers themselves are not using unsafe conditions or modern slavery. Tony’s Chocolonely, the Dutch chocolate brand sold widely in UK supermarkets, was founded in 2005 after journalist Teun van de Keuken discovered child and forced labour in West African cocoa supply. Tony’s buys directly from farmer cooperatives at a premium above market price and traces every bean — a genuinely slavery-free supply chain. Big supermarkets that delay supplier payments by 60 or 90 days often face legal and reputational challenge for squeezing small farmers.
Treatment of Customers
Ethical treatment of customers means honest advertising, safe products, clear terms, and genuine after-sales support. In 2015 Volkswagen was caught fitting ‘defeat devices’ to hide the true emissions of its diesel cars — the dieselgate scandal cost the firm over thirty billion dollars in fines and lost sales, and damaged its brand for years. Consumers punish firms that mislead them, and regulators increasingly back them up.
Sourcing of Materials and Marketing Decisions
Ethical sourcing means choosing raw materials from suppliers who meet ethical and environmental standards — Fairtrade coffee and chocolate, certified sustainable timber, cotton that is not picked by forced labour. It also means saying no to cheap options that fail those tests. Greggs sells only Fairtrade coffee in its UK shops, accepting the higher cost in exchange for credibility with customers.
Ethical marketing means not targeting vulnerable groups (gambling adverts around children’s TV), not exaggerating product claims, and being honest about ingredients and origins. The UK’s Advertising Standards Authority can order a misleading advert to be withdrawn and name the firm responsible.
The Ethics-Versus-Profit Trade-off
A trade-off is when a business must give up something in one area to gain in another. Paying a UK living wage raises staff costs — but can cut staff turnover 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 long-term: Patagonia, the outdoor brand, built its entire identity on environmental responsibility (it famously ran 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.
Pressure groups and consumers amplify unethical behaviour fast. Greenpeace campaigns have forced tuna brands to switch to pole-and-line fishing to protect dolphins; PETA campaigns have pushed cosmetics firms to stop testing on animals. Social media means a single factory-scandal video can reach millions before a PR team drafts a response.
The message is clear: unethical shortcuts can generate short-term profit, but when 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. Supermarkets charge for carrier bags; Starbucks and Pret offer discounts for reusable cups; Deliveroo is testing electric bikes and cargo cycles for last-mile deliveries.
Sustainability means meeting today’s needs without using up resources future generations will need. The UK’s net-zero target has pushed firms into electric vans, energy-efficient buildings and carbon offsets.
Waste disposal: recycling is now a standard cost. Costa Coffee runs cup-recycling schemes; Tesco takes back soft plastic at its stores. Pollution: older, more polluting vehicles pay a daily charge in UK clean-air zones such as London’s ULEZ. Climate change: sourcing, transport and packaging all generate carbon — McDonald’s has committed to sourcing fish only from certified sustainable fisheries and beef from farms with reduced methane emissions, protecting its future supply chain while cutting the impact today.
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 of greenwashing — claiming green credentials without genuine action. Customers and regulators are quick to spot and punish this.
Benefits include stronger brand reputation, the ability to charge premium prices, better staff retention, and early compliance with future laws. When governments later tighten rules, ethical firms do not need to scramble. Ethics and sustainability are no longer optional — they shape what materials a firm uses, how it hires, what it claims in adverts, and how quickly it can react when a new law lands.
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.