Page 323 - Cambridge IGCSE Business Studies

25: Environmental and ethical issues

■ taking legal action against pressure groups
■ defending business decisions in order to improve their image, which may have
been damaged by pressure groups.
Why businesses respond to environmental pressures
If a business fails to respond to environmental pressures, then it may face the
following threats.

■ The business’s reputation may be damaged. It may lose customers, employees and
investors.
■ The business may be closed down if government regulations to use greener
methods of production are not followed.
■ Inability to meet government regulations may create legal problems for businesses.
■ Pressure groups may oppose the business, produce negative publicity and prevent
a company’s growth.

Pressure groups may also have a positive infl uence. They may approve businesses

that have environmentally friendly practices, which gives businesses good publicity.
Opportunities presented by environmental pressures
Businesses respond to environmental pressures because environmentally friendly
practices may have benefi ts.

■ Recycling and using energy efficient machines may lead to cost savings.
■ Governments may provide financial incentives to encourage firms to use
321
environmentally friendly methods of production.
■ Publicity gained from greener methods can attract new customers, employees and
investors and keep existing ones.
■ Telecommuting (working from home) benefits the environment and is a great
motivator for employees.
■ The green revolution has led to the growth of new businesses dealing with
environmental management.
■ Following government regulations and standards can give a firm a competitive
advantage over other businesses.

EXAMPLE

Futuris is a company that has developed and benefited from the environmental pressures faced by businesses. The Costa
Rican environmental management company provides environmental advice to companies worldwide.

The role of legal controls
Governments use legal controls to limit the negative effects of business activity on

the environment. Some examples are listed below.

■ The government may impose penalties in the form of fines, closure of facilities
and imprisonment on businesses that ignore pollution targets or waste disposal
regulations.
■ It may charge a levy or tax on the commercial use of energy. It is hoped that this will
encourage businesses to be more energy eff icient.