Page 325 - Cambridge IGCSE Business Studies

25: Environmental and ethical issues

Some businesses, however, do not behave in an ethical way. Some examples of
unethical business practices are shown in Table 25.5:

Sector Examples of unethical practice

Finance ■ Failing to tell customers about extra/add on costs.
■ Insider trading (trading of company’s stocks by individuals
having knowledge of non-public information).
Marketing ■ False advertising of their products and services.
■ Providing products and services that are unsafe for use.
■ Non disclosure of risks associated with the product
or service.
Human resources ■ Unfair payment to employees, for example unequal pay for

the same work done by different groups of people.
■ Use of child labour.
■ Production in sweatshops, where the working environment
and hours do not meet health and safety standards.
■ Discrimination of employees based on gender, ethnic group,
religion and age.

Operations ■ Dumping: selling products at very low cost internationally so
as to drive out competition.
■ Improper waste disposal.
■ Exceeding of pollution limits set by the government.

Table 25.5 Unethical business practices
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EXAMPLE

A pesticide factory in Bhopal, India, owned and operated by Union Carbide India Limited, leaked large and fatal amounts of
a highly poisonous gas in December in 1984. This was responsible for the death of around 8,000 people. Aft erwards many
children were born with birth defects.
Poor maintenance, lack of quality control and safety regulations not being followed led to the disaster. Chemicals
abandoned at the plant continue to leak and pollute the groundwater. The government of India had to settle for $470 million
in compensation from Union Carbide, although the damages to the region have been estimated to cost $3.3 billion. No
amount of money, however, can compensate for the disaster caused by the company’s unethical business practices.

EXPLORE! Not all businesses are unethical. For example, many businesses set ethical
objectives. Most businesses choose to treat their suppliers and workers fairly by
Amnesty International is a paying reasonable prices and wages and providing good terms and conditions.
worldwide campaign to end

These businesses also make an effort to avoid the use of child labour, use recycled

abuse of human rights and
unethical practices. Find out materials and try to consider the environmental impact of their operations. Fair
about other pressure groups that Trade is one such initiative. Fair Trade is a global campaign about trying to ensure
have an international presence. better prices for producers, fairer working conditions, and promoting sustainability
Are there any pressure groups
for producers in developing countries. Other organisations such as Starbucks have
that are currently active in your set up their own charitable foundations to help the communities which supply them
country?
with products.
Some businesses will always aim to provide goods that are safe to use and not
try to mislead customers. Legislation also exists as a form of protection against
those businesses that try to exploit other stakeholders.