Ethical and environmental considerations

Modern businesses are judged not only on profit but on how they make it. Customers, staff, regulators and investors all scrutinise ethics and environmental impact. AQA expects you to understand the trade-offs and the role of pressure groups.

Ethics in business

Business ethics = principles guiding decisions about right and wrong. Common areas:

• Fair pay — minimum wage, living wage, fair pay between executives and workers (FTSE-100 CEOs earn ~118× median UK pay).
• Worker conditions — safe workplaces, reasonable hours, no child labour, freedom to unionise.
• Honest marketing — truthful product claims, no misleading promotions, no hidden charges.
• Fair pricing — not exploiting captive markets (e.g. petrol stations on motorways).
• Tax — paying corporation tax in the country where profits are earned (Amazon, Starbucks have faced public backlash for tax structures).
• Supply chain — Modern Slavery Act 2015 requires UK firms to report on slavery risks.

Environmental considerations

• Pollution — air (vehicle emissions), water (industrial discharge), land (chemicals, plastics).
• Greenhouse gases — CO₂, methane. Net Zero by 2050 is UK law.
• Waste and recycling — single-use plastics, food waste, e-waste.
• Resource use — water, raw materials, deforestation.
• Biodiversity — habitat destruction, palm oil and rainforests.

The UK has banned single-use plastic plates, cutlery, balloons (Oct 2023). The Plastic Packaging Tax (April 2022) charges £210/t on packaging with under 30 % recycled content.

Why ethics and environment matter to business

Customer pressure

• ~60 % of UK consumers say they consider sustainability when buying.
• Younger consumers expect brands to act on social issues.
• One bad story can collapse sales (Boohoo Leicester factory pay scandal 2020 — share price fell 20 %).

Employee attraction

• Staff want to work for companies with values.
• 76 % of UK graduates research a company's ESG record before applying.

Investor pressure

• ESG (Environmental, Social, Governance) funds manage trillions of dollars.
• Companies with poor ESG ratings struggle to raise capital.

Regulation

• Plastic packaging tax, Modern Slavery Act, Equality Act, energy performance certificates, carbon-emission targets.
• Penalties for non-compliance can be huge (Rolls-Royce £671 m fine for bribery, 2017).

The trade-off with profit

Ethical and environmental practice often costs more:

• Higher input costs — Fair Trade beans cost coffee roasters more than commodity beans.
• Investment — solar panels, electric fleet, recyclable packaging.
• Time — ethical audits, ESG reporting.
• Reduced sourcing options — banning suppliers with poor labour records.

But there are upsides:

• Premium pricing — customers pay more for ethical brands (M&S charges more for Fair Trade).
• Reduced regulatory risk — fewer fines, smoother permits.
• Talent attraction — better staff, lower turnover.
• Investor preference — cheaper capital.
• Long-term cost savings — energy efficiency cuts utility bills; lower waste = lower disposal costs.

The trick is to act early — proactive firms set the agenda and price; laggards get stuck with the cost.

Pressure groups

Organised groups that campaign on specific issues. They influence businesses through:

• Public campaigns — protests, social media, news coverage.
• Boycotts — Greenpeace, Nestlé infant formula 1970s; Shell North Sea Brent Spar 1995.
• Lobbying — meeting MPs, regulators.
• Shareholder activism — buying shares to attend AGMs and force votes.

Examples:

• Greenpeace — environmental campaigns, often dramatic stunts.
• Friends of the Earth — environmental policy lobbying.
• Stonewall — LGBTQ+ rights in workplaces.
• War on Want — campaigning on global poverty and corporate tax avoidance.

Successful pressure-group campaigns can force rapid change. Greenpeace's 2010 KitKat campaign got Nestlé to commit to sustainable palm oil within months.

Examiner tips

When asked about trade-offs, give both the cost and benefit, and conclude with a balanced view. "Investing in solar panels costs M&S £8 m, but reduces energy bills and protects the brand." Always link to a real-world example and a stakeholder.