Study Notes
Environmental and ethical issues in business involve understanding how business activities impact the environment and society, and the importance of sustainable development and ethical decision-making.
- Social responsibility — when a business makes decisions benefiting all stakeholders, not just shareholders. Example: Reducing air and noise pollution from production processes.
- Global warming — the gradual increase in Earth's temperature due to pollutants. Example: Emissions from excessive fossil fuel use.
- Externalities — costs or benefits affecting third parties not involved in a transaction. Example: Noise pollution from a purchased speaker affecting neighbors.
- Sustainable development — economic growth that does not harm the environment or future generations. Example: Using solar panels to reduce resource depletion.
- Pressure groups — organizations aiming to influence businesses or governments to adopt certain policies. Example: Consumer boycotts to promote socially responsible production.
- Ethical decisions — choices based on moral principles, often beyond legal requirements. Example: Avoiding harmful practices even if they are legal.
Exam Tips
Key Definitions to Remember
- Social responsibility
- Global warming
- Externalities
- Sustainable development
- Pressure groups
- Ethical decisions
Common Confusions
- Confusing private costs with external costs
- Misunderstanding the difference between legal and ethical decisions
Typical Exam Questions
- What is an external cost?
An external cost is a cost borne by society due to business activities. - How can businesses contribute to sustainable development?
By using renewable energy and recycling. - Why might a business choose to make ethical decisions?
To improve public image and avoid legal issues.
What Examiners Usually Test
- Understanding of how business activities impact the environment
- Ability to explain the concept of externalities
- Knowledge of sustainable development practices
- Awareness of ethical issues in business and their implications