In this topic, we will explore some of the global challenges we are facing as a society. Climate change is the biggest risk facing global businesses today. In the next decade, we must see a transformative change to avoid disaster. Business can play a leading role in the solutions we need to create a new normal. In addition to growing social awareness which holds business accountable for its role in fixing global challenges and expects ethical leadership, there is also a high level of trust in business to lead this transformation.
Welcome to Topic 6: Ethical, Responsible and Sustainable Considerations for Operating a Global Business. In this topic, you will learn about:
- Some of the social and environmental challenges facing us as a society
- The link between environment and social issues
- What responsibility business has
- Ethical aspects of globalisation.
These relate to the Subject Learning Outcomes:
- Explain the impact of globalisation on the business environment.
- Outline how global businesses are affected by the type of environment (legal, political, economic, financial and social-cultural) they operate in.
- Discuss the ethical impacts for global businesses with reference to sustainable and responsible practices.
Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.
Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.
Sustainable development is the idea that humans should live and meet their needs without compromising future generations’ ability to flourish and meet their needs.
The following article sets out the theory and background of sustainability. It looks at what sustainable development is, how it has developed across history, and its importance.
Youmatter, 2020, Sustainable development – what is it? Definition, history, evolution, importance and examples, youmatter.
- Read the article
- In your reflective journal, summarise the three (3) main learnings for you personally. To assist with your reflection, think about how much of this you were already aware of, or what shocked/surprised you the most. You can access the reflective journal by clicking on ‘Journal’ in the navigation bar for this subject.
The following video by the United Nations explains the social and environmental challenges we are facing as a society. It shows the extent of the challenges that we are facing and explains the urgency with which we must act. It also introduces Sustainable Development Goals or SDGs. These have been developed following extensive consultation.
United Nations 2020, Urgent Solutions for Urgent times, streaming video, YouTube.
- Watch the video.
In your reflective journal, answer the following questions:
- Why do you think it is important for us to protect the environment?
- What social issues do you feel are most important?
- Why is urgent action needed?
You can access the reflective journal by clicking on ‘Journal’ in the navigation bar for this subject.
We are facing huge threats because of global carbon emissions created by human activity. By 2030 global emissions must be halved, yet current trends have shown increases in our missions. Business has a vital role to play as much of the emissions are caused through their operations. An encouraging trend is the commitment by large businesses to work to a net-zero target. The following article looks at the positive trend in this space as well as discussing the urgency required.
Kelly, C & Herweijer, C 2021, How business can bridge the gap and achieve net zero, PWC.
- Read the article.
The planetary boundaries study the changes we have seen to our environment due to human activity since the industrial revolution.
The planetary boundaries represent nine different scientific measures of human disturbance that act as a threshold. If human disturbance continues beyond these thresholds, there is a substantial risk of destabilising the earth's systems. In essence, the planetary boundaries identify a safe operating space for humanity.
A new documentary features the planetary boundaries and their impacts. The following video is a summary of this documentary. Still Watching Netflix 2021, Sir David Attenborough Presents: Breaking Boundaries: The Science of Our Planet, streaming video, YouTube.
- Watch the video.
- Note down the social and environmental impacts discussed and be ready to discuss this as part of the scheduled seminar.
Increasingly business is taking on a stakeholder approach. This means the business needs to operate with a broader set of outcomes in mind. Profit can no longer be the sole focus, as we have seen in a ‘business as usual’ or a ‘shareholder approach.’
The following podcast series 'Leading With Purpose' looks at the requirements of ethical leadership in today’s global society. This specific episode discusses the importance of ethics and more responsible business practices. Listen out for the attributes stated as being required in a CEO or other leadership position today.
David Gonski on corporate responsibility, Leading With Purpose podcast.
- Listen to the podcast.
- Research the following terms and write their definitions in your own words in your reflective journal.
- License to operate
- Stakeholder approach
- Ethical leadership.
Taking an alternate look at the measure of wealth and poverty and our definition of progress, the New Economic Foundation developed the happy planet index. It is a measure that looks at how efficiently resources are used to deliver human well-being. In other words, how much of the planet's resources are we using, and how well is that contributing to long and happy lives.
Jeffrey, K 2016, This is the most efficient economy in the world, New Economics Foundation.
- Read the article.
- Look up how your home country scores on the Happy Planet Index.
- Be prepared to discuss this with your lecturer as part of the seminar.
The following book section sets out a directory of sustainable business case studies with a brief introduction for each.
Saylor Foundation 2012, Sustainable business: Case examples, A Primer on Sustainable Business
- Skim through the list, taking note of the different businesses and the diversity in industries represented.
- Pick one of the sustainable business examples and do some further research on the chosen company.
- In your reflective journal, create a brief review of your findings.
The business case for sustainability section to understand more about the social responsibilities of business. Gittell, R, Magnusson, M & Merenda, M 2012, '1.5 The Business case for sustainability' The Sustainable Business Case Book.
- Read the book section.
Assessment 1 – If you were allocated this week by your lecturer, you will need to co-facilitate the discussion on the discussion forum as per the assessment instructions provided. You can access the activities by clicking on ‘Topic 6: Assessment 1: Facilitation & Participation.’ You can also navigate to the forum by clicking on 'BUS100 Assessment 1 Forum' in the navigation bar for this subject.
Assessment 1 – For all students not allocated a facilitation task this week, you are expected to actively participate in the class discussion and respond to peer facilitation. You can access the activities by clicking on ‘Topic 6: Assessment 1: Facilitation & Participation.’ You can also navigate to the forum by clicking on 'BUS100 Assessment 1 Forum' in the navigation bar for this subject.
Read through this week’s topic content.
Some of the social and environmental challenges facing us as a society
We are facing environmental challenges such as:
- rising sea levels
- glaciers melting
- the loss of certain species
- extreme weather events
- ocean acidification.
In terms of some of the social challenges, we face poverty:
- an increasing gap between rich and poor,
- overpopulation
- health issues
- lower life expectancy
- gender inequality.
This video, Here's what to expect from our planet in the next 100 years if we take no action on climate change, shows what the future century would look like if the environmental and social challenges we face were not addressed.
In terms of climate change, there are different projected future scenarios related to the rise in global temperatures we can expect. 1.5°C is the most desired projection.
As we look at the need for global business to commit to sustainable world outcomes, let us explore a few basic facts (United Nations 2021):
- Humans are to blame for the climate crisis. Unequivocal scientific evidence shows that human activity is causing climate change. This will lead to a global temperature increase.
- Even if governments and businesses undertake immediate action, temperatures will keep increasing until at least the middle of the century. Regardless of the speed with which we decrease global carbon emissions, the temperature rise is likely to be at least 1.5°C, and in fact, with the current state, we are more likely to hit at least 2°C of warming.
- We will experience increased extreme weather events. This includes heatwaves, floods, droughts, and bushfires which will all become more common. Even with the most desirable projections, these extreme weather events are still expected to occur.
- There is only an extremely limited time left to make these changes. To change our current activities and avoid the more disastrous projections, we must act urgently. In concrete terms, carbon emissions must be cut drastically in the next decade.
The Intergovernmental Panel on Climate Change (or IPCC) is a United Nations body responsible for climate change knowledge due to human activity. The latest report by the IPCC was published in 2021. It shows that it is theoretically possible to limit the global temperature rise to 1.5°C if all countries and businesses acted immediately. To review a summary of findings, look at the Headline statements from the summary for policymakers.
This global index can see companies committing to immediate action and aligning their targets with a 1.5°C outcome. View more information on the targets on the Science Based Targets website.
The link between environment and social issues
The environmental and social challenges we are facing are inextricably linked to each other. For example, in the Amazon rainforest, deforestation and wildfires threaten more than 1,000,000 indigenous people living there.
Another example is sea level rise, an environmental impact, which is accelerating. Rising sea levels will affect almost 2,000,000,000 people who live in coastal cities around the world, which is anticipated to result in millions of people being forced to migrate (Benn et al. 2022). There are rising concerns about the stability of our society if such large-scale migration becomes a reality. This could lead to social unrest and conflicts.
The changing weather patterns associated with human-induced climate change and the effects of extreme weather are clear when we look at agriculture. For example, changing rainfall patterns in India have led to an entire year of rainfall occurring in the space of a day (Shiva 2016). When these extreme weather patterns take place during harvest season, entire crop yields are lost. This impacts all the farmers, their families, their communities, and the national economy.
When we look at something like air pollution, which is an environmental issue, we can also see a clear link to social impacts. For example, air pollution reduces the overall liveability and well-being of people subjected to it; it causes health issues, disease, and reduced life expectancy (Yin et al. 2020).
The effects of environmental issues and social issues are not separate from one another. They are interconnected. Therefore, when we talk about sustainability or sustainable business; both environmental and social impacts must be considered.
What responsibility business has
Let us explore the role businesses place in creating some of these environmental and social issues.
The fossil fuel industry, and within that about 100 fossil fuel companies, are responsible for roughly 70% of the world’s greenhouse gas emissions. Fossil fuels include coal, oil and natural gas (Hyman 2020). However, globally governments, are still subsidising fossil fuels which artificially reduces their cost.
You may remember the collapse of an eight (8)-story garment complex in Bangladesh in 2013. In this disaster, 1100 factory workers died, and a further 2500 people were injured (Bliss 2019).
Fashion is considered the second most polluting industry globally after fossil fuels. Media attention has created more awareness of sweatshops. When fashion is made at the lowest possible cost, factories with poor safety standards, where workers are treated under slavery conditions, keep costs down. However, the employees being treated poorly, not protected effectively against injuries, and paid below a living wage affects the entire community. In addition, there are concerns about the environmental impacts the industry has. This includes the amount of water needed to produce crops such as cotton. Other concerns are the substantial use of pesticides in cotton farming, along with the toxic dyes used to colour fabrics which create health issues for the workers and pollution of water sources. In addition to the problems we see as part of the production process, the industry has created a concept known as fast fashion. Through successful marketing, consumers are encouraged to purchase multiple cheap clothing items and discard them as the latest trends are introduced. It is estimated that globally, 80 to 100 billion new garments are produced per year, and a truckload of clothing is disposed of every second (Bliss 2019).
Other examples are the meat and leather industry. These are responsible for large areas of deforestation, for instance, in the Amazon as the rainforest is cleared to graze cattle. In addition to issues such as soil erosion, the cattle produce high levels of methane gas which significantly increases emissions. The rainforest acts as a carbon sink, so when areas of forest are cleared, the carbon stored in this natural system is released back into the atmosphere (Benn et al. 2022).
The traditional shareholder approach the business has followed resulted in profit being the only focus. Any environmental or social impacts caused through the business operations were disregarded. These environmental or social costs are called externalities. With increasing awareness of these issues, there is growing social expectation for business to change their operations and even lead the transition to a sustainable world.
Ethics for the global corporation
Multinational corporations operating in their home country and one (1) or more host countries must consider how they will implement different stakeholder pressures. For example, both the home country and host countries will have their own legal system, cultural values, customs, celebrations, workplace standards, business practices, and so on. A multinational corporation needs to decide which of these are adhered to and how.
There are often differences in workplace safety requirements. For instance, while there may be very stringent safety practices required in the home country, the multinational corporation may take a compliance-driven approach and lower its safety practices to match that of the host country. Considerations like this are a part of the ethical dilemmas a multinational corporation must resolve.
Contemplate
The following figure illustrates the competing stakeholder pressures that feed into these ethical dilemmas for multinational corporations. Can you think of another example that illustrates the conflict between the home country and host country pressures for a global business?
There is a growing appreciation of the risks associated with environmental and social issues and how these risks are becoming more pressing. This results in policy changes and new laws which protect both the environment and human rights. There is also growing social awareness of these issues (Benn et al. 2014).
The trust that is placed in corporations acting in an ethically correct manner as well as being part of the solution to global challenges, places new responsibility on global business (Edelman Trust Barometer 2021).
Knowledge check
Complete the following two (2) tasks. Click the arrows to navigate between the tasks.
Key takeouts
Congratulations, we made it to the end of the sixth topic! Some key takeouts from Topic 6:
- We are facing significant environmental and social challenges as a society.
- There is a need for urgent transformational action to reduce the effects of climate change.
- A stakeholder approach is required for business to take responsibility for the negative impacts caused because of the pursuit of profit at any cost which we have seen in the past.
- There are increased expectations that global business will contribute in a positive manner to the global environmental and social challenges we are facing.
- Ethical leadership is becoming vital in the global business environment.
Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time, you can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then click 'Join' to enter the class.
Click here to access your seminar.
The learning tasks are listed below, these will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
In- seminar learning tasks
The in-seminar learning task identified will be completed during the scheduled seminar. Your lecturer will guide you through this task. Click on the following heading to read more about the requirements for your in-seminar learning task.
Based on your self-directed study tasks, your lecturer will lead a class discussion. Be prepared to discuss your findings and reflect on these.
Welcome to your post-seminar learning task for this week. Please ensure you complete this after attending your scheduled seminar with your lecturer. Your lecturer will advise you if it is to be completed during your consultation session. Click the heading to read the requirement for your post-seminar learning task.
Think about this week’s topic. Do you have any questions that you would like your lecturer to elaborate on? Please send them to your lecturer prior to the next seminar.
Each week you will have a consultation session which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time, you can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then click 'Join' to enter the class.
Click here to access your seminar.
Should you be unable to attend, you will be able to watch the recording which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
- Business Ethics Lab 2019, Why business ethics? [Podcast]podcast Business Ethics Lab.
- Clay, J 2021, Breaking boundaries: The science of our planet narrated by Sir David Attenborough, Netflix.
- Edelman Trust Barometer 2021, 2021 Edelman trust barometer global report, Edelman.
- Magnin, A 2020, Sustainable development goals explained with 3 useful tips: Environment SDG sustainability, Sustainability illustrated, streaming video, YouTube.
- Rockström, J, Steffen, W, Noone, K, Persson, Å, Chapin, FS, Lambin, E, Lenton, TM, Scheffer, M, Folke, C, Schellnhuber, HJ, Nykvist, B, de Wit, CA, Hughes, T, van der Leeuw, S, Rodhe, H, Sörlin S, Snyder, PK, Costanza, R, Svedin, U, Falkenmark , M, Karlberg, L, Corell, RW, Fabry, VJ, Hansen, J, Walker, B, Liverman, D, Richardson, K, Crutzen, P & Foley, J 2009, 'Planetary boundaries: exploring the safe operating space for humanity', Ecology and Society, 14(2):32.
- The Ethics Centre 2020, The ethical advantage: the economic and social benefits of ethics to Australia, Deloitte.
References
- Benn, S, Dunphy, D & Griffiths, A 2014, Organizational change for corporate sustainability, Routledge.
- Benn, S, Edwards, M & Williams, T 2022, Sustainability: A Key idea for business and society, Routledge.
- Bliss, D 2019, The huge toll of ‘fast fashion’ on the planet - and why the answer could be circular, National Geographic, https://www.nationalgeographic.co.uk/environment/2019/06/the-huge-toll-fast-fashion-the-planet-and-why-the-answer-could-be-circular
- Carroll, A & Buchholtz, A 2018, Business and society: Ethics, sustainability, and stakeholder management, Nelson Education.
- Edelman Trust Barometer 2021, 2021 Edelman trust barometer global report, Edelman, https://www.edelman.com/sites/g/files/aatuss191/files/2021-03/2021%20Edelman%20Trust%20Barometer.pdf
- Gittell, R, Magnusson, M & Merenda, M 2012, ‘1.5 The Business case for sustainability’ The Sustainable business case book, Saylor Foundation, https://saylordotorg.github.io/text_the-sustainable-business-case-book/s05-05-the-business-case-for-sustaina.html
- Hyman, E 2020, Who’s really responsible for climate change?, Harvard Politics, https://harvardpolitics.com/climate-change-responsibility/
- Jeffrey, K 2016, This is the most efficient economy in the world, New Economics Foundation, https://neweconomics.org/2016/07/this-is-the-most-efficient-economy-in-the-world
- Kelly, C & Herwijer, C 2021, How business can bridge the gap and achieve net zero, PWC, https://www.pwc.com/gx/en/issues/reinventing-the-future/take-on-tomorrow/business-achieving-net-zero.html
- Shiva, V 2016, Soil, not oil: climate change, peak oil and food insecurity, Bloomsbury Publishing.
- Szabla, D, Pasmore, W, Barnes, M & Gipson, A eds. 2017, The Palgrave handbook of organizational change thinkers, Palgrave Macmillan.
- The Ethics Centre, David Gonski on corporate responsibility, [Podcast], https://open.spotify.com/episode/5fC4IFpwRbHzWLjAxYiuNJ
- United Nations 2020, Urgent solutions for urgent times, streaming video, YouTube, https://www.youtube.com/watch?v=xVWHuJOmaEk
- Yin, P, Brauer, M, Cohen, A, Wang, H, Li, J, Burnett, R, Stanaway, J, Causey, K, Larson, S, Godwin, W & Frostad, J, 2020, ‘The effect of air pollution on deaths, disease burden, and life expectancy across China and its provinces, 1990–2017: an analysis for the global burden of disease study 2017’ The Lancet Planetary Health, 4(9):386-398.
- Youmatter 2020, Sustainable development – what is it? Definition, history, evolution, importance and examples, Youmatter, https://youmatter.world/en/definition/definitions-sustainable-development-sustainability/
