Business’ Environmental Responsibilities and Stewardship: The Sustainable Approach
The purpose of the present paper is to discuss the issue of environmental responsibility. The latest business and management trends represent a proof that business owners have started to realize that the manner in which their actions impact the surrounding environment plays influences the future development of the business itself. The positive and constructive attitude that most companies have shown towards the environment demonstrate that entrepreneurs all over the world are striving to be good stewards of our landscape.
However, it must be underlined right from the very beginning that this phenomenon is not being developed at the same pace everywhere across the globe. Nonetheless everybody realizes the advantages that a sustainable approach to business may have for both the organization, the community where it is located and the environment in general. This area of decision is clearly connected to that which we normally call “ethics.”
Aristotle in his “Nichomachean Ethics” states that “virtue, then, being of two kinds, intellectual and moral, intellectual virtue in the main owes both its birth and its growth to teaching (for which reason it requires experience and time), while moral virtue comes about as a result of habit, whence also its name (ethike) is one that is formed by a slight variation from the word ethos (habit).” (Aristotle, 20) A business approach based on sustainability embodies both moral and intellectual virtue.
A further aspect that must be underlined right from the very beginning is that the ethic character of the decision making process includes all the varieties of options that the organization selects for its functioning. In other words, those decisions which concern the impact of the organization upon the environment are tightly connected with all the other decisions. Taking this into consideration we understand the fundamental importance of the ability to take wise business decisions with a powerful ethical dimension.
We can consider this ethical paradigm as a proper approach to business. This implies that there are both pros and cons as far as it is concerned. Before discussing the pros and cons we must underline that at least as far as developing countries are concerned, they do not tolerate business initiatives which exploit workers or harm the environment. Just like research in the area demonstrates it, such practices may have devastating consequences upon the reputation of the company at international level.(Kaufman)
Therefore, in a certain sense companies do not really have an alternative if they wish to be successful and make profit. According to various authors (Kaufman), “a commitment to improving social and environmental conditions in the developing countries where a company operates is the key to maximize the profits and growth of those operators” (this conclusion is based upon a study involving more than 200 companies).
But, since ethics and morality are closely connected, in the case of a business approach we might ask ourselves if the ethical dimension of a decision is brought about by its purpose or by the principle it stands for and supports? In this regard, Kant says “that an action done from duty derives its moral worth, not from the purpose which is to be attained to it, but from the maxim by which it is determined, and therefore does not depend on the realization of the object of the action, but merely on the principle of volition by which the action has taken place, without regard to any object of desire.” (Kant, 11)
What does the sustainable approach actually imply? It implies that the company must use energy which comes from renewable sources and also that recycled or renewable materials are to be used. In addition, the old machinery and that which consumes too much is to be replaced. Pollution is another key factor and companies must make sure that they diminish their emissions which pollute air, water and the soil. Last, but not least waste management must be seriously taken into consideration.(Kaufman)
However, the sustainable approach is not limited to the management of the material resources. A second important element which it involves is represented by the human resources. As far as these are concerned, the company must provide proper “health insurances, retirement benefits and professional development” (Kaufman).
Furthermore safety standards must be enforced and constantly improved. This is where the local community comes in as a stakeholder. Supporting the community with initiatives varying from “education to health care, environmental protection and agricultural development” (Kaufman) has proven to be part of a strategic and profit enhancing strategy.
But things don’t stop here. The company which has decided to do business and maintain a sustainability approach must be careful whom it makes business with. In other words, the company ought to monitor its suppliers and make sure that they follow the same business philosophy. Under these circumstances, the company and its associates collaborate in order to achieve the same sustainability goals.
Complying with all these standards is believed to result into six major benefits, as it follows: a sterling reputation, better employees, a production which is more efficient, a smoother relationship with the authorities, a better coordination both at internal and external level, suppliers that are more reliable and also more flexible. (Kaufman).
While this is the bright side of the story one must nevertheless realize the huge efforts that a company must perform in order to stay faithful to its sustainability goal. The main challenge is believed to be development. In other words, the companies ought to find the right path to make sure that while respect the environment and the community where they work, their profits continue to rise as well. (Richardson, 13).
Regardless of the advantages which companies might obtain from a sustainable approach in terms of marketing, it must be made clear from the very beginning that there are important ethical principles involved in the matter. For example, the resources of the world are used by man in order to satisfy his needs. It is very clear that these needs have surpassed the basic necessities which allow man to survive or to live in a comfortable manner. Taking a good look at the facts, we realize that man is destroying the earth’s resources at an incredible speed and with no regard for the consequences.
Man often forgets that he is not the only inhabitant of the earth. In the race for a better human living, entire ecosystems are destroyed and many animals die. Among them there are valuable species which often become extinct. We could ask ourselves if this is fair and if it is not the case to change something. The debate on this argument is not new. Despite the fact that it has been lasting for years, nobody seems to pay much attention to it. The protests of the associations which defend the rights of the animals are considered somewhat boring, while the ethical dimension of the issue has been left to oblivion.
Just like some voices suggest, the planet has its own control mechanisms through which it prevents the uncontrollable expansion and dominion of a single species. In other words, if the human development does not impose itself certain limits, the only denouement it can meet is the destruction of the planet and with it, of itself. When dealing with sustainable development, it must be strongly underlined that it implies high costs which keep increasing in a constant manner. In addition there are the “diminished returns of extracting resources from greater depths of from lower concentrations”(Richardson, 54).
A further argument with a strong ethical dimension is represented by the distribution of the resources. It is a clear and known fact that the earth’s resources are limited. It is also known that the access to them differs from population to population. Unfortunately the rich nations which have the necessary technology are also the ones which keep getting richer. The poor ones see their access diminished if not cut. In this manner, the state of unbalance is constantly maintained.
A third ethical issue might regard the future generations. The contemporary consumption pace and the rhythm in which the available resources are diminished could make one draw an alarm regarding the future. The resources of the planet are diminishing while its population is not. Taking into account the unfair situation in which we find ourselves, is there room for thinking about the fate of our children and grandchildren or not?
Energy is one of the most valuable resources for humanity. The development of technology has allowed for the possibility of using alternative energy sources such as biomass, water power, solar, wind and water power as well as geothermal energy. Naturally the prices of such alternative sources represent a problem, being high they are not accessible to everyone.
Under these circumstances one might realize that the present use of alternative energy sources does not really diminish pollution or the consumption of the earth’s resources. Within the realms of ethics we might ask ourselves what is the actual difference between the wants and the actual needs of energy. In addition, we might ask ourselves if the richer nations have or not a greater responsibility as far as the research and development in the area of sustainable energy are concerned. (Reid, environmentalleader.com)
Believing that there are such energy sources or consumption policies which would allow the planet’s resources to be maintained for a longer period, while making sure that all the nations are provided with a comfortable living is rather naive. Under these circumstances, it has been argued that doing the moral thing means choosing the least terrible solution. The problem is that this implies a relativistic evaluation of the matter which impacts the manner in which the moral principles are conceived.
Before stepping into a debate regarding the character of the moral principles, we may state that we agree with the opinions which state that there is no such thing as objective moral principles.”Ethics can be seen as a system of principles or judgements which state whether something is good or bad, right or wrong” (Amberla, T, Wang, L., Juslin, H., Panwar, R, Hansen, E., Anderson, R., 45).
In other words, there are no universally valid moral principles existing somewhere and waiting to be discovered and applied by man. On the contrary, it is man who judges the reality in which he lives in order to understand what is moral and what is not. Reading between the lines we understand that an objective evaluation of the sustainability issue is required, evaluation which is likely to lead to some relevant conclusions regarding the ethical “things to be done”: “At the macro level, the definition of business ethics particularly encompasses the moral evaluation of the economic system of free enterprise, as well as possible alternatives to and modifications of it”( De George in Amberla, T, Wang, L., Juslin, H., Panwar, R, Hansen, E., Anderson, R., 46)
There is no action that man can perform which can bring advantages exclusively. All the choices imply renouncing to something. It is the same with the smart use of the environmental resources. Therefore, what companies fond of the sustainable approach need to do is make a smart choice- from which a maximum of parties can benefit. But, if there are no universal laws which can guide this decision process, then the subjective side of the matter might become dominant. Since the matter is represented by ethical issues, it is easy to understand the complexity and the importance of the discussion.
All actions and decisions are based upon values and interests. Ultimately it is safe to say that even interests are guided by values. In the attempt to understand what values are, we could define them as “concepts of beliefs about desirable end states or behaviors which transcend specific situations, guide selection or evaluation of behavior and events and are ordered by relative importance.” “Schwartz introduced four universal value categories present in all cultures: 1) self-transcendence, 2) self-enhancement, 3) openness and 4) conservation” (Amberla, T, Wang, L., Juslin, H., Panwar, R, Hansen, E., Anderson, R., 45). Ethics, including business ethics ought to reflect the considerations mentioned above.
However, the purpose of businesses is that of making profit. It is likely for a contradiction to occur between the declared purpose and the ethical values. What are companies then supposed to do? Since companies are not machines, but are managed by people, it has been argued that the decision process will be influenced by the personal values of the managers (some cultures being oriented towards individualistic values, other being focused upon community values). (Hans, 25)
It has also been suggested that the societies which are dominated by collectivistic values are more likely to be green-oriented, just like individuals with collectivistic values are more concerned with having their businesses respect the social norm instead of achieving certain economic performances. Since ethics tells what is good and what is wrong, providing us with the rules that we need to follow in order to have a god behavior and lead a life with a strong moral character, we can consider ethics to be normative (it imposes norms of behavior) (Hartman Laura P. & Joe DesJardins,13)
However, taking into account the fact that sometimes the best solutions are taken depending on the circumstances, we can ask ourselves whether there is a difference between ethics in general and business ethics in particular. Since the moral values are the same for everybody, the answer should be “no.” The value of the individual derives from his actions and not from his declared values. Nevertheless this does not imply that people will always act according to their values. The social circumstances and the pressures coming from the social environment may sometimes have people do the contrary of what they want to do. Under these circumstances, the role of the business leader becomes fundamental. If the problem is connected to circumstances, then the business genius lies in creating those circumstances in which good people can perform good acts and bad people are prevented from doing evil acts. (Hartman Laura P. & Joe DesJardins, p13)
Social ethics refers to the manner in which the social communities are supposed to live. The main role here is played by the institutions and the main questions to be addressed include “justice, public policy, law, civic virtues, organizational structure and political philosophy.” In this sense business ethics is concerned with how business institutions ought to be structured, about whether they have a responsibility to the greater society (corporate social responsibility or CSR) and about making decisions that will impact many people other than the individual decision maker.”(Hartman Laura P. & Joe DesJardins, p15) Here we understand that the impact of an individual decision is greater than one might imagine. We could ask ourselves if it is fair that such decisions are to be taken based upon personal values. Business leaders however realize the impact of their choices and those who are green oriented are more likely to follow ethical principles such as the respect for the others and the environment. Nevertheless, the profits issue is also to be carefully managed (the challenges of the sustainable approach have been mentioned earlier in the paper) and it is safe to say that business leaders must have a deep understanding of society and a strong long-term vision.
An interesting aspect which needs to be mentioned is represented by the nature of the decisions. What looks like an ethical thing to someone might be very well considered a simple financial decision to someone else. The truth is that the ethical and the business decisions do not exclude each other and the economical mechanisms may very well involve ethical considerations. While both the economic and the ethical decisions are concerned with the impact of their consequences upon the decision maker and others, business is oriented towards very specific goals while ethics is a supporter of impartiality. It is easy to see why conflicts might occur between the two. (Watkins, 42)
Sometimes, depending on the circumstances, it is difficult to recognize the ethical dimension of an issue. “Some writers have called this inability to recognize ethical issues normative myopia or shortsightedness about values” (Hartman Laura P. & Joe DesJardins, 49) . This would explain why certain decisions which seem right in a certain moment prove to be unethical later when the circumstances change. However, when it comes to the sustainable approach, it is very clear that an unbalanced consumption and destruction of the earth’s resources will have devastating effects for everyone on a long-term (even if the poor nations will be the first to suffer).
Taking a look at the business environment and seeing the large number of stakeholders which are involved, it is easy to see why the decision process is so challenging. When many perspectives are involved, the chances for ethical dilemmas to occur increase. The most difficult thing to do is make sure that everybody can benefit from a decision (usually when the rights of a group are supported by a an action, those of another group are denied). A concept which must be taken into consideration at this point is represented by the one of “moral imagination.” It refers to the capacity of coming up with multiple solutions — making sure that the rightful option can be found. In other words, people with a moral imagination are more likely to take business decisions which are ethically valid than good people who are not endowed with it. (Hartman Laura P. & Joe DesJardins, p 54)
It is true that business decisions are often taken based on circumstances and subjective values. However, if one wishes to perform a task which also has an ethical dimension, then there ought to be a set of rules to which he could relate. Such a set is to be found in the Caux Principles for Responsible Business, which has “set forth ethical norms for acceptable businesses behavior” (Hartman Laura P. & Joe DesJardins, p 30-31). The first principle is to respect stakeholders beyond shareholders. The shareholders are those who benefit economically from the decisions and the actions of an organization. The stakeholders however are more numerous and they include the workers, the community, the competition and the consumers of the sold goods. All of these parties ought to be treated with respect and fairness in order to make sure that the overall functioning of the market will be supported as well (long-term approach to business).
The second principle states that the companies ought to contribute to economic, social and environmental development. It is impossible to conceive a flourishing business in an economy which is in a process of decay. Therefore if the business owners wish to expand and develop their companies, they must make sure that a market exists in this regard. Investing in the community where the business is located is a long-term strategic action. In addition, by supporting the community at social, financial and environmental level, companies demonstrate their good will and are likely to gain the support of the stakeholders.
The second principle insists upon the “responsible” character of businesses. According to it, “a responsible business enhances society through effective and prudent use of resources, free and fair competition and innovation in technology and business practices” (Hartman Laura P. & Joe DesJardins, 30) We will see that all the Caux principles are strongly connected and support each other.
According to the third principle, the business organizations must respect the letter and the spirit of the law. Respecting the spirit of the law refers to those particular circumstances in which some actions, despite being regal might have negative consequences upon the stakeholders. Ideally, a company ought to “operate with candor, truthfulness and transparency, keeping its promises” (Hartman Laura P. & Joe DesJardins, 31) While truthfulness and transparency are coordinates that a lot of businesses choose to demonstrate, candor is more likely to be achieved within the harsh competitive business environment.
The fourth principle advises the business companies to respect rules and conventions. Communities often have their own cultures an traditions. In order to make sure that they will function well on a long-term basis, businesses must respect these local realities and adapt to them. Fairness and equality are fundamental factors. Think global; act local might be the proper slogan to describe the philosophy behind this fourth principle.
Principle number five is in favor of supporting responsible globalization. The development of technology and the geopolitical decisions from the latest years have made globalization an inevitable phenomenon. The geographical markets are losing their borders and business is often made in a worldwide market. As a participant in the global market place, a “responsible business supports open and fair multilateral trade”(Hartman Laura P. & Joe DesJardins, p31) According to this principle, when the local reality contradicts the global economic trends, the best thing to do is to support the local reformation. However, the ethical value of this approach is to be subject to further study.
Principle number six tells companies to respect the environment. Since the planet is the main supplier of resources, it is easy to understand why it ought to be treated with respect. Everybody knows this and yet the planet’s resources are destroyed without mercy. In a strong ethical spirit, the sixth Caux principle states that “a responsible business ensures that its operations comply with the best environmental management practices consistent with meeting the needs of today without compromising the needs of the future generations” (Hartman Laura P. & Joe DesJardins, p31)
The last principle on the list has the business organizations avoid illicit activities. The seventh principle is supposed to reinforce the third one which suggested that responsible companies must respect both the letter and the spirit of the law. Needless to say that acting outside the law or support terrorist activities or drug trafficking falls outside the ethical approach. One might ask himself if it is possible for an action to be morally valid and yet outside the law. While such a possibility must not be excluded, it must be mentioned that generally such circumstances do not occur.
I
If we were to translate all the principles discussed so far into philosophical theories, we would be dealing with utilitarianism, deontological ethics as well as with virtue ethics. Utilitarianism deals with the utility of our actions which are evaluated in terms of their consequences. Deontological ethics declares that the human behavior must be guided by moral principles while virtue ethics focuses on the individuals’ character. Discussing the utilitarian view, we must understand that the final goal is the maximization of the overall good. But is this really possible? We have already seen that most of the times business decisions must solve conflicting interests and that often circumstances are the ones which have the most influential role. Ideally a business would look for the best interest of all its stakeholders and act based upon a long-term approach to business. Reality however demonstrates that this is often impossible.”How do we distinguish between needs and wants? How do we balance the needs and aspirations of different world communities? What is the responsibility of the wealthier nations to develop sustainable energy?” (Stevenson, 831)
If the survival of a business is based upon the destruction of an important part of the planet’s resources, then the company’s actions can be considered unethical only. But is it ethical to demand for a business to be shut down in order to preserve the chance for a better future for someone else? If the best interest of all the stakeholders is to be taken equally into consideration, then it is safe to say that the question remains open for debate. Balance and moderation could be the solution, but reality demonstrates that regardless of its level, profit is never enough and that man now concentrates not on his needs, but upon his wants. Even if utilitarian perspectives sometimes advise to choose the best available option and judge exclusively in terms of consequences, it must be underlined that the best solution for the present might sometimes be an unethical one. The contradiction can be easily solved if we step away from this philosophical conception which has egoism at its center. When it favors the best interest of the individual. However, it always depends on which side we are.
Free and competitive markets ought to be a solution that works in everybody’s best interest. Free market capitalism has nevertheless already proved that it simply cannot work in order to maximize the best interest of all the social categories. Utilitarianism is based upon the evaluation and comparison of consequences, but often there is no method available to perform this action. In addition, utilitarian supporters state that the end justifies the means. We have already discussed why such an approach falls outside the realms of ethics.
When it comes to deontological ethics, its purpose is to provide us with a set of rules for rightful and ethic behavior in the social environment. But what happens when the best interests of our business organization go against the best interest of other people? What is our duty then? To serve the organization we belong to and which pays us in order to do our job, or respect the moral duty of not harming anyone through our actions? Among the legal rules, the organizational rules, the role-based rules and the professional rules, which are most likely to define us? Within the realms of this social contract, which is the most ethical approach that we can adapt? A helpful distinction is made between the categorical imperatives, which must be respected by everyone with no exception and the hypothetical ones, which are to be respected only by those who are part of a certain professional category.
It has been nonetheless argued that there are certain principles which must be respected regardless of their consequences. The respect for the human dignity is one of them and was supported by no other than the famous philosopher Kant. Since everyone has the same rights, respecting them would mean serving the best interest of all the people. Naturally we need to understand that my best interest becomes in this way limited by the best interest of the other. What should, we do then if the best interest of our company is in conflict with the one of another and again in conflict with the one of some stakeholder? We have already agreed that it is impossible for a business to survive if it tries to make everybody happy, especially under the circumstances in which conflicting interest occur. The answer is that the company in case ought to try and minimize the damage, acting in a balanced manner and having in mind all the involved parties (here we underline the difficulty of remaining impartial when financial profits are at stake). And this is where virtue ethics comes into place teaching us that the gap between egoism and altruism can be surpassed through motivations which are both self and other oriented.
All in all we can conclude that when it comes to a sustainable approach to business, companies face very difficult challenges. We have seen that in the nowadays business context, the academic environment and the large audience are strong supporters of the efforts made in the direction of global sustainability. The organizations which serve the best interest of their stakeholders and demonstrate their concern for the environment are most likely to record increased profits as well.
This happens because people are realizing that this is the rightful thing to do under the circumstances in which the planet’s resources are quickly diminishing threatening not only the future of the generations to come, but challenging ours as well. While it is generally agreed that the sustainable approach is the ethical one, challenges arise when looking closer at the picture. The costs of such an approach are big. In addition, the market mechanisms do not really allow for business organizations to care for everybody’s best interest. The utilitarian perspective seems to support an egoistic approach to business, while deontological ethics, virtue ethics and environmental facts draw the alarm signal suggesting we should act in the opposite direction.
The ethical behavior is guided by both personal and collective values. When it comes to business, in order to have things clear, there are the deontological rules as a reference point. The categorical and the hypothetical imperatives also serve as a guide for ethical and moral behavior. Principles such as the Caux ones give us a further idea about the manner in which we ought t to conduct business. It is clear that all actions have consequences, both positive and negative ones. The genius of business makers is to create those circumstances which allow for diminished negative effects and increased positive consequences. While this “genius” is difficult to achieve, managers are left with the possibility of moral imagination and an objective analysis of reality to prevent them from normative myopia.
Bibliography:
Aristotle, Nicomachean Ethics (Ross, W.D. Translator). Retrieved fromhttp://socserv.mcmaster.ca/econ/ugcm/3ll3/aristotle/Ethics.pdf September 30, 2010
Hartman Laura P. & Joe DesJardins. Business Ethics Decision Making for Personal integrity & Social Responsibility, Second Edition
Jonas, Hans. The imperative of responsibility. Chicago: University of Chicago Press,1984
Kant, I. Fundamental principles of the metaphysics of morals. NuVision Publications, 2007
Reid, Ralph. “Environmental Responsibility, Today’s business Megatrend,,” Retrieved from http://www.environmentalleader.com/2010/08/17/environmental-responsibility-today%E2%80%99s-business-megatrend / September 25, 2010
Richardson, John E. Business Ethics 10/11. NY: McGraw-Hill, 2011
Stevenson, M.A., Dowell, T.M. “Ethics And Energy Supplement,” Journal of Business ethics, vol.9, no.10, 1990, pp.829-835
Watkins, S. Philosophical ethics and business
Amberla, T, Wang, L., Juslin, H., Panwar, R, Hansen, E., Anderson, R. “Students Perceptions of Forest Industries Business Ethics – A Comparative Analysis of Finland and the U.S.A.,” Electronic Journal of Business Ethics and Organization Studies, vol.15, no.1, 2010
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