Business Ethics

Ethics and the Environment

Pollution and Resource

Depletion
Threats to the environment come
from two sources:
Pollution: The undesirable and
unintended contamination of the
environment by human activities such
as manufacturing, waste disposal,
burning fossil fuels, etc.
Resource Depletion: The consumption of
finite or scarce resources.

Major Types of Air Pollution

Greenhouse gases: carbon dioxide,
methane, nitrous oxide.
Ozone depleting gases:
chlorofluorocarbons
Acid rain gases: sulfur oxides.
Airborne toxics: benzene, formaldehyde,
toluene, trichloroethylene, and 329 others.
Common air pollutants: carbon monoxide,
sulfur oxides, nitrogen oxides, airborne
lead, ozone, particulates.

Major Types of Water

Pollution
Organic wastes: human sewage,
animal wastes, bacteria, oil.
Inorganic pollutants: salt brines,
acids, phosphates, heavy metals,
asbestos, PCBs, radioactive
chemicals.

Major Types of Land

Pollution
Toxic substances: acids, heavy
metals, solvents, pesticides,
herbicides, and phenols.
Solid wastes: residential garbage,
industrial wastes, agricultural
wastes, and mining wastes.
Nuclear wastes: high level,
transuranic, low-level.

Depletion of Non-Renewable
Resources
Extinction of species through destruction of
natural habitats.
Natural resources depleted at peaked rate, not
exponential rate.
Fossil fuel depletion:
Coal in 150 years
Natural gas in 3040 years
Oil between 2010 and 2040

Mineral depletion:

Copper and mercury in 2100

Aluminum during 21st century
Indium and antimony in 10 years
Tantalum in 20116 years.

Ethical Approaches to
Environmental Protection
Ecological approach.
nonhumans have intrinsic value

Environmental rights approach.

humans have a right to a livable
environment

Market approach.
external costs violate utility, rights, and
justice; therefore, they should be
internalized.

The Ethics of Pollution

Control
For centuries, businesses were able to ignore
impact of their activities on natural environment
because:
Business was able to treat air and water as free good, and
Businesses have seen the environment as unlimited good.

Ecological Ethics or deep ecology = The ethical

view that nonhuman parts of the environment
deserve to be preserved for their own sake,
regardless of whether this benefits human beings.
The Last Man Argument
Asks us to imagine a man who is Earths last survivor.
We recognize it is wrong for the last man to destroy all
nonhumans.
So we must recognize some nonhumans have intrinsic
value apart from humans.

Ecological Ethics
In addition to human beings, other animals
have intrinsic value and are deserving of our
respect and protection.
Pain is an evil whether it is inflicted on
humans or members of other animal species.
(Utilitarian)
Because of intrinsic value of its life each
animal has certain moral rights, in particular
right to be treated with respect. (nonutilitarian)
Broader versions of ecological ethics would
extend our duties beyond the animal world to
include plants.

Environmental Rights and

absolute Bans
Humans have a right to fulfill their capacities as free
and rational human being and a livable environment
is essential to such fulfillment. So humans have a
right to a livable environment and this right is
violated by practices that destroy the environment.
This moral right should override peoples legal
property rights because without it we shall loose
very possibility of human life and possibility of
exercising other rights.
Such environmental rights can lead to absolute bans
on pollution even when the costs far outweigh the
benefits. (Rests on Kantian theory of rights.)

Environmental problem as
Market Defects: Partial
Control
Private cost: The cost an individual or

company must pay out of its own pocket

to engage in a particular economic
activity.
Social cost: The private internal costs
plus the neighbors external costs of
engaging in a particular economic activity.
Total costs of making a product include a
sellers internal private costs and the
external costs of pollution paid by society.

A supply curve based on all costs of making a product lies higher

than one based only on sellers internal private costs.
The higher supply curve crosses the demand curve at a
lower quantity and a higher price point than the lower supply
curve.

Problems of not Internalization

of the
Costs
of
Pollution
When sellers costs include only private costs, too much is
produced and price is too low.

This lowers utility, and violates rights, and justice.

Allocation of resources is not optimal from the viewpoint of

society as a whole. More is produced.
Producer ignores external costs and make no effort to
minimize them like other costs.
Goods are no longer distributed efficiently to consumers
because external cost introduce effective price differentials.
Remedies
Pollution agent to pay to all those being harmed, voluntarily or
by law, an amount equal to the costs the pollution imposes on
them.
Polluter to stop pollution at its source by installing pollution
control devices.

Costs and Benefits

The amount a firm should invest in pollution control, then,
must rest on a cost-benefit analysis: a precise calculation of
what the device or practice would cost and what its expected
benefits would be. Thomas Klein summarized the procedures
for cost-benefit analysis as follows:

1.

Identify costs and benefits of the proposed program and the

person or sectors incurring or receiving them. Trace transfers.
Evaluate the costs and benefits in terms of their value to
beneficiaries and donors. The standard of measure is the value
of each marginal unit to demanders and suppliers ideally
captured in competitive prices. Useful refinements involve:
Incorporating time values through the use of a discount rate.
Recognizing risk by factoring possible outcomes according to probabilities
and, where dependent, probability trees.

Add up costs and benefits to determine the net social benefit of a

project or program.

Social audit: report of the social costs and social benefits of the firms
activities

Optimal Level of Pollution

Removal
(Utilitarian Approach)

Costs of removing pollutants rise as

benefits of removal fall.
Optimal level of removal is point where
its costs equal its benefits.
But when costs and benefits are not
measurable, utilitarian approach fails.
In such situations some use the
precautionary principle, others the
maximin rule.

Precautionary Principle and

Maximin Rule
Precautionary Principle: The principle that
if a practice carries an unknown risk of
catastrophic and irreversible
consequences, but it is uncertain how
large that risk is, then the practice should
be rejected until it is certain the risk is
nonexistent or insignificant.
Maximin Rule: When risks cannot be
measured, the most rational procedure is
to first assume that the worst will happen
and then choose the option that leaves us
best off when the worst happens.

Alternative Approaches to
Pollution
Social Ecology
Environmental crisis are rooted in social system of hierarchy and
domination that characterize our society.

Ecofeminism
The position that there are important connections- historical,
experimental, symbolical, theoretical- between the domination of
women and the domination of nature.
Roots of crisis lies in a pattern of domination of nature that it tightly
linked to the social practice and institutions through which women
have been subordinated to men.
Key pattern of thinking- the logic of domination sets up dualism
(masculine-feminine, reason-emotion, artifact-nature, mind-body,
objective-subjective etc.)
Because of their role in childbearing, child raising, and human
sexuality, women are seen as more emotional, closer to nature and
the body, and more subjective and passive, whereas men are
masculine, more rational, closer to constructed artifacts and the life
of the mind, and more objective and active.

Other feminists
Extend the ethic of care toward nature

Conservation
Conservation: Saving or rationing of natural resources for
later use.
A number of writers have claimed that it is a mistake to
think that future generations have rights. They advance
three main reasons to show this:
First, future generations cannot intelligently be said to
have rights because they do not now exist and may never
exist. Because there is a possibility that future generations
may never exist, they cannot "possess" rights.
Second, if future generations did have rights, we might be
led to the absurd conclusion that we must sacrifice our
entire civilization for their sake.
Third, we can say that someone has a certain right only if
we know that he or she has a certain interest which that
right protects.

Conservation Based on
Ethics
Rawls: Though it is unjust to impose heavy burdens on
present generations for the sake of the future, it is
also unjust for present generations to leave nothing
for the future. We should ask ourselves what we can
reasonably expect they might want and, putting
ourselves in their place, leave what we would like
them to have left for us. Justice, in short, requires that
we hand over to our children a world in no worse
condition than the one we received ourselves.
The ethics of care support conservation policies similar
to the ones Rawls advocates.
Utilitarian reasoning, too, supports Rawls' conclusions.
Some posit that the ethical thing to do is to discount
future consequences based on their uncertainty and
distance from the future.

Sustainability
We must deal with the environment,
society, and economy so that they
have the capacity to continue to meet
the needs of present generations
without compromising the ability of
future generations to meet their own
needs.
Environmental sustainability,
economic sustainability, and social
sustainability are interdependent.

Environmental Sustainability
Not depleting renewable resources
faster than their replacement.
Not creating more pollution than
environment can absorb.
Not depleting non-renewable
resources faster than we find
replacements.

Economic Growth
Schumacher
We must abandon the goal of economic
growth if we are to allow future
generations to live as we do.

Others
We must achieve a steady state where
births equal deaths and production
equals consumption and these remain
constant at their lowest feasible level.

Club of Rome Projections

Suggest that continued economic
growth will deplete resources and
increase pollution until industrial
output, food production, and services
decline, causing catastrophic
population loss sometime during the
twenty-first century.

Moral Questions Related to

Economic Growth
It is troubling that current economic
growth policies that have led to high
rates of energy and resource
consumption in developed nations
while developing nations are left to
consume at low rates.

Backed by scientific data on ecological destruction including the sedimentation

study by Jagdish Krishnaswamy, which played a crucial role in shaping public
and official opinion, the campaign finally resulted in the State Government
taking an environmentally sound and socially responsible decision to terminate
the mining lease within five years.
Besides KIOCL's manner of functioning raises the core issue of corporate
governance. KIOCL knew that its meaning lease would expire in 1999. It also
knew, chose to ignore, the changes in the law, which would directly impact on
their business. So why did KIOCL make investments in new facilities costing
the public exchequer several hundred crores after their lease had expired?
KIOCL, in a desperate bid for survival, turned to the clich?argument of loss of
employment that stopping of mining would cause. The shallowness of that
argument was illustrated by comparing the loss of employment of around 1950
workers in the organised sector against the loss of livelihood of unorganised
farm workers in the Bhadra command area.
The present trends of globalisation will see further threats to ecologically fragile
areas. The campaign leading to a landmark judgment by the Supreme Court
serves as a case study for conservation groups who will have to defend
important wildlife habitats from ill-conceived developmental projects. The victory
is also a powerful message to the corporate world that, fro development to
continue unhindered, it is imperative that they respect the law of the land and
evolve a self-regulatory doctrine steering away from ecologically sensitive
landscapes.
However, if we cannot resolve our economic and social problems by using the
97 per cent of the landscape, which is outside the protected areas, but only
continue to pillage ecologically fragile areas, we will be doing so at our own
peril.