Transcript Business Ethics

Business Ethics
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Aims of this presentation
• To define business ethics
• To give examples of ethical statements (eg
from Trafigura)
• To apply ideas from five ethical theories
• To consider the example of Trafigura, a
company that knowingly deposited toxic
waste in the Ivory Coast
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A real life example
You are Human resources Manager of a large
Corporation.
You are told in confidence of imminent
redundancies.
Your best friend is one of those affected and
today signs a large re-mortgage agreement on
her house.
WHAT DO YOU DO ???
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Business Ethics
• How we behave as individuals
• How we organise our business and
manage relationships within it
• How we regulate and arrange business
activity within society – the laws we
pass
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Principles to apply: Kant
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Autonomy – freedom to choose
Rationality – thinking it through
Motive – only the good will is good
Universalisability – what if this were the
norm?
• A priori truth (categorical) – individual
circumstances don’t matter (hypothetical)
• Treating people as ends, not just means
• Duty – not self-interest or pleasure
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Immanuel Kant wrote:
“Suppose a man does an action for the sake of
duty alone, for the first time his action has
genuine moral worth… a moral worth beyond
all comparison the highest… he does good not
from inclination, but from duty”.
Groundwork of the Metaphysics of Morals
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4.2
For Kant lying is self-contradictory
• One example Kant used to illustrate this was a
business one. Suppose you desperately needed
money. Should you ask someone to lend you money
with a promise to pay the money back but with no
intention of paying it back? Do your extreme financial
circumstances justify a lying promise? To find out,
Kant would require us to universalize the maxim of
this action: "It is morally permissible for anyone in
desperate financial circumstances to make a lying
promise, that is, to promise to repay borrowed
money with no intention of doing so." Would such a
universalized maxim be logically coherent? Kant
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answers with a resounding
no.
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Principles to apply - utilitarianism
• Calculate consequences
• Assess gain over harm
(pleasure/pain)
• General happiness, not individual
• Mill adds altruism and concern for others to
Bentham’s pleasure/pain
• Mill adds rules which create general welfare
based on past experience
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John Stuart Mill wrote (showing the
influence of Aristotle):
“A theory which considers little in an action
besides that action’s own consequences will be
most apt to fail in the consideration of the
greatest social questions, for these must be
viewed as the great instruments for forming
the national character, or carrying forward the
members of the community towards perfection
or preserving them from degeneracy”.
UU
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4.2
Compare with this web-based
assessment of utilitarian ethics. Is
there anything to add?
• http://ethicsops.com/UtilityTest.aspx
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Principles to apply – virtue ethics
• Ask – does this action fit with my or the
organisation’s values?
• Will this action lead me/the organisation to
flourish?
• Can I do this with integrity?
• What does my practical wisdom (phronesis)
tell me is right?
• What would my moral heroes do now?
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Compare with this assessment of
virtue ethics. Is there anything to
add?
• http://ethicsops.com/CharacterVirtue.as
px
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Principles to apply: natural law
• Natural rational purpose or goal – is this
action consistent?
• Apply the five primary precepts – are any
violated (P.O.W.E.R)?
• How does this square with my conscience
(synderesis – my God-given natural faculty
for knowing good)?
• Human law must match divine law and
natural law
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Aquinas wrote (showing the influence of
Aristotle’s goal of social flourishing):
“It is completely sinful to use fraud to sell goods
for more than a fair price. Since sellers deceive
their neighbours by this behaviour, and cause
them harm”.
ST II-II Q77
UU
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4.2
Papal encyclical Caritas in Veritate
(1995) states:
• The chief challenge facing society today is that of
globalization. We need to ensure that globalization
does not damage the poor and the most vulnerable.
• Corporations and businesses must recognize
obligations beyond profit-maximization. Laissez-faire
capitalism not consistent with Catholic social vision.
Alternate forms of business should be encouraged.
• "The environment is God's gift to everyone, and in
our use of it we have a responsibility towards the
poor, towards future generations and towards
humanity as a whole."
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Principles to apply – situation ethics
• What action maximises
agape love?
• What are the likely
consequences of
alternatives?
• Which choice puts people
before principle?
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Joseph Fletcher wrote (showing the
influence of Aristotle’s virtue of prudence):
“Love’s calculations, which the Greeks call
prudence, keep love sharpened…it saves
love from selective blindness…each of its
claimants must be heard in relation to
the others….this is the operational and
situational discipline of the love ethic – it
needs to find absolute love’s relative
course”.
Situation Ethics page 90…find
absolute love’s relative courseU
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4.2
Trafigura
• Set up in 1996 to trade oil and petroleum products
around the world
• “Trafigura’s impact on the global economy is a
positive one; our responsibility is to the communities
in which we operate, our customers, our suppliers
and employees”. Trafigura Ethics Statement
• To clean up dirty fuel in 2006, traders planned to add
caustic soda to absorb sulphur contaminants, despite
being told this process was banned in the west.
• The "most difficult" problem, as they recorded, was
how to dispose of the resultant stinking toxic waste.
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Awareness and avoidance
• The project manager
reported to the Chief
executive Claude Dauphin:
"Caustic washes are banned
by most countries due to
the hazardous nature of the
waste (mercaptans,
phenols, smell)."
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Dump it on the poorest
• A chartered tanker, the Probo Koala,
took three cargoes, each of 28,000
tonnes of contaminated gasoline, and mixed them
with caustic soda and a catalyst.
• The waste ended up being tipped all around
Abidjan. Those living and working nearby risked
burns, nausea, diarrhoea, loss of consciousness
and death from contact with such compounds.
• The most sombre allegations concern the killer gas
hydrogen sulphide.
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Harmful side-effects
• Inhabitants near the dump sites
reported respiratory and eye problems,
while further away, people reported
nauseating smells.
• Trafigura try to evade responsibility:
“There is no evidence to suggest that
the slops would generate hydrogen
sulphide at levels that could have
caused the deaths and serious injuries
A small child shows the effects of toxic
alleged".
gas released in the Ivory Coast
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Lies the Court didn’t believe
• Trafigura said: "there is no evidence to
suggest that the slops would generate
hydrogen sulphide at levels that could have
caused the deaths and serious injuries
alleged".
• 31,000 Africans joined in an unprecedented
group action for compensation. £30m was
awarded.
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The conclusion?
• Using the principles from our five
ethical theories, what did Trafigura do
that was morally wrong?
• Which is the best approach to issues
concerning the environment, business,
and the profit motive?
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