Ethics

Second last class before finals

Last Lecture
This week

 Group Report
 Individual Peer review
 Chapter 11 & 12
The environment
International Business
Environment: Whose responsibility? Why?

 What would freedom say? ( Page 247)

 What would George say? ( Page 248)
Tragedy of the commons (page 248)

 What is meant by ’the commons’?

 What is the ‘tragedy’ of the commons ?
 Is part of the ‘tragedy a a violation of rights’?
• Whose rights? How?
“Tragedy of the commons” as violation
of rights
 Harms are born by present and future generations
What frameworks does it suggests?
Environment: Whose responsibility?

 If harms are externalized…

Someone else pays social social ( environment,
human rights, etc. ) costs.
 Should prices reflect social costs, as well as private
costs?
 Where, and upon whom the costs of environmental
harm fall is a matter of justice
Humanistic argument (page 249- 250)

 What is the humanistic argument ?

 William Blackstone: if everyone has a right to a livable
environment, then others have an obligation to allow
free enjoyment of this right.
 This right supersedes the right to property. Why?
• Consider Kant's maxim # 2
Naturalistic Argument (page 250-252)

 What is the ‘naturalistic argument’?

 Environment ethicists want respect for the natural world.
 What sort of ethical framework is this?
 Peter Singer
 Animals are sentient beings, & thus have interests that
deserve considerations.
 To disregard those interests is ’speciesism’?
Growth (Page 252- 253)

 Who does growth benefit?

• How are benefits distributed?
• Who decides how to distribute them?
 Who pays for growth?
Ethics of price disincentives

 People accustomed to receiving environmental

subsides are often unwilling to begin paying these costs.
• Remember ‘asymmetric claims’ ?
 Price disincentives
• What are they?
• Who do they disadvantage most?
Intergenerational Issues (page 253- 255)

 Do we have the right to use the world’s non-renewable

resources to our own advantage?
• John Rawls
• “Just savings principle”
Science or ideology?

 How should we proceed (how do we manage growth) if

evidence is incomplete or inconclusive
Precautionary Principle (page 256-260)

 Reverse the burden of proof.

 No longer “Prove that it is possible”, but “prove that the
activity is not dangerous”.
Voluntary Action (page 260-261)

 Management voluntarily engages with environmental

policy for a variety of reasons.
CERES Principals (page 261- 262)

 Coalition of Environmentally
Responsible economics
 Include
• Use natural resources sustainably
• Reduce Waste
• Conserve energy
• Restore environments
• Audits & reports of environmental incentives
Brundtland Report (page 263)

 1987: World Commission on Environment & Development

 “development that meets the needs of the present
without compromising the ability of future generations to
meet their own needs.”
 Integrate growth goals with the just saving principle.
 Negative Rights
 Positive Rights
Case 11.6- OK Tedi Mine, Indonesia

 Ethical questions related to OK Tedi case.

1. Universal environmental protection standards?
2. Proper relationship between multinational firms and
government desperate for development and foreign
exchange?
3. How to balance local resistance with national
government enthuiasm?
International Business Ethics

 What responsibilities to multinational corporations have

in international environments?
 How does a corporation respect cultural differences
encountered in the host country?
 How is commerce regulated in globalised markets?
Competition or Trust?

 A popular claim: “if you want to get ahead, you can worry about ethics. The
competition won’t”.
 The survival of a firm should not be jeoparized by acting ethically.
 Indifference to ethics should not be normalized
 To normalize purely self-interested behaviour would lead what Hobbes calls
a state of war.
 What is needed to market international markets work?
Ethics and cultural difference

 A popular claim: “ This type of action is OK over there,

because they’re more concerned with getting jobs than
with ethics.
Does human desperation negate the importance of
business ethics?
 Primary Values transcend particular culture. Example:
respectfulness, honesty, trust, integrity, sincerity, loyalty,
and diligence.
 Secondary Values are particular
Continued…

 They relate to how primary values are expressed in

particular cultures.
Which country’s citizens embrace
corruption as a primary value?
Corruption in foreign cultures

 Foreign corrupt Practices Act:

 1977 US Laws
 Prohibit US firms from making payments to foreign
governments to advance their business interests.
Cultural Relativism (page 278)

 What sot of ethical problems might be encounter in international

dealings?
 A popular claim: “ They’ve set up their laws to give an unfair
advantage to domestic firms. We have to cheat to complete.”

Moral Evasion
 Companies bring new skills and processes to foreign
countries.
 What does Richard De George recommend as
guidelines for operating in a host country?
Business and Human Rights?

 Should human rights be conditional?

 Example: “We respect human rights if we can afford it.”
 Human rights are inalienable.
 Human rights are not cost free; they require the removal of negative
externalities
 Donaldson argues that companies ought never deprive workers of
their rights.
 …..in some cases companies (must help protect workers from
deprivation).
 However, companies are not obligated to aid the deprieved.
Case 12.4: Shell and Nigeria

 Can a multinational be an innocent bystander when it

operates in a country ranked 143 (out of 182) on
Transparency International Corruption Index?
 What was shell’s position when that oppressive regime
executed dissenters such as Ogoni leader Ken Sari
Wewa?
 What about Canadian firms trading with Columbia
companies?
Corporations and the Political

 Corporations are capable of conferring and enjoying

political benefits.
 Unwillingness to confer benefits on the part of those who
benefit from exploitation is no ground for moral
exemption.
Affordability (Page 285)

 Donaldson
 the fairness affordability test
 If a corporation cannot afford to respect human rights in
a country, then it might be to forego operations in that
country.
A Double Standard

 De George
• the same standards are not always applicable to
entrepreneurs and MNC’s in international business.
 One cannot do what is not within one’s control
 In many countries bribery is common place.
 System is a collective responsibility.
 Multi nationals have option of moving their operations
else where ; local business do not.
Four International Incentives

 Global Sullivan Principals (293-294)

 UN Global Compact (295-296)
 Caux Round Table (296-297)
 Transparency International (297-300)