P1 Explain the ethical issues a business needs to consider in its operational activities
Ethics are non-official rules but ‘’must’’ which has to be followed by the organisations. All organisations have their own policies and procedures, which every employee has to read and sign to it such as Code of Conduct and Code of ethics (slightly similar but also different in a way). Out there are many companies which affect the environment by producing and selling to public. This is why many big companies run their own campaigns for recycle waste, building green spaces, investing in schools and hospitals etc. In this way companies show their responsibility for what they are doing in order to make profit. Somme business’s products are unhealthy and can affect public in deathly way such as cigarettes and alcohol. Companies producing those must inform customers for the affect and side effects on those hazards products. However the same rules apply to medications as each has its own description including the side effects so the customer will be aware of what could happen. The above two are more or less obligated by law to do so, however this is a good ethic showing public honesty on what they are going for. Ethics also include the Corporate Governance, which is applying to all those employees working on the very top of the organisations. Usually all humans could get obsessive of powers and use them for selfish reasons. For this potential abuse of power, the organisations have own defence system for such potential abuse by rotate those employees. Other essential point of ethics is Sustainability, which is related to keeping the same environment for futures generations and that includes clean water, fresh air, clean ground and green spaces. In order organisations to achieve that they use recycling, reusing, reducing, restore and renew things. Out there are also campaigns running by some organisations to motivate people to use those 5 Rs and educate public what could happen if they do not support that mission. This is the place where CSR come and all companies or at least those with good ethical values are taking obligation to remove or minimise the negative effect their products/activities bring. They do that by cleaning up all undesirable products. In order that to be monitored is it done or not, governmental organisations are asking the companies to produce Annual Report including annual profit but also how the company support society and the environment. Companies supporting the mission of saving the earth and building new thing for society, pay less taxes also companies donating a large amount of money into something are getting discount of their cooperate tax. In conclusion I would say that ethics means views, morals, beliefs, society norms, standards, behaviour and actions.
Ethical Issues in BAT
Sustainable Approach
The high demand of BAT were supported by reducing a 48% of CO2e emissions from 2000 baseline. However BAT have some other major issues such as; harm reduction, sustainable agriculture and farmer livelihoods, and corporate behaviour. All those three points are in researches and the company will work in their achievements. The industry achieved were a leadership which took place in ten of the sections such as the maximum 100% rating for Raw Material Sourcing, Environmental Policy and Management, Environmental Reporting; and Materiality. BAT comprehensive global is focusing on sustainability issues.
Corporate Social Investment
In order to ensure the best results plus those mentioning above BAT employs the best of the best people to help them create beater products (less harmless but high quality), save the environment the e.g. could be reducing the O2 emissions which has to be done by researches of specialists. BAT employed worldwide over 50,000 people in which 69 nationalities global wide and 138 nationalities taking management places. There are 30% female on the Main Board and in 2015 more 33% of management roles taken by women. All that shows the company meets very well the equal opportunity and equal rights policies. Other factors shows that employees care about BAT as there was 93% of workers worldwide that completed employee opinion survey. Has to be admitted that BAT really work on creating the perfect and save environment for its employees as 73% of all companies finished with zero accidents in 2015.
Corporate Governance
A good corporate governance is a number one priority to BAT which is working on achieving their objectives in honest, transparent and accountable way. For this point it has to be known that the Executive Directors have one-year rolling service agreements with BAT. This is the proof of that how big companies offer limited time for the top leaders, by preventing power selfishness to take place over the company (democratic companies changing their presidents every four years for the same reason). Board Committees meet regularly with the board of directors to discuss financial conditions and potential impacts also make recommendations. BC are Non-Executive Directors which are working on helping BAT with financial advices but still only advices not action decisions of work. BAT involves the shareholders in Annual General Meeting which are aiming to represent the aims and objectives of BAT. The whole point is the shareholders to see what is happening with the company, who are the operating staff/heads of the company etc. However the directors are interested in understanding shareholders views and any concerns they may have. Standards of Business Conduct are not only about transparency or loyalty they include a bundle of policies aiming to support the ethical work of BAT. Anti-bribery and corruption policy are one of those concertation on ,, companies and employees to be involved or implicated in any way in corrupt practices’’ or ‘’to maintain, as part of its books of account, a register of political donations, gifts, charitable contributions and non-commercial sponsorships made by or on behalf of the company’’.
Policies, Principles & Standards
The Statement of Business Principles contains three principles that relates to Mutual Benefit, Responsible Product Stewardship and Good Corporate Conduct. There are also about eighteen Core Beliefs. The principles help the effectiveness of engagement of the stakeholder dialogue. The shareholders of BAT corporate to developing business principles to CPR. They agree to that reduction in the health impact of tobacco is very main health objective, however the consummation is legal and customers can chose their own brands and types of cigarettes. Business Principles creates the Business Conduct based on commitment to high standards. The staff will sign code of conduct, which will make employee agree to the required level of standards that has to be meet. BAT is committed to transparency in terms of their work with all group companies. BAT will give support third parties in regarding to policy issues of mutual interest. However BAT won’t obligate a third party to conduct to Principles for Engagement / Terms of Engagement. International Marketing Principles of BAT is committed to ensure marketing (advert) activities will be not directed to young people in any way. BAT Vapour Products Marketing Principles are clearly in that they will be targeting to customers who already smoke but will never hide anything from them in terms of potential risks, ingredients, % of nicotine on each pack.
Employee Wellbeing
As any other organisation BAT has its policies related to H&S from the other hand they run risk assessments on both environment and people. BAT support their employees with medical services and insurance, healthy lifestyle and fitness schemes and family-friendly policies and initiatives, such as flexible working and help with childcare.
Human Rights
BAT respect and fallow the conduct of human rights, carrying assessments for the whole group. The controls is done twice-yearly including all BAT operations against human rights risk indicators for businesses.
Regulation
BAT support Governmental and Non-governmental organisations when it comes to creating regulations and policies. BAT was working with two countries one of which is the UK, to create standards on the e-cigarettes. Building policies and laws has to be done very wisely because sometimes could lead to effect which breaks other laws and the example is ‘’ sudden and significant hikes in excise rates can result in price disparities between neighbouring countries, increasing smuggling across borders.’’ BAT support and fallow the Principles for Transparency and Integrity in Lobbying.
Illegal Tobacco Trade
Since the price of tobacco raised the contraband of cigarettes also did so. However if the price goes down the problem will be gone but then people will be encouraged to smoke even more because one box will be much affordable. The big problem with contraband is that taxes goes down, the country can’t get anything from it, also the control of under 18 age people can’t be done. BAT help to all that by investing £40 million every year in against the tobacco trades.
Youth Smoking Prevention
The ethical and also legal problem is children can’t smoke and those who sale to them will be find. However there kits over 18 they are allowed to some but BAT believes they shouldn’t do that. So what they so is to make awareness by doing courses and seminar to young people of the impact of smoking cigarettes. BAT also do training for staff selling tobacco in order to know the techniques how to sale legally and prevent sale of cigarettes to youth.
Sustainable Agriculture
BAT doesn’t have their own farms so they buy the tobacco from third parties. The once with contracts are supported and BAT invests £60 million each year. By annual self-assessments and on-site reviews of all our first-tier leaf suppliers BAT get the best quality of leafs and suppliers are happy as their work in regarding to farming, waiting and so on will be paid as it supposed to be (SRTP). The reviews carried once every 4 years by BAT are in-depth analysis of the suppliers’ policies, processes and practices, as well as farm visits. SRTP is also looking at child labour and the living standards of the farmers.
Environmental and supply chain management
It is all about BAT working on reducing their own emissions which influent the environment. However they help other companies to reduce that negative impact by basements and so on. This is so as ‘’Environmental problems cannot be solved by one company acting alone’’. From their side they help Leaf and Non-leaf suppliers to adjust and work in appropriate way, manage waste, manage Co2 emissions.
Harm Reduction
BAT can’t stop people from smoke so at least they can improve their products in order to reduce the CO2 emissions. This is why BAT give the choice of less risky alternatives to smoking such as Vapour Product, for which BAT help to develop. BAT convince their commitment to exemplary corporate conduct and transparency for the whole business. In more simple words they do not hide how they make cigarettes and also show to smokers the impact of long term smoking. BAT develop e-cigarettes, licensed medicinal products or tobacco heating products. However smoking reduction will means reduction of profit, many people will lose their jobs and then the question comes, is it just a gesture to close people eyes or the business is willing to reduce customers in time?!
Marketing Responsibly
In relation to marketing activities BAT thinks that smoking has to be regulated and to be sold only to adults. However BAT doesn’t encourage people to smoke or invite non-smoking people to start smoking, it gives the choice to customers. BAT doesn’t mislead customers with the potential risks of smoking such as cancers etc. BAT is creating and showing that the e-cigarettes are much less harmful than the normal tobacco, however they do not encourage customers to get e-cigarettes and also show their potential risks.
Bibliography: http://www.bat.com
Outcome: All italic part of this report are taken from the website above and presented in direct way in order to show the most accurate example of the certain point.
NOTE: P1 document got very strong PASS