Ethics and sustainable business go hand in hand
Businesses that truly care about their impact on the environment are often also ethical because operating a business as sustainably as possible is the right thing to do. But there's a lot more to ethical business than just caring for the environment. An ethical business will also care about the way they do business like adopting fair trading practices, not engaging in anti-competitive behaviour and treating workers well across the whole supply chain.
A prime example of businesses cleaning up their ethical act is the ‘Who Made My Clothes?’ revolution triggered by thecollapse of the Rana Plaza building in Bangladesh in 2013. The deaths of 1,138 clothes makers and injuries to 2,500 finally brought the world’s attention to how our clothes are actually made and forced large multinationals to ‘do better’ when it came to the transparency of their supply chain and the treatment of everyone along it.
What is an ethical and sustainable business?
An ethical business is one that operates responsibly, taking into consideration the impact of its actions on its customers, employees, suppliers, the environment and the community. Ethical businesses strive to conduct business in an honest and transparent manner, with a commitment to fairness and respect for all stakeholders. They also seek to ensure that their products and services are produced in a way that is socially and environmentally responsible.
Ethical means more than just law-abiding. It means morally principled and acting as a good corporate citizen. An ethical business will likely have a commitment to diversity amongst its people. It will be willing to guarantee its product quality and stand by any claims it may make in that regard. It will not employ animal testing or child labour. And when it comes to sustainability, they will ensure that their claims are valid, proven, backed up by certifications wherever possible and not prone to ‘greenwashing’.
How can you tell if a business is ethical?
The best way to tell if a business is ethical is to research the company's policies and practices. Look for statements of corporate responsibility, such as a code of ethics, diversity and equality in the workplace, and a commitment to sustainability (a great example is Better Packaging Co.'s here). Check reviews from employees and customers to see if they have had any bad experiences with the company. Finally, look for information about the company's involvement in the community and its commitment to being a good corporate citizen beyond its core business operations.
CSR (Corporate Social Responsibility) is a term for a company’s commitment to manage its operations and activities in a socially, ethically, and environmentally responsible way. It is focused on the way a company conducts itself and its business practices, with the aim of having a positive impact on the environment, employees, customers, and the community.
You may also have heard the acronym ESG (Environmental, Social and Governance) bandied about recently in relation to a company’s policies regarding non-financial factors or measures. ESGrefers to a set of criteria used to assess a company’s performance in terms of its environmental, social, and corporate governance practices. ESG criteria evaluate how a company is managing its impacts on the environment, the well-being of its employees, and its relationships with stakeholders.
Companies that adhere to ESG standards are considered more ethical and responsible businesses, as they prioritize the interests of stakeholders (employees, customers, users, suppliers etc) over those of shareholders. Companies that follow ESG standards often have higher ratings from credit rating agencies and are more likely to attract investors, as they are seen as more responsible and ethical.
A BCorp certification is a good way to tell if a business operates ethically. A B Corp, or Benefit Corporation, is a type of for-profit business entity that is certified by the non-profit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency. B Corps are legally required to consider the impact of their decisions on their employees, suppliers, community, consumers, and the environment. They are also required to meet a high standard of social and environmental performance, increase transparency, and be accountable to the public. There are now over 6,000 BCorps around the world across 159 industries and 87 countries.
Another certification to look for is Sedex. Sedex (Supplier Ethical Data Exchange) is an ethical auditing and certification program that helps businesses manage the social, environmental and ethical aspects of their supply chains. It provides companies with a comprehensive platform to assess, monitor and report on supplier performance in areas such as working conditions, health and safety, the environment, and business ethics. It also offers an online database of suppliers and their certifications, which helps buyers to identify and source suppliers that meet their ethical standards.
Why is ethics important in sustainability?
Ethics is important because it forms the basis for sound decision-making that helps ensure sustainable practices are adopted. Ethical considerations can help determine which resources to use and how to use them in a way that preserves them for future generations. They also help guide individuals and organisations in their sustainability efforts, providing a moral compass to make sure that their actions benefit the environment, society, and other stakeholders in the long run.
How can businesses make sure they are acting both ethically and sustainably?
Establish and review an ethical code of conduct: Businesses should create a code of conduct that outlines their ethical and sustainable practices. This code should set out the standards of behaviour expected of employees as well as the practices that the business will follow to ensure they are acting ethically and sustainably.
Train staff in ethical and sustainable practices: Training staff in ethical and sustainable practices is essential for any business that wants to ensure they are operating ethically and sustainably. This training should include topics such as environmental sustainability, labour rights and ethical business practices.
Monitor suppliers: Businesses should ensure that their suppliers are following ethical and sustainable practices. This includes monitoring their production methods, supply chain practices, and labour practices.
Monitor customer feedback: Businesses should pay attention to customer feedback to ensure they are meeting the ethical and sustainable standards they have set for themselves. This can help businesses identify areas where they need to improve and make sure that their practices are in line with customer expectations and their own!
Examples of businesses doing this well in Australia and New Zealand.
Australian protective and workwear provider, Bisley has a vision to be the most responsible workwear brand and is committed to taking positive steps as a company to honour the key pillars of their business: people, planet, product and prosperity. Bisley is on a mission to become a leader and fulfil their responsibility to positively transform their industry. Their sustainability journey started from a review to ensure an ethical supply chain and has expanded from there into almost all aspects of the company. Read a Case Study on Bisley's sustainable packaging journey.
Global outdoors apparel brand Patagonia is a leader in ethical and sustainable business practices. The company is committed to a number of initiatives that prioritise environmental stewardship, responsible manufacturing, and giving back to the communities they operate in. They are committed to using organic and recycled materials, minimising their environmental footprint, and donating 1% of their sales to environmental causes. They are also focused on creating fair and safe working conditions for their employees, as well as providing fair wages and benefits. Additionally, Patagonia has set a goal of becoming 100% carbon neutral by 2025 and has committed to using renewable energy sources to power their facilities.
Soft drink company Karma Cola’s mission is to provide not only delicious drinks, but also to create positive social change. The company works with small-scale farmers in Sierra Leone to build sustainable agriculture, providing training and access to resources to increase their yields and incomes. They also use Fairtrade Certified ingredients, and invest 1% of their profits into their Karma Cola Foundation to support communities in Sierra Leone. Also, their bottles are made from recycled plastic, and their labels are printed with vegetable-based inks. Finally, Karma Cola is committed to transparency, making sure their customers know exactly where their ingredients come from and how they are produced.
Citizen Wolf is a sustainable fashion choice because of their commitment to ethical production and materials. All of their shirts are made using 100% organic cotton and are produced in a local factory that is certified by the Global Organic Textile Standard. They also use 100% recycled packaging, employ water-saving technology, and use eco-friendly inks and dyes. Finally, they partner with Trees for the Future, a non-profit that plants trees in low-income communities around the world.
All Good is committed to sourcing their bananas from Fairtrade farmers who are paid a fair wage, and the company is passionate about protecting the environment. All Good Bananas uses 100% renewable energy, recyclable packaging, and works to reduce its carbon footprint through sustainable farming practices. Additionally, the company donates a portion of its profits to local charities and organisations that are focused on protecting the environment.