What are business ethics?
Business ethics are moral principles that guide the way a business behaves. The same principles that determine an individual”s actions also apply to business.
Acting in an ethical way involves distinguishing between “right” and “wrong” and then making the “right” choice. It is relatively easy to identify unethical business practices. For example, companies should not use child labour. They should not unlawfully use copyrighted materials and processes. They should not engage in bribery. However, it is not always easy to create similar hard-and-fast definitions of good ethical practice. A company must make a competitive return for its shareholders and treat its employees fairly. A company also has wider responsibilities. It should minimise any harm to the environment and work in ways that do not damage the communities in which it operates. This is known as corporate social responsibility.
Why should a business act ethically?
Acting ethically will help a company to prosper in the long run. Businesses have great potential to transform people's lives and to alleviate poverty through generating economic growth. They produce goods and services that customers want and they create jobs. Through paying taxes, they contribute to government revenue that can finance schools, hospitals and other public services. However, a business must keep in tune with the wishes of the societies it serves or it runs the risk of alienating its shareholders, stakeholders and customers. This would be bad for business, reducing growth and potentially affecting profit. Anglo American has to deal with many different levels of interest when setting up a new project. This includes, for example, the owners of the land and the people and services in the area.
The current South African government has a policy of transferring a share of the ownership, management and benefits of the country's mining industry to people previously excluded from the economy. Anglo American is backing the South African government in this process. This includes supporting black economic empowerment deals (BEE). Through this process, Anglo American has sold (usually at a small discount) 26% of its assets in South Africa to BEE groups. For example, Anglo American was instrumental in the creation of Exxaro. This is now the largest black-owned and managed mining company listed on the Johannesburg Stock Exchange. It also aims to have at least 40% of its managers drawn from the ranks of previously disadvantaged ethnic groups
What are the effects of acting ethically?
Most business activity incurs financial costs such as equipment and labour. Non-financial costs include noise and impact on the environment. There is a financial cost to acting ethically. To engage stakeholders takes time and money. Mining in ways that minimise environmental impacts is more expensive than extracting resources regardless of impact.
An ethical business also recognises its responsibility for minimising the non-financial costs. The Pebble Project in Alaska is a good example of the way that Anglo American takes account of non-financial costs. This is a gold and copper mining project in the early stages of assessment. This could provide new jobs and revenues for the Alaskan economy at a time when oil and gas revenues have been falling. However, some people are concerned that the mine could damage fish stocks and wildlife. Therefore, Anglo American has been consulting widely and through a structured process with local people, politicians, businesses and especially indigenous people. Anglo American has made it clear that it will only seek to proceed with the project if it can be done without damage to the local fisheries. It will also give priority to the recruitment of local people.
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