Business Studies – 6.4.1 Ethical issues | e-Consult
6.4.1 Ethical issues (1 questions)
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When a company sources materials from a developing country, it has a significant responsibility to ensure that its suppliers adhere to ethical standards regarding worker welfare and environmental protection. This is because the company's actions directly impact the lives and livelihoods of people in the supplier's country.
Ethical considerations include:
- Fair prices for workers: The company should ensure the supplier pays workers a living wage – enough to cover basic needs like food, shelter, and healthcare. This prevents exploitation and poverty.
- Safe working conditions: The supplier must provide a safe and healthy working environment, free from hazards and risks.
- Environmental responsibility: The supplier should minimize its environmental impact by using sustainable practices, reducing pollution, and conserving resources.
- Child labour and forced labour: The company must ensure the supplier does not use child labour or forced labour in its operations.
How the company can monitor and enforce these standards:
- Supplier audits: Conduct regular, unannounced audits of the supplier's facilities to assess compliance with ethical standards. These audits should be conducted by independent third-party organizations.
- Code of conduct: Establish a clear code of conduct for suppliers, outlining the company's ethical expectations.
- Training and support: Provide training and support to the supplier to help them improve their ethical practices.
- Transparency and traceability: Maintain transparency in the supply chain and be able to trace the origin of materials.
- Contractual agreements: Include ethical clauses in contracts with suppliers, specifying penalties for non-compliance.
- Whistleblowing mechanisms: Establish confidential whistleblowing mechanisms for workers to report ethical violations without fear of reprisal.
Failure to monitor and enforce ethical standards can damage the company's reputation, lead to legal action, and harm the lives of workers and communities in the developing country. A proactive approach to ethical sourcing is essential for sustainable business success.