Docent: Hans Verboven. Final grade: 16/20. This document is a comprehensive summary of the course Ethical and Sustainable Business (10+ lectures, 2 guest lectures), and of the slides of the course on Blackboard + list of potential EXAM QUESTIONS by the professor.
EXAM QUESTIONS:
1. What are the 5 aspects of sustainability?
DEF of Sustainability in a business related environment:
1. Sustainability is maximizing the added value of your activities for as many stakeholders as
possible and minimizing the waste of resources, financial resources, time and talent.
2. Corporate social responsibility is a continuous process of improvement, whereby
organizations voluntarily incorporate economic, environmental and social considerations in
an integrated manner throughout their business operations. Stakeholders consultation is an
important part of this process.
80%: Sustainable Business Optimization
20%: Sustainable Business Innovation
Sustainability as a solution, indeed it is not the problem:
• Economic and social values are complementary.
• Companies have the knowhow, the organizations and the resources to influence the
business in a positive way as no go or foundation can influence it.
• Companies have the biggest impact in issues/domains which are related to their core
business.
• Each company should identify a specific set of issues on which there is an impact on the
value chain.
• The solution for all future problems will be found by innovative socially responsible
companies in a free market system. Governments will play but a small role!
Tools of sustainability:
1. Plan-Do-Check-Act: product service/operational/organizational excellence
2. KPIs
3. Themes and Actions
4. Portfolio Management
Drivers of Sustainability:
I. Sustainability is meeting the needs of the present without compromising the needs of future
generations. New DEF of PROFITS = EARNINGS + EXTERNAL VALUE – COSTS – EXTERNAL
COSTS.
II. Sustainable business means being aware of local and global risks for the own company and
the approach to address or mitigate them.
III. Sustainability is responding to the changing expectations of society.
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, IV. Sustainability is engaging in a big story that starts from the ambition to make the world a
more liveable place for everyone. 5 Ps (people, planet, profit/prosperity, peace,
partnerships), 17 SDGs and 169 sub-SDGs.
V. Responding to the major social and environmental challenges of the 21st century through a
sustainable long-term strategy of optimization and innovation. The importance of a scalable
model is seen here: EX NESPRESSO, where their engineers helped to cultivate the beams and
provide equipment to farmers.
VI. Sustainability is common sense for entrepreneurs.
EU Taxonomy
A uniform classification system that defines which activities are environmentally sustainable and
a methodology to calculate how green the activities of a company are: a tool to say what is
environmentally sustainable and how to calculate it.
It distinguishes 3 kinds of activities:
1. Low-carbon activities: activities that by themselves contribute substantially to any of the six
environmental objectives (such as solar and wind power).
2. Transition activities: activities for which there are no technologically and economically
feasible low-carbon alternatives, but which support the transition to a climate-neutral
economy in a manner consistent with a pathway to limit temperature rise
3. Facilitating activities: activities that should enable the transition to a low-carbon economy
(e.g., energy storage and electricity grids) and where that activity does not result in asset
lock-in that undermines long-term environmental goals, considering the economic life of
those assets
It also deals with 6 kinds of environmental objectives:
1. Climate change mitigation: contributing to the stabilization of greenhouse gas emissions by
avoiding or reducing them or by removing greenhouse gases.
2. Climate change adaptation: reducing or preventing the adverse effects of current or
projected future climate, or the risks of such adverse effects, either on that activity itself or
on people, nature or assets.
3. Protection of water and marine resources: achieving good status of waters, including
surface water and groundwater or preventing the deterioration of waters that are already
in good status, or significantly contributing to the achievement of good environmental status
of marine waters.
4. Waste reduction, recycling and transition to a circular economy: increasing the durability,
reparability, upgradability and reusability of products, reducing resource use through design
and choice of materials. Development of "product- as-a-service" business models and
circular value chains, with the aim of products, components and materials retaining their
highest utility and value for as long as possible.
5. Pollution prevention and control: making a significant contribution to protecting the
environment from pollution by preventing or reducing emissions to air, water and land
(except greenhouse gases), improving air, water or soil quality, quality of air, water or soil in
the areas where the economic activity takes place while minimizing negative impacts.
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, 6. Protection and restoration of biodiversity and ecosystems: protecting, conserving or
restoring biodiversity to ensure a good state of ecosystems, or protecting ecosystems that
are already in good condition.
All of this is made in 3 main steps:
STEP 1 (Eligibility): analyse whether the activities are eligible using the EU Taxonomy compass.
STEP 2 (Alignment): analyse whether the activities comply. In this case see if the activities make a
significant contribution, DNSH and respect the minimum requirements.
STEP 3: set up reporting to calculate the proportion of Taxonomy aligned KPIs (Turnover, KPI, OpEx).
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, Lesson 2 - Business Ethics
EXAM QUESTIONS:
1. Narrow point of views in ethics
2. Bentham and the defenders of Utilitarianism
DEF of Ethics: standards of behaviour that tell us how human beings ought to act in the many
situations in which they find themselves-as friends, parents, children, citizens, businesspeople, and
so on.
What is not about:
A. Feelings (feeling comfortable or uncomfortable). Do not trust your feelings too much on it.
Even though feelings provide important information for our ethical choices, as they tell us
what can be considered wring and right.
B. Habits: not about things repeated every day. People who respect habits may be feeling
wrong when they are doing something which is not right.
C. Religion: ethics is not exclusively for the religious people. It should be rather universal.
D. Following the law: a good system of law may incorporate ethical standards but law can
deviate from what is ethical. Law can become ethically corrupt as some totalitarian regimes
proofed, also it can be designed to serve only narrow groups. (First big code of law from the
Roman period, then reformed by Napoleon).
E. Following culturally accepted norms: it is not because it is custom that something is ethical
(When in Rome do as the Romans do).
F. Science: it has no values, it is just what it is, so finding objective truth it’s the goal. It is
important to remember that science does not tell us about what is right and what is wrong
to do, in addition something scientifically possible may not be ethical to do.
Where do we need Business Ethics:
• Major cases which attract public attention and have legal punishment
• Cases being studied in business schools
• Unethical behaviour? (Volkswagen with greenwashing, Exxon Mobil, Starbucks)
• It is much more about 100Ks of small decisions that are taken every day in companies all
over the world!
o Do I sack my employee?
o Do I give a present to this representative so he will do me a favour in the future? This
would be just transactional, while in general I don’t want to do it for the favour
o Will I get the supplier another chance?
o Investing in new environmentally friendly machines? Or still use the old ones? (You
have to calculate the investment and what it is convenient)
o Overbill a customer? (Maybe at a later time)
o Pimp our resume or make a small lie to get the job?
o Misuse of corporate resources? (Pens and mugs)
Why be ethical in Business?
• Legalism
o Live and act by the law
o Caveat Emptor (may the buyer be aware)
o It is allowed when it’s not forbidden
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