Business ethics is concerned with good and evil, wrong or right, the just as well as unjust business practices. Therefore, ethical businesses conform to a mass of values, principles, thoughts, and norms concerned with the conduct that ought to guide their decisions in business operations (Steiner, and Steiner 197). The concern about responsibilities business have towards the society began to take center stage in the early twentieth century, which is a move beyond the ultimate goal of maximizing profits (Alee 02). Businesses have a responsibility to pursue policies, make decisions, or take a course of action desirable regarding the values and objectives of the society. An avenue for the societal welfare in the retail industry is corporate social responsibility. This paper identifies ethical issues and gives possible ways that the retail industry handles business ethics.
Corporate social responsibility, CSR is a major ethical concern that has a potential to affect the retail industry as it relates to a general evaluation of values as connected to the relationship a business organization has with its environment. Within the U.S alone, the social commitments and profitability of companies have been a concern since the early seventies (Ni and Van Wart 248). In the context of a retailer, it relates to the relationship a business has to the customer. The concept of CSR, integrates Ethical considerations, environment, economic, and social issues into business practices as well as strategies. Currently, customers are concerned about organizational social behaviors to make crucial decisions like purchasing. The CSR of companies plays a significant role in brands of a company that clients purchase.
Businesses adhere to the demands of CSR by signing to the UN global compact pledge to demonstrate an interest in global citizenry in areas such as labor standards, human rights, and environmental protection. Companies also know that their retail products face fierce competition, hence difficulty in differentiating products or businesses from others. Products attributes such as quality or price no longer inform the decisions of customers. Hence, companies use CSR to address customers’ ethical needs through becoming good corporate citizens as clients focus on the organizational attributes during evaluation.
The Green issue is another area of ethical concern that the retail industry address on their operations. Every retailer has an obligation to the environment to reduce carbon emissions or their impacts on the environment because of their businesses. Additionally, reduction of power usage, reduction of wastage of resources, as well as the use of green energy forms the basis of a company’s green issue as far as the ethical obligation to the environment is concerned.
Companies, especially in the retail industry are scaling up their environmental responsibilities to address the issues of green retailing. Businesses have taken steps toward reducing the amount of carbon emission. For example, Wal-Mart a top retailer installed small generators in its over seven thousands rig trucks so that engines can go off while parked. This strategy was alongside other energy efficiency and green energy strategic measures such as eliminating thirty percent of their energy use (Bălan 58). Ultimately, the literature shows that environmental issues were some of the earliest ethical concerns in business and now, it forms a fundamental concern among the world’s top retailers. For Wal-Mart alone, addressing the issues of green economy has ensured savings of up to two hundred million a year through energy efficiency measures they have in place.
A business ethics issue that retailers subscribe to or face today is the product safety. Product safety refers to the fundamental right of consumers to safe products. A product safety act, proving that only safe products retail in the market safeguard this ethical issue. Product safety in the retailing context is the extent of risk associated with using a product. In a natural order, every product has some level of associated risks, which must be under the acceptable risk range. It is an ethical obligation of retailers to ensure that products passed on to customers meet the minimum risk criteria allowed by the quality and standards organizations. Issues of safety may arise in any number of ways, a company may be a victim of sabotage or might make a foolhardy decision hence might pass a product that is unsafe to consumers violating their ethical obligation.
The issue of product safety in the retail industry is critical throughout the supply chain as it directly affects the welfare of the customers. In the textile retail, for example, retailers ensure that manufacturers conform to safety standards by proof of various safety certificates such as Children’s Product Certificate and General conformity certificates. Within the retail industry, the safety of a product is a responsibility of retailers as any news of unsafe product destroys the customer faith in the company, hence detrimental effects on the reputation of the company. However, competition within the retail industry generally aids in ensuring that goods and services that go through a supply chain are safe and of high quality (Trevino and Nelson 365).
Ethical sourcing has been a significant concern and a topic of debates by labor movements, pressure groups, governments, and media regarding the fair trade and ethically sourced raw materials. This issue attracts a significant concern in the clothing industry, where the working condition and compensation strategies from where the global textile raw materials are sourced are pathetic. The growing concern for the environment has also escalated debates on ethical sourcing, especially the increased consumer awareness for sustainable sourcing. Within the clothing sphere, many customers now decide to purchase products or clothing sourced from organic cotton, hemp as well as other raw materials that do not have hazardous impacts on the environment.
Businesses, especially retailers now realize that the best way to deal with the issues of ethical sourcing is to maintain a reputation for fairness. Moreover, the ever-increasing need of consumers that retailers conform to responsible sourcing means those companies will keep off issues such as products sources utilizing child labor or encouraging poor working conditions. For instance, in 2008, BBC featured a documentary of Primark’s suppliers utilizing child labor. Consequently, a study afterward revealed that forty-four percent of the retailer’s clients were potentially considering another outlet subject to this discovery (Hall).
In conclusion, business ethics to a retailer is an obligation. Some of the critical ethical consideration within the retail industry concerns the customer’s interest. However, failure to observe such principles hurt the reputation of the retailer leading to a loss of competitive advantage or sometimes loss of business and consumer trust. Companies apply necessary checks like manufacturer certification of products, adherence to some set standards and principles by environmental authorities or governments to ensure address and redress of business ethics in the retail industry. Ultimately, CSR is a major ethical encompass of retail operations that most ethical issues form a part.
Works Cited
Steiner, John F, and George Albert Steiner. Business, Government, And Society: A Managerial Perspective. 13th ed., Mcgraw-Hill Irwin, 2012.
Alee, Raul. "Business Ethics: Consumers and the Supermarket Retail Industry in Chile." Asean Journal of Management & Innovation (2014).
Ni, Anna, and Montgomery Van Wart. "Corporate Social Responsibility: Doing Well and Doing Good." Building Business-Government Relations. Routledge, 2015. 175-196.
Bălan, Carmen. "Carbon-footprint policy of the top ten global retailers: contribution to sustainable development." Amfiteatru Economic Journal 12.27 (2010): 52-65.
Trevino, Linda K., and Katherine A. Nelson. "Managing Business Ethics. Straight Talk About How To Do It Right. John Willey&Sons." Inc (2011).
Hall, James. "Primark Faces Customer Exodus After BBC 'Child Labour' Allegations". Telegraph.Co.Uk, 2008, https://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/2792753/Primark-faces-customer-exodus-after-BBC-child-labour-allegations.html. Accessed 12 Nov 2018.
