Ethics in business: a glossary

A

affirmative action: US policy relating to equality of employment opportunity, in terms recruitment, pay and employee development, regardless of sex, religion, race or disability.

Agenda 21: title of a document from the Rio earth summit in 1992, signed by over 170 countries in a show of commitment to a worldwide programme of action to help the world develop in a more sustainable way. It singles out local councils as having a key role to play, and many authorities in the UK are working on environmental projects with local businesses, schools, charities and community organisations under the heading of Local Agenda 21.

B

BATNEEC: acronym for Best Available Techniques Not Entailing Excessive Cost that relates to alternate cost-effective processes to those which pose a threat to the environment.

benchmarking: the comparison of performance in similar processes usually against primary competitors, although it is also becoming common to benchmark against organisations in different industries and sectors that may be more willing to share information. Large organisations may also benchmark against internal functions and departments that are successful in a particular field or activity.

Brundtland report: 1987 report, Our common future, emanating from the international committee chaired Gro Harlem Brundtland.

BS7750: British Standard for environmental management systems (EMS).

Business in the Community: business body with a membership of around 450 corporations that promotes the economic and social regeneration of communities through business involvement and which, in 1991, established the Opportunity 2000 programme.

C

carbon tax: a tax of fossil fuels to encourage industry to use less fuel and less carbon intensive fuel.

cause-related marketing: a partnership between a company and a non-profit organisation which increases the company's sales while raising money and visibility for the cause. A CRM campaign may use advertising, public relations and other marketing tools, and is paid for by the sponsoring company.

CERES principles (formerly the Valdez principles): established by the Coalition for Environmentally Responsible Economies (CERES) in the USA in 1989 in response to the Exxon Valdez oil spill off Alaska. They define an environmental ethic with criteria by which investors and others can assess the environmental performance of companies. The principles cover such areas as: protection of the biosphere; sustainable use of natural resources; and risk reduction.

codes of conduct: written statements of business principles which are intended to guide activity.

compliance audit: an evaluation of business activities to ensure legal requirements are being met.

D

Dignity at Work policy: a written statement outlining employees' rights which consolidate in one place policies covering race and gender discrimination, harassment, bullying and victimisation, for example.

duty of care: a requirement for a business to show that all its waste has been disposed of in a responsible manner (eg, a licensed disposal site).

E

eco-labelling: European Community initiative to show products that meet high environmental criteria.

ecological footprint: a measure of the sustainability of economies, the footprint is the amount of land required to meet a typical consumer's needs. One estimate in 1996 suggested that in the United States it takes 12.2 acres to supply the average person's basic needs; in the Netherlands, eight acres; and in India, only one acre. The Dutch ecological footprint is 15 times the area of the Netherlands, whereas India's footprint exceeds its area by only about 35%.

EMAS: the European Union Eco-Management and Audit Scheme is a voluntary environmental accreditation scheme available in all EU member states to organisations involved in industrial activities. Some member states, including the UK, have extended the scheme to local authorities. It requires details of an organisation's environmental policy and management system to be published in an environmental statement, validated by an independent verifier and then submitted to the "competent body" - the Department of the Environment, Transport and the Regions (DETR) in the UK. The DETR runs an EMAS helpline on 0171 890 3032.

employee volunteering: employer-supported schemes where employees volunteer to donate their time and skills to a charity or community group. Practice varies, but often at least some of the volunteering takes place in work time and employers provide facilities, such as office space, telephones and stationery to support employees' activities.

environmental audit: an evaluation process that monitors, on an ongoing basis, the environmental impact of a company's activities.

environmental burden: a quantitative indicator of the extent to which emissions may exert an environmental effect. The technique, pioneered by ICI, calculates an environmental burden (EB) for each emission by assigning a factor which reflects the potency of its possible impact on: acidity; global warming; human health; ozone depletion; photochemical ozone creation; aquatic oxygen demand; and ecotoxicity to aquatic life. The potency factor is multiplied by the weight of the emission to calculate the EB.

environmental impact assessment: a formal evaluation of the environmental impact of a product, process or project.

environmental impact: the change to the environment caused by a substance release.

environmental management system: an environmental management system (EMS) identifies an organisation's key environmental effects through a thorough audit. It sets targets for reducing environmental impacts and procedures to monitor progress. The process is often accompanied by the publication of an environment report. An EMS can be accredited through voluntary schemes such as EMAS and ISO 14001.

Ethical trading initiative: campaign backed by major companies, trade unions, aid agencies, campaigning groups and the Government that was launched in 1997 and which aims to promote standards designed to protect the basic human rights of workers worldwide.

G

global warming: a rise in planet temperature resulting from an increase in the emissions of "greenhouse gases", notably carbon dioxide from the burning of fossil fuels.

globalisation: the process of global economic integration.

I

ISO 14001: a voluntary international standard which superseded the British Standard BS 7750. It allows organisations to gain accreditation for their environmental management systems provided they meet the conditions of the standard. It differs from EMAS in not requiring the organisation to publish independently validated information on its environmental performance.

K

kyosei: the Japanese notion of living and working together for the common good to enable mutual prosperity.

  • life-cycle assessment: the evaluation of the impact of a product, process, service or function over its entire life, from the extraction of raw materials to manufacture to disposal. There are four stages to a life-cycle assessment: initiation, inventory, impact analysis and improvement.

    M

    matched giving: the employer agrees to donate an amount to charity equivalent to the sum raised or donated by the employees either as individuals or as a group. The employer's obligation under such a scheme is often limited to a maximum donation.

  • Natural Step: the Natural Step was developed in Sweden in 1989 and defines the principles of a sustainable society. The principles look at the earth as a complex system of which humans are an integral part. The four principles are:

    1.       Substances from the earth's crust cannot systematically increase in the biosphere.

    2.       Substances produced by society cannot systematically increase in the biosphere.

    3.       The physical basis for the productivity and diversity of nature must not be systematically deteriorated.

    4.       There must be fair and efficient use of resources to meet human needs.

    non-governmental organisations (NGOs): organisations that campaign on one issue, such as human rights and environmental issues, and which are independent of government. Typically the title NGO is applied to trade unions, church groups and environmental activists, for example, but can also include representatives of business.

    O

    Opportunity 2000: business-backed programme developed by Business in the Community to increase the quality and quantity of women's employment opportunities in private and public sector organisations. Around 325 organisations have committed themselves to improving the status of women within their organisations by signing up to the scheme.

    P

    PerCent Club: a group of almost 300 companies committed to making an investment in their communities by contributing at least half of one per cent of their UK profits, or one per cent of dividends, to the community.

    polluter pays: the principle of charging the polluter for the damage caused by pollution, including the costs to the environment.

    Prompt Payers Code: CBI-sponsored code of practice which outlines best practice in terms of the payment of corporate creditors.

    Q

    Quality of work life theories: concepts of job satisfaction and job enrichment involving activities such as job enlargement and job rotation, developed with the aim of reducing the monotony and boredom associated with repetitive production/assembly line work.

    R

    Race for Opportunity: the Campaign for Racial Equality's equivalent to Opportunity 2000, which seeks to encourage companies to develop a staffing composition which reflects representation in society as a whole, and 80 organisations had joined the scheme by June 1998.

    reconsumption: the use of reuse of a product either in whole or in part. Reconsumption relates to the five "R's" - reuse, repair, rejuvenate, refill and recycle.

    S

    secondment: employees are loaned to another organisation, often a community or charity group, to provide skills and expertise. The employee may gain valuable development experience including project management, teamworking and increased motivation.

    Social accountability 8000: standard developed in 1997 by the Council on Economic Priorities Accreditation Agency (CEPAA) for ethical sourcing and the production of goods. It is based on the conventions of the ILO, the Universal Declaration of Human Rights and the United Nations Convention on the Rights of the Child and is designed for independent verification by an external auditor.

    social audit: regular, externally verified process to measure and report on an organisation's social performance in terms of the various stakeholder groups, such as the community, employees, the environment and suppliers.

    social responsibility: the obligations that a business has toward its stakeholders, including staff and the communities in which it operates, and to society in general.

    stakeholder theory: the premise that property rights, in this case those derived from share ownership, are not absolute and that other constituencies, both directly and indirectly affected by a corporation's actions, also have comparable, if not more important, rights. Stakeholding is a shift from property rights to membership rights.

    stakeholders: the different groups that are directly or indirectly affected by corporate activities. Stakeholders can be split into two groups, primary and secondary. Primary stakeholders include: shareholders and investors; employees; customers; local communities; suppliers; and the natural environment. Secondary stakeholders include: government and regulators; trade unions; and the media; environmental pressure groups; and animal welfare organisations.

    sustainability: economic and social development that occurs without detriment to the environment and the natural resources on which future human activity and development may depend.

    sustainable development: sustainable development was defined by the Brundtland Commission as meeting the needs of the present without compromising the ability of future generations to meet their own needs.

    T

    triple-bottom line: a concept to help companies move towards sustainable business developed by consultancy SustainAbility. The three bottom lines that business needs to account for represent society, the economy and the environment. Society depends on the economy - and the economy depends on the global ecosystem, whose health represents the ultimate bottom line.

    W

    whistleblowing: a situation in which an employee reports unsafe, dishonest or unethical practices by a colleague or the employing organisation.

    ORGANISATIONS PARTICIPATING IN THIS ISSUE OF MANAGEMENT REVIEW

    Allied Domecq

    EEF South

    OKI (UK)

    Anglian Water Services

    Elf Oil UK

    Optical Fibres

    Aylesford Newsprint

    Ericsson

    Pinneys of Scotland

    BAA

    Forte Posthouse Hotels

    Polar Pumps

    Biffa

    Glaxo Wellcome

    Reading Borough Council

    Birmingham City Council

    Hewlett-Packard

    Rhodia & Rhône-Poulenc

    Body Shop International

    J Sainsbury

    ScottishPower

    Boots Company

    Llandough Hospital & Community NHS Trust

    SMC Pneumatics (UK)

    British Airways

    London Borough of Croydon

    Snap-On Tools

    Bucknall Austin

    NIPA Laboratories

    Sun Valley Foods

    Comcast Teesside

    Northern Rock

    Wilkinson Sword

    Co-operative Bank

    Novartis International

    Xerox

    Drake & Scull Technical Services

    NRG Group

    Yorkshire Water Services