Ethical Issues

Stakeholder conflicts

There is a great deal of potential for stakeholder conflict with MNCs.

Being ethical and green is expensive! Shareholders may question the cost of ethical behaviour in the short run even though it may give the business a competitive advantage – the consumer’s need for cheaper energy can cause damage to the environment and local communities

Pay and working conditions

Although many MNCs do pay above-average wages and have strong CSR policies in place, others may exploit workers in terms of pay, child labour, sweatshops and dangerous conditions. The collapse of the factory in Dhaka, Bangladesh, in 2013 killed over 100 people and put Primark to shame for the pay/working conditions that their supply chain was using.

Environmental considerations

MNCs can cause great damage to the environment by their processes and the transportation of their products. This damage can be short or long term and the resulting situation may be unsustainable. Examples include the impact on areas such as the Amazon rainforest.

Supply chain considerations

Many MNCs have long supply chains that are difficult to control in terms of ethical working practices. Cheap clothing chains have been involved in controversy on several occasions over the exploitation of labour. Video example - BBC news undercover investigation – Primark:

Marketing considerations

MNCs need to take into account how they promote and package their products to avoid controversy. This covers not just the need to be sensitive (as in section 3.3.3) but also more controversial practices such as tobacco companies targeting youngsters in developing economies as they did here in the 70s/80s, or the modern-day largely unregulated e-cigarette industry!

Ethical Issues, figure 1Ethical Issues, figure 2