Automotive Industry

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There are different principles that a company may adopt towards business ethics, they range from the idea that ‘business is business’ and that anything is acceptable practice as long as profits are maximised, at the other end of the scale, the idea of good ethics mean good business suggests that if a company acts ethically it will have a positive affect upon profits, for example, if a company sells items of poor quality customers will not return for a second purchase.

It is often thought within business that if one is acting within the law then therefore they are acting ethically, this is not always the case, for example, in some countries it is still legal to sell garments made with animal fur, yet not everyone would class this as ethical/moral. It is important for companies to recognise their practices and how they may be interpreted through the eyes of other people. It is also important for companies and industries as a whole to establish which stakeholder they have duties towards, depending on which stakeholders this may be, could increase or decrease pressures upon that industry to change for the ethical good of that certain stakeholder.

The greatest driver for change in terms of ethics comes from consumers; this may be through avoidance, targeting, political action or direct action by demonstrating. There are many sources in which consumers can access information regarding the policies of companies, for example, consumer magazines such as Ethical Consumer or Which? The way in which business’ can respond to this may be by increasing their ethical profile, by investing in community projects, providing a wider choice of products or even just by making information more available to it’s consumers.

In recent years a set of ethical indices has be created, known as FTSE4Good, this was established in July 2001 and “is about working out what is the globally accepted standard for companies and rewarding those that achieve that standard” Parker, G (2001). There are certain criteria which must be met to appear on the register, which is laid out in Appendix A. There are also exclusions from the register; these include, not being involved in nuclear power, weaponry or tobacco industries. FTSE4Good will be discussed in more detail below.

Ethical Influences in the Automotive Industry

The FTSE4Good is a good indicator of how ethical the car industry is. The criteria that is set out by the FTSE governing board in order to determine the classifications of different industries, is listed in Appendix A. By using this criterion it is clear to see that the car industry can be classified as a high impact sector. In terms of policy, the car industry is keen to ensure that there is commitment to the use of targets, monitoring and auditing and to public reporting. This is done with regards to such things as CO2 emissions etc and the continuous effort to reduce them. The responsibility for the policy also lies at board or developmental level.

The car industry also accepts that there are globally applicable corporate standards. Once again these include reducing CO2 emissions and safety laws concerning such issues as air bags. In terms of management it is important that companies within the car industry have an environmental management system in place. The majority of companies do and it is this system’s job to ensure that there is an environmental policy, to identify the significant impacts and to document objectives and targets in key industries as well as carrying out other important roles. The environmental report is the final section that is looked at in the criteria to determine the impact of the sector. For high impact sectors such as the car industry this means that there must have been a report published within the last 3 years which covers the whole group and meets at least 3 of the 4 indicators set out in Appendix A.

There are many stakeholders within the automotive industry which could impact upon decisions made with regards to ethical issues, the shareholders within each company are massive stakeholders but the industry also gains a lot of publicity about every aspect of the way in which they perform their business, with this in mind it is thought that consumers and the government would inflict huge demands for change within this industry to ensure that all policies were ethical, not just in terms of the environment but also with regards to trade union relations, marketing decisions, wages and conditions, political donations, and such like.

The New Economics Foundation is trying to assist the Government in educating consumers about the ethics of ‘green’ cars and how they help the environment. They believe that by introducing new ‘green labelling’ onto motor vehicles consumers will be able to make an educated decision over their choice of car. “The fuel efficiency labels show information such as how many miles to the gallon a car gets, how expensive it is to run and whether it qualifies for a reduction in road tax due to emissions output.”

The Government is also encouraging the conversion of vehicles to LPG. “In 2001 grants for LPG vehicles grew by almost 50%, as consumers are more concerned with the environment than ever before.” ( The Ethical Purchasing Index, which illustrates the amounts of money being spent through ethical consumerism in the UK in regards to green transport (including grants for the purchase of clean fuel vehicles had increased by 4.8% from �21 million to �22 million.

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