Kameko, the CEO of an oil drilling company, and her top management team recently discovered that their facilities are damaging a beach in Asia and the local wildlife. Apply Bagley’s ethical decision tree to help Kameko decide if temporarily closing or not closing the facilities is the right thing to do. ?Assuming it is legal to close the facilities, which of the following would you advise Kameko when she asks you, “Should we close the facilities?”
Multiple Choice
Yes, close the facilities because stopping business maximizes shareholder value.
No, ?keep the facilities open because that maximizes shareholder value.
Yes, close the facilities because not taking action would be unethical.
No, ?keep the facilities open because environmental damage is not a big deal.
The correct answer and explanation is:
The correct answer is:
Yes, close the facilities because not taking action would be unethical.
Explanation:
When applying Bagley’s Ethical Decision Tree to the scenario, the decision-making process involves analyzing the situation from a moral perspective, weighing the potential consequences, and considering the broader ethical implications. Here’s how each step of the decision tree applies to this case:
- Identify the ethical issue: The core ethical issue here is whether to continue operations that are causing environmental harm to a beach and local wildlife. The impact on the environment and wildlife represents a clear moral dilemma, as the company’s activities are contributing to long-term ecological damage.
- Consider the consequences: While keeping the facilities open may generate revenue and profits (which benefit shareholders), the environmental damage is a negative externality. This harm can have far-reaching effects on the ecosystem, potentially leading to the extinction of species and the degradation of natural resources that local communities depend on. The long-term damage to the company’s reputation and potential legal liabilities from environmental harm are also important factors.
- Consider the stakeholders: Kameko and the management team must consider not just the shareholders but also other stakeholders, such as the local communities, wildlife, employees, and future generations. The wellbeing of the local people and wildlife is at stake, and ignoring this harm could result in long-term damage to the company’s reputation and relationships with customers, regulators, and investors who prioritize sustainability and corporate responsibility.
- Is there a clear duty to act?: Given the ethical responsibility to avoid harm and promote the well-being of others, closing the facilities is the morally right decision. Environmental stewardship is a crucial element of corporate social responsibility, and failing to act could result in a loss of trust and the perpetuation of harm.
- Making the decision: Closing the facilities would demonstrate that the company values ethical principles over short-term profits. It would show the company’s commitment to social responsibility and could ultimately improve shareholder value by safeguarding the company’s long-term sustainability, avoiding regulatory issues, and aligning with the growing trend of environmentally-conscious business practices.
In conclusion, while it may seem that keeping the facilities open could maximize short-term profits, not taking action would be unethical and ultimately damaging to both the environment and the company’s reputation. Therefore, closing the facilities is the right ethical decision.