6.2 — Environmental and Ethical Issues

2026 📋 Syllabus Objectives

By the end of this topic, you should be able to explain and apply:

  1. How business activity can impact on the environment (e.g. global warming)
  2. The concept of externalities — external costs and external benefits of business decisions
  3. Sustainable development and how businesses can contribute to it
  4. How and why businesses respond to environmental pressures and opportunities (e.g. pressure groups)
  5. The role of legal controls over business activity that affects the environment
  6. Ethical issues businesses face — especially conflicts between making profits and doing the right thing
  7. How businesses react and respond to ethical issues (e.g. child labour, paying fair prices to suppliers)

📖 Main Content

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6.2.1 — How Business Activity Impacts the Environment

What is the environment? The environment is our natural world — this includes clean air, fresh water, forests, oceans, and undeveloped land. Business activity can damage the environment in many ways.

Key negative impacts of business activity:

  • Air pollution — Factory chimneys release smoke and harmful gases into the air. Aircraft engines burn fuel and release gases into the upper atmosphere, which damages the ozone layer (the protective layer around the Earth).
  • Water pollution — When businesses dump waste materials into rivers or the sea, it kills fish and wildlife and makes water unsafe for humans.
  • Carbon emissions and global warming — Transporting goods by ship or truck burns fossil fuels (oil, gas, coal). Burning fossil fuels releases carbon dioxide (CO₂) into the atmosphere. This traps heat from the sun and causes the Earth's temperature to rise — this is called global warming or climate change. Global warming causes rising sea levels, extreme weather, and loss of habitats for animals.
  • Resource depletion — Businesses use up natural resources like forests, minerals, and fresh water faster than the Earth can replace them.

💡 Simple Example: A car factory that burns coal for energy releases carbon dioxide, which contributes to global warming. Ships transporting those cars overseas also burn fuel and add to carbon emissions.

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