U1.09 — Ethical practice (external environment)
Overview
Ethical practice means doing the right thing — even when it’s not the easiest or most profitable choice. In business, ethics are the moral principles that guide how decisions are made and how a company interacts with customers, employees, the community, and the environment.
A business that operates ethically builds trust, loyalty, and long-term success — while unethical behaviour can damage reputation and lead to legal or financial problems.
The external environment includes everything outside the business that affects how it operates — such as government, the community, competitors, and natural resources. Ethical practice helps businesses respond responsibly to these outside pressures.
Environmental Responsibility
Businesses are expected to protect the environment and reduce their impact.
Example (WA): Fortescue Metals Group investing in renewable hydrogen and low-emission technology.
Example (Local): KeepCup and Zero Store Fremantle promoting reusable and sustainable products.
Ethical Focus: Reducing waste, managing emissions, using sustainable materials, and protecting ecosystems.
Fair Treatment of Customers and Suppliers
Ethical businesses treat all stakeholders with honesty and respect.
Example: Woolworths and Coles being transparent about product sourcing and food safety.
Example (WA): Farmer Jacks supporting local growers.
Ethical Focus: Fair pricing, accurate advertising, and transparency in product quality and origin.
Community and Social Responsibility
Businesses contribute positively to their communities.
Example (WA): Rio Tinto funding education and community programs in regional mining towns.
Example: Bankwest supporting local charities and financial literacy workshops.
Ethical Focus: Giving back, supporting local employment, and investing in community wellbeing.
Corporate Governance and Transparency
Ethical practice includes honest reporting, strong leadership, and compliance with laws.
Example: Australian companies must follow the Corporations Act 2001 (Cth) and Australian Consumer Law.
Ethical Focus: Accountability, accurate financial reporting, and clear communication with stakeholders.
Respect for Cultural and Indigenous Rights
Businesses in Australia have an ethical duty to respect Aboriginal and Torres Strait Islander cultures and traditions.
Example (WA): Tourism operators in Broome and Margaret River working with Indigenous guides and communities.
Ethical Focus: Cultural respect, genuine partnerships, and accurate representation.
Why Ethics Matter
- Builds trust with customers and the public.
- Improves brand image and customer loyalty.
- Attracts responsible investors.
- Reduces risk of fines, scandals, or boycotts.
- Encourages long-term sustainability over short-term profit.