Ethics Notes - Definitions
Categorical Imperative: Kant`s idea that we must act in ways that we can wish every person
would act. Every person should treat each other as persons, not as tools that can help them
someday. Example: “Lying whenever necessary.” If everyone acted like this, then the notion of
lying and truth-keeping would be meaningless. Not everyone would be treated equally.
Ponzi Scheme: A ponzi scheme is an elaborate plan through which scammers attract investors
to invest with them (since they provide high return on investment margins), although they pay
investors back with the money provided by other investors. It is almost like a never-ending
cycle, which can only be put to a stop if the scammer is caught. A famous ponzi scheme
example is that of Bernard Madoff in 2008, where he attracted people to invest with him for
extremely high returns. Madoff was eventually caught, and admitted to his sons that he was
running a scheme. Madoff’s scheme was the largest type of investor fraud ever to have been
recorded in history.
Greenwashing: A tactic exercised by companies and businesses to demonstrate high levels of
“Green PR” without actually taking any green initiatives. Example: Labelling coal as “clean coal”
which is an oxymoron. This is because burning coal, or fossil fuels, there is no such thing as
“clean”. Therefore, “clean coal” can be a form of greenwashing.
Triple Bottom Line: The idea that business must not only adhere to the “bottom line” of their
business’s operations; rather they must also incorporate environmental and social aspects of
their operations. TBL is important in today’s business environment because of the changing
face of business reputation, based on their actions. A highly profitable business may not be the
best company because of the TBL idea.
Corporate Philanthropy: The effort of businesses to contribute to society socially; through
donations of money or goods and services in kind, voluntarism (where corporate employees
work for social causes), and sponsorship of events that contribute to society. Through
corporate philanthropy, a business promotes their reputation through a solid TBL, since they
show that they are paying attention to the social aspects of their business as well.
Veil of Ignorance: Idea introduced by John Rawls, which proposes the idea of remaining
ignorant as to what social status you hold or others hold in society. This promotes equality and
non-bias when dealing with others, which indeed is an ethical action. People would be acting
non-impartially to each other.
Sustainable Development: Development ensuring that the use of resources and the impact on
the environment today does not damage prospects for the use of resources or the environment
by future generations. Example: construction of energy efficient buildings.
Conflict of Interest: A situation in which an individual has a private or personal interest that is
sufficient to appear to influence the objective exercise of that individual’s duties. Example: A male manager of a company dates a female employee who is responsible for reporting to him.
The manager may do things which may benefit the female employee, or vice versa.
A Moral Problem: A moral problem is basically a problem wherein the issue is not of something
that must or must not be done, but something that should or should not be done. Example: if
you should eat the whole pie yourself, or if you should share the pie with your visiting cousin.
Economic Efficiency Ethic: Judges the moral implications of a decision by its economic
consequences and provides the moral justification for a market system.
Social Capital: Social capital refers to the willingness of people to help each other under social
circumstances; without the use of money. Society works best when there is plenty of social
capital. If there is very little social capital in society, drastic events such as wars and revolutions
may take place. Also, little social capital may provoke citizens to do things such as organized
crimes in order to attain what they need. Social capital is an important aspect in the
sustainability of society.
The Principle of Utilitarian Benefits: This principle states that actions must be taken to ensure
the greatest good for the greatest amount of people. Actions must not be taken which result in
a greater net harm to society, as opposed to a greater net benefit. The biggest problem with
this principle is that it does not accommodate the well-being of many in society, since its only
goal is to promote the greatest good for society instead. Many people may be left out and
harmed as a result of an action which promotes the greatest benefit to most of the people.
Political Globalization: Political globalization refers to the amount of individual and collective
organizations which impact or aim to impact the world as a whole.
1909: 40 inter-governmental organisations (IGOs) and 200 international non-
governmental organisations (INGOs)
1996: 250 IGOs and 5,000 INGOs .
Deontological Ethics: The idea of behaviour to be labelled as ethical or not ethical, based on its
adherence to the rule or rules. Sometimes referred to as “rule ethics” since rules bind a person
to their duties.
Microfinance: The provision of financial products, such as micro-credit, micro-insurance, and
savings accounts, to persons living in areas of poverty without access to banking services. The
aim of microfinance is to alleviate poverty, by providing low-income families in rural areas of
the world the chance to start their own business to sustain their lifestyle. Microfinance is not a
new idea; it was introduced in 1700s. However, the rate of load repayment is significantly high
Whistleblowing: An action where an individual within an organization waves a red flag over the
company’s internal operations, which are illegal. They alert authorities of the actions of the
executives of the company in order to put an end to this wrong behaviour. Sherron Watkins was the executive employee of Enron who demonstrated the act of whistleblowing. She had
emailed the CEO of the company of inaccuracies in the financial statements of the company,
which leaked out to authorities.
Corporate Sustainability: Corporate activities demonstrating the inclusion of social and
environmental as well as economic responsibilities in business operations as they impact all
Cost Benefit Analysis: An analysis conducted to evaluate if an action’s benefits outweigh the
costs, or vice-versa. Cost Benefit analyses are conducted to identify if an idea is feasible, and if
it is determined to be the better option out of other alternatives. Cost-benefit analyses must
always be conducted by companies in their decisions, so that they pick the best choice. An
example of the usage of the cost-benefit analysis is when a company is determining whether or
not to buy a new type of equipment. (Elaborate on this).
Mission Statement: A company’s mission statement explains the purpose of the company. They
are meant to serve as a quick overview of why the company is doing what they are doing, in
order to attract more members/employees and in order to keep the current
members/employees on board. For example: Microsoft’s mission statement is “We work to
help people and businesses throughout the world realize their full potential”. This displays the
purpose of their company.
Inalienable Right: Rights which are given to all citizens, but may be surrendered or transferred
through governmental or legal procedures. The difference between inalienable and unalienable
rights is that inalienable rights may be surrendered in certain circumstances, but unalienable
rights cannot be surrendered or given up under any circumstances whatsoever. An example of
an inalienable right is property rights; rights which are given to a person but may not be
surrendered unless the consent of the person owning those rights are given.
Impartiality: Judgements should be based on objective criteria, instead of it being based on
bias, prejudice, or any other ideas which may influence the judgments. Example: Picking a
candidate not because you know them from before, but because they possess more merit than
Invisible Hand: Adam Smith’s idea that markets in an economy is driven by certain forces that
appear “invisible” to us. A major force which shapes the market is the promotion of a
company’s or an individual’s self-interest. By doing this, an individual or a person may not know
that they are positively or negatively affecting the self-interests of others in the economy,
hence their actions act as an “invisible hand” which moulds the appearance of an economic
Limited Liability: The idea that investors or shareholders are liable to the company only