The economics of ethical behaviour and environmental management

Ethics and economics have long been viewed, if not as being incompatible, at least as being at odds with each other. This has often translated in the field of environmental policy and management into radical opposition between supporters of economic performance and environmentalists. It has seemed that the ethics of economics and that of environmental preservation were themselves at odds. The discussion has opposed utilitarian and duty-based philosophies. Ultimately, the firm manager, especially when under financial pressure, must decide between keeping the firm in business and doing the right thing for the environment. This view of things is now itself at odds with reality. One needs to explain why an increasing number of firms, both big and small, are setting up environmental management systems, making environmental investments and reducing risks over and beyond legal requirements, even when the benefits are not at all obvious, even in the long run. Is it that economics and ethics have not only become compatible, but lend support to each other? If so, how is this possible? What are the social processes at work? And can we come up with a theoretical framework that can describe this new reality? Even at the philosophical level, are utility based and duty based ethics as contradictory as they seem? This paper investigates these questions and shows how, philosophically, the two ethics may be efficiently combined and how an analytical framework may be devised to explain society’s new ‘ethical incentives’ and self-moralising processes. A new role for government emerges.