The economics of ethical behaviour and environmental management

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