Introduction
Business ethics indicates the principles as well as directing a company’s activities to make sure impartiality, transparency, and accountability in its business practices. It includes the application of ethical structures to estimate decisions along with behaviours specifically concerning stakeholders which include workers, consumers, as well as providers along with the environment. Ethical business practices are essential as they promote trust to boost the reputation of the organisation and decrease dangers combined with legislative penalties along with economic losses. As suggested by Crane et al. (2019), organisations that incorporate ethical practices inside decision-making procedures probably accomplish lengthened success along with sustainable development.
In the context of unethical practices, the brand Zara an internationally well-known fashion brand also a segment of the Inditex Group has faced efficient criticism. In spite of its market dominance as well as popularity, the brand has been involved in labour exploitation scandals specifically in nations such as Brazil in which employees were discovered to be working in sweatshop situations with very low salaries along with poor security measures. As suggested by Burgen and Phillips (2018) highlighted that Zara’s providers hand involved in forced labour practices, including migrant employees working 12-hour shifts in dangerous and unhealthy situations with salaries between $156 and $290 a month. The minimum remuneration in Brazil is $344. In terms of environmental degradation, the contribution of Zara via its fast-fashion model has stimulated concerns. As stated By Sitaro (2020), Zara generates huge quantities of clothes at a quick speed, accelerating extreme waste as well as carbon emissions along with the consumption of unsustainable assets.
Section 1: Evaluation of Philosophical Bases
Philosophical Bases Overview
Several philosophical structures can be utilised for the estimation of Business ethics, every single one provides a unique perspective. Three common structures are ‘Utilitarianism’, ‘Deontological ethics’, and ‘Virtue ethics’.
| Utilitarianism | Jeremy Bentham and John Stuart developed this theory that concentrates on the results of actions. The ethical choice as per utilitarianism theory, manufactures the exceptional good for a great number of individuals, as supported by Scarre (2020). The fundamental principle of this theory is maximising all-inclusive happiness or utility and at the same time minimising damage. Utilitarianism requires that organisations consider the advantages as well as consequences of their choices on stakeholders which include consumers and workers. |
| Deontological Ethics | Embedded in the work of Immanuel Kant, the theory of deontological ethics states that actions are ethically correct or wrong on the basis of a bunch of regulations or responsibilities, in spite of everything of the consequences. This theory highlights that organisation should respond in terms of their principles which include fairness as well as honesty along with respect for human rights, even on condition that following these principles might not maximise the level of profits. Deontology concentrates on the inherent morality of activities and the requirement for organisations to be supportive of ethical measures constantly, as suggested by Udayakumar et al. (2021). |
| Virtue Ethics | This theory is developed by the philosopher Aristotle. The theory of virtue ethics concentrates on the character as well as virtues of the decision-maker in c comparison with the particular activities or their results. This particular theory postulates that ethical behaviour has its origins in people who personify virtues which include honesty as well as courage along with compassion and in addition integrity, as supported by Dursun and Mankolli (2021). In the context of business, the theory of virtue ethics highlights promoting a corporate environment in which the theory of ethical virtues is cultivated and decisions reflect these values in its regular functions. |
Application to Zara
Utilitarianism and Zara’s Business Practices
Utilitarianism needs organisations to consider the extensive influence of their choice on all investors. The fast-fashion model of Zara provides priority to quick production along with affordable products which benefits customers in the short term but causes lengthened damage for other investors. One of the most significant scandals involved the supply chain of Zara in Brazil, in which employees are being forced to go through sweatshop-like situations. Migrant employees work 12-hour shifts in dangerous and unhealthy situations with salaries between $156 and $290 a month, as supported by Burgen and Phillips (2018). At the same time, Zara’s practices increased profits and customer satisfaction, they caused massive suffering for employees by violating their fundamental rights and health. The fast fashion model of Zara provides a contribution to environmental degradation that damages international environments along with future generations. In America alone, approximately 11.3 million tons of textile waste which is equal to 85% of all textiles ends up in landfills every single year, as suggested by Igini (2024). Zara’s lack of success for the purpose of decreasing ecological damage denies the utilitarian principle regarding maximising all-inclusive goods, as the shortened advantages of fast-fashion for customers.
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Deontological Ethics and Zara’s Supply Chain
The theory of Deontological ethics highlights cohering to ethical responsibilities as well as principles which include the responsibility of treating workers impartially and respecting human rights. Zara’s dependence on providers that violated labour rights as well as security measures showcases a transparent violation of deontological principles. The providers of Zara in Brazil utilized migrant workers for the purpose of violating fundamental human rights by forcing them to work in hazardous situations for lengthy periods in the absence of impartial payment. As stated by Hanzer (2022), indirect engagement of the organisation in such unethical measures demonstrates a lack of success in supporting ethical responsibilities to secure the wellness of every single employee.
The organisation Zara faced criticism for its ecological measures, as the fast fashion model of Zara promotes overproduction as well as enormous consumption of its assets. The theory of deontological ethics would quarrel over that Zara has a duty to drive sustainability as well as decrease its adverse ecological influence. As suggested by Wolff (2024), the business model of Zara is inherently unsustainable because it advances the quick turnover of the collections of clothes as well as accelerating the reduction of assets along with population.
Virtue Ethics and Corporate Culture at Zara
The Theory of Virtue Ethics highlights ethical virtues which include integrity as well as compassion along with fairness in the context of leadership along with decision-making. The management of labour right along with ecological problems of Zara regarding its corporate environment. As stated by Chávez (2017), Turkish workers alleged for the purpose of unpaid wages to produce Zara clothes as well as attracting attention to a scarcity of integrity in the supply chain management of the organisation. Ethical leadership would provide priority to impartial treatment along with compensation for every single employee. The fast fashion model of Zara classified by excessive production along with consumption highlights ecological liability. As suggested by Conlon (2019), in spite pledge to utilise 100% sustainable materials, the business measures of the organisation Zara reflect inadequate compassion for the globe. Authentic leadership would be able to require an extensive movement in the direction of sustainability as well as ethical labour measures to make sure that these values are essential for the purpose of the organisational functions of the company Zara.
Section 2: Ethical Decision-Making
Concept Overview
‘Ethical decision-making’ is described as the procedure by which organisations make decisions that synchronise with ethical levels to take into consideration the effect on every single investor. The method includes estimating the ethical suggestions for choices to contemplate possible damages as well as advantages and selecting activities that synchronise with principles of impartiality, transparency, and responsibility. As suggested by Lopotan et al. (2020), a fundamental feature of ethical decision-making is considering the longitudinal impacts of business measures on employees, customers, and the ecosystem.
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Critical Evaluation of Zara’s Unethical Practices
One of the leading illustrations of ‘unethical decision-making’ at the brand Zara includes allegations regarding forced labour. The complainants claim that the company Zara has supply connections with three Chinese organisations that the ‘Australian Strategic Policy Institute (ASPI)’ recognised in March 2020 along with the ‘Helena Kennedy Centre for International Justice (HKCIJ)’ recognised in June 2022 as utilising or advantaging from ‘Uyghur forced labour’, as stated by Government of Canada (2023). This choice to partner with providers included in human rights mistreats emphasises a scarcity of diligence along with duty in the supply chain management of the organisation. The decision-making method of Zara concentrates on decreasing production expenses, even at the cost of labourers’ rights in comparison with assuring ethical sourcing. This specific decision deteriorates the worldwide reputation of Zara.
Figure: Ethical Decision-Making Flowchart of Zara
(Source: Self made)
The lack of success of the brand Zara to be involved in ethical decision-making is additionally evident in its sweatshop situations. In the year 2011, the contractor allegedly liable for 90% of the Brazilian production of Zara was discovered to have subcontracted labour to a factory engaging migrant employees from Bolivia and Peru in sweatshop situations in Sao Paulo to manufacture clothes for Spanish organisations. Labourers were discovered to be investing 16 to 19 hours a day with little time break and in debt to their traffickers, as suggested by Cleanclothes (2013). The truth is that the brand proceeded with the dependence on these providers without executing strong mistakes or assuring impartial labour practices demonstrating a systemic lack of success in its ethical decision-making method.
In the supply chain management of Zara, low wages have been an additional vital concern. Zara and the additional subsidiaries of Inditex Group experienced the lowest rating for paying employees a living wage, as supported by Oxfam Australia (2017). This unethical practice originates from the decision-making method that prioritises the reduction of cost more than impartial compensation. The fast fashion model of Zara accelerated efficient ecological pollution in various nations in which the production of fabrics generates enormous waste because of lax regulations, as suggested by Maiti (2024). The organisation Zara provides priority to fast as well as cost-effective production more than sustainable measures for the purpose of avoiding the ecological effect of its logistics. At the time of the Coronavirus pandemic, the distribution approaches of Zara were additionally criticised for failing to make sure worldwide distributive justice, concentrating exceptionally on logistical effectiveness along with benefits in comparison with unbiased access to assets. ‘Ethical decision-making’ would need the brand to adopt sustainable measures.
Section 3: Response by Leaders and Employees
The ‘leadership’ and workers of Zara have faced efficient obstacles in reacting to the unethical practices of the organisation, specifically labour exploitation as well as environmental damage along with supply chain management problems. The reactions of the leadership of the brand reflect both reactive along with dynamic metrics.
Leaders’ Responses
The ‘leadership’ of the brand Zara has comprehensively reacted to unethical measures by assuring reforms specifically after public scandals. As an illustration, after the Brazilian sweatshop scandal in which the labourers faced insecure situations along with minimum remuneration, Inditex Group executed a ‘Supplier Code of Conduct’ focused on developing labour situations, as suggested by Inditex (2022). The organisation additionally committed to expanding audits along with transparency all over its logistics. At the same time, this showcases a responsive initiative, it demonstrates that leadership perceived the lack of success in upholding ethical measures.
The influence of these metrics has been combined, in spite of these attempts. As a theory of leadership ethical responsibility recommends that leaders must assure that their activities sync with ethical responsibilities to investors, as supported by Knights (2022). The leadership of Zara has been criticised for the purpose of lacking meticulous implementation of its qualities, as unethical practices lasted in different areas including the Uyghur forced labour scandal.
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Financial and Reputational Impact
In terms of its ‘financial performance’ along with brand reputation, the reaction of the brand’s leadership to unethical exercises had noticeable consequences. As an illustration, later than the Brazilian sweatshop scandal, the brand faced legal actions as well as penalties and a temporary drop in sales in Brazil, as suggested by Butler (2018). In spite of the fact that the organisation’s all-inclusive sales recovered because of its worldwide existence.
The brand Zara’s allegation combined with forced labour in the country China provides a contribution to a depletion in its reputation among ecologically aware customers, specifically in Western markets in which the consumption of ethical measures is increasingly significant, as suggested by Safaya (2023). In spite of the fact that the owner of Zara reported over $23 billion of revenue in the year 2020, as stated by Salamzadeh (2023). This emphasised the way the lack of success regarding leadership in terms of maintaining constant ethical qualities can accelerate reputational damage.
Employees’ Responses
The employees of the brand Zara specifically those in production parts have faced real-time exploitation with minimum wages as well as a poor working environment present in numerous areas. At the same time when the retail workers of the brand have extensively remained unimpacted by these allegations, the labourers in its logistics have experienced the impact of unethical exercises. Labour unions have constantly emphasised these problems, but the internal labour force of the brand has been restricted in its ability to directly impact leadership choices.
Section 4: Recommendations for Ethical Improvement
Strengthen Supply Chain Transparency and Labor Standards
The brand should take extensive steps to assure ‘ethical labour practices’ all through its logistics. This could be accomplished by adopting blockchain technology for the purpose of tracing fabrics and labour sources instantly to give complete visibility to investors, as supported by Helo and Shamsuzzoha (2020). Zara must additionally expand the frequency as well as the depth of third-party audits along with partnering with labour rights companies to make sure compliance with impartial remuneration as well as working situation qualities. This will determine previous problems which include forced labour along with sweatshop conditions to assure that taking advantage of labourers is destroyed.
Adopt a Circular Economy Model
The brand Zara must transition in the direction of a ‘circular economy’ in terms of decreasing waste as well as reusing materials along with providing customers incentives for the purpose of returning old garments for reuse. This will reduce the ecological damage resulting in fast fashion which efficiently provides a contribution to pollution as well as the reduction of assets. Incorporating sustainable practices which include utilising organic fabrics as well as developing the effectiveness of energy in production purposes will decrease the carbon footprint of the brand Zara in addition to determining the ecological problems, as supported by Team (2024). Longitudinal sustainability objectives will additionally boost the reputation of the brand Zara among ecologically aware customers.
Implement Ethical Pricing and Distribution Strategies
The brand Zara should remove ‘unethical pricing’ practices by assuring constant as well as impartial pricing all over its markets. As suggested by Kim and Woo (2021), the distribution approaches of Zara must encourage worldwide equity specifically during crises which include the Coronavirus pandemic.
Section 5: Conclusion
In conclusion, unethical practices of the brand Zara which include labour exploitation as well as environmental damage along with inconsistencies in pricing originate from the lack of successful ‘ethical decision-making’ and deficiency of coherence to fundamental philosophical models which include ‘utilitarianism’ as well as deontological ethics, and virtue ethics. Reactions in terms of leadership have been reactive in comparison with dynamic, accelerating reputational disruption. The brand Zara must strengthen its supply chain transparency as well as adopt sustainable exercises along with the execution of impartial pricing approaches, for the purpose of development. The brand can be able to encourage liable business practices by implanting ethical structures inside its decision-making methods.
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Reference List
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