Business Ethics and Sustainability: A Critical Analysis of Lanka Electricity Company Private Limited (LECO)

This report critically assesses the energy generation and supply industry from the perspective of business ethics and sustainable development goals implementation, with Lanka Electricity Company Private Limited (LECO) as the organization to be assessed for energy sustainability worldwide. The report evaluates LECO's social, environmental, and economic aspects and provides recommendations on how the company could improve further in the areas of affordable and clean energy and responsible consumption and production of energy. The report also discusses the theoretical and conceptual approaches to business ethics and sustainability in the energy industry.

Running Head: ETHICAL JOURNAL 0
Business Ethics
Business ethics and Sustainability
(Student Details :)
12/31/2018

Ethical Journal 1
Contents
Abstract.........................................................................................................................2
Business ethics and Sustainability...............................................................................3
Introduction...................................................................................................................3
Theoretical/conceptual approaches.............................................................................5
Environmental, Economic and Social aspects of LECO...........................................8
Analysis.......................................................................................................................13
SDG-7: Affordable and Clean energy.....................................................................13
SDG-12: Responsible consumption and production...............................................14
CSR Activities of the LECO in Sri Lanka................................................................16
Conclusion..................................................................................................................17
References.................................................................................................................19

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Abstract
Business ethics and sustainability are strongly interrelated as ethical consumption,
production and distribution of energy is the key to sustainability. Sustainability means
the availability of resources for the currently living community and future generations
as well. In this way, the discussion is an attempt to know the key requirements of
sustainability goals achievement.
For doing so, here a company LECO is been considered for the analysis. The report
have analysed the energy generation as well as supply industry with the help of the
company ‘Lanka Electricity Company Private Limited (LECO)’ of generating,
supplying energy as well as manufacturing energy smart meter using renewable
energy resources. Besides, all 17 sustainable development goals (referred as SDGs)
which are declared by United Nations are also been accessed for the critical analysis
of the LECO from the perspective of global sustainability in all areas of human living
on earth.
Thus, it is hoped this study will help environmentalists, human beings, government
as well as industrialists of our nation for achieving sustainability for the whole world
while doing business in ethical barriers. In this way, it has been successfully found
that LECO is giving appreciable efforts to preserve our environmental resources for
long-time, and this report also have recommended some useful suggestions in order
to help the company to improve in the areas of affordable, clean energy as well as
responsible consumption and production of energy.

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Business ethics and Sustainability
Introduction
This report is aiming to critically assess the energy generation and supply industry
from the perspective of business ethics as well as sustainable development goals
implementation. Here the Lanka Electricity Company Private Limited (LECO) is been
chosen as the organization to be assessed for the energy sustainability worldwide.
Source: (Bass & Dalal-Clayton, 2012)
The LECO is the greatest electricity distribution company of Sri Lanka with market
shares of about 20 per cent. The company controls all major functions related to
energy distribution as well as energy smart meter manufacturing in Sri Lanka. LECO
is an ethical as well as renewable energy supplier. The LECO Company is
committed towards building an energy generating, supplying entity which consumers
willing to stay with long time-period. LECO is promising to be transparent and fair
because they want to bring back the public’s trust in the energy production as well as

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supplying industry. For achieving above, LECO supply their consumers safely and
efficiently; listen to them as well as offer good personal consumer service.
Source: (LECO, 2018)
Thus, the report is emphasizing on critically assessing the energy production and
supplying industry in which the LECO operates from the perspective of business
ethics or Corporate Social Responsibility (CSR). Furthermore, the report will also
evaluate the extent of the organisation’s efforts considering environmental, social as
well as economic aspects. Additionally, two of the United Nations Sustainable
Development Goals (SDGs) will be discussed so that recommendations on how the
LECO could improve further in those discussed SDGs areas can be provided (United
Nations, 2018).

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Source: (Birol, 2018)
Theoretical/conceptual approaches
Energy generating and supplying companies, especially those are producing from
fossil fuels: oil, coal, natural gas, are prone to attack by the ecologists as well as
their supporters in the media. Although people criticize the conventional sources
using energy companies for disastrous pollution yet attacking these companies is not
suggested because ultimately they generate fossil fuels, without which people
cannot survive for heating their home; producing our food; powering cars, trains and
buses (Nelder, 2009). People use conventional resources as fuel for electrical power
that people need for lighting as well as for all the information technology they use on
daily basis, from our mobile phones to computers. Thus, world cannot stop those

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companies from generating energy and supplying it to their consumers just because
they are using a lot of fossil fuels or conventional natural resources. On the other
hand, one thing which can be done is that we can imply business ethics strictly over
all energy supplying as well as generating companies. Society can contribute by
eating more slowly, travel locally through energy saving alternative vehicles, and
relish only entertainment and recreation which requires minimal or no utilise of fossil
fuels (Union of concerned Scientists, 2018).
Source: (LECO, 2018)
Moreover, any energy generating and supplying company can be considered an
ethical one, when they aim to help thousands of peoples for having a meaningful
association with the clean energy projects. Further, there are many aspects through
which business ethics and morality of an energy supplying company can be
assessed:

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 Company should effort to deliver an encouraging return for their investors
while having a worthwhile connection to renewable energy considering an
environmental and social impact.
 The business shareholders must be capable to trust the company for doing
well.
 The way company conducts the business lies in their core values as well as
gives a moral scope for running as a company.
 To be ethical during business, the company must be transparent as well as
strive for to actively engaging with their investors from published statutory or
voluntary communications (Williams, 2014).
 The energy company should adopt the governance as well as ethics code.
 The company must be contributing to the evolution to a smarter and cleaner
energy system.

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Source: (LECO, 2018)
Environmental, Economic and Social aspects of LECO
Social impacts of LECO are as follows:
 Successful operation of LECO will eliminate social inequality, for example the
arrangement of distributed renewable energy sources (RES) motivates rural
areas for their overall development. LECO will supply energy to all of the
consumers in a way that they can become the owner of their own energy; this
idea will greatly influence rural areas as they can access clean and adequate
energy with the help of LECO.
 By creating a modern as well as efficient distribution network in Sri Lanka
LECO is affecting society in a positive way and ultimately the world will grow
because of generating energy from renewable resources and supplying it into
needed areas.

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 The LECO’s objective of lighting up Sri Lanka is achieved above the
expectations while evaluated post 29 years of operations which is showing
that company has done a lot for the Sri Lankan society.
 The LECO is modelling new energy culture for the energy future worldwide.
 LECO being an energy supplier, will enhance energy security of houses
greatly because the company aims to make the households consumers their
own energy supplier and wants to get the trust of them.
Source: (Dresner, 2008)
Environmental impacts of LECO are as follows:
 Carbon emissions

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 NOx, SOx, PM10, PM2.5 emissions which cause negative effects on human
health
 Landscape and biosphere Interference
 Amount of waste generating through energy generation
 Risk of accident/failure for example: worst accidents of nuclear reactors
 Environmental contamination due to long-time storage of radioactive materials
 Efficiency of the resources in the economy (World Bank, 2015).
Economy impacts of LECO are as follows:
 GDP growth
 Land requirement: due to less efficiency, total energy produced per unit land
occupied is less for most of the renewable energy sourced technologies
 LECO will encourage balanced development of various regions
 Trade balance
 Unemployment rate: if there will be a significant imbalance in the labour
market then this rate will increase.
 Innovativeness and competitiveness of economy will be increased
 Energy security of public sector and enterprises will be enhanced (Nelder,
2009).

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Source: (World Bank, 2015)
In this way, LECO’s social, environmental as well as economic aspects has been
evaluated and summarized from the perspective of business ethics and
sustainability. Ethical responsibilities of this energy generating and supplying
company include following: There should be no harm to the natural resources while
harnessing them for supplying energy purposes. Energy generating process must
not include any excessive harnessing of fossil fuels. Renewable resources must be
utilized as much as possible. There should be limitation over making business from
supplying energy to the human society as people cannot live without using energy
and its use is mandatory hence it should be accessible and economic. Policy
framework made for electricity supply industries have been followed strictly by the
LECO (Griggs et al., 2013). In this context, LECO is a renewable and ethical
energy supplier because of the reason that LECO effectively sells gas and electricity
to their customers. The energy in LECO derived from the renewable resources of
solar, wind, hydro and tidal. It is well-known that National Grid is a big bucket

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with generators filling it up from electricity through lots of distinct sources as well as
energy suppliers so that electricity can be distributed to their consumer’ homes.
Hence LECO supplies only that electricity which is generated by renewable sources
only and this way, they only utilize renewable sources (United Nations Development
Programme, 2015).
Moreover, in monetary terms LECO is providing profit to the nation of Sri Lanka in
many ways as it is working and earning revenues in three major areas of energy
industry include generation, distribution as well as smart energy metering. Therefore,
the company is having direct, democratic effect on the economy and GDP growth of
the company. In terms of business ethics, LECO adopted a wholly transparent way
for salaries, accounting and business decisions and even they publish minutes as
well as salaries on their website. Thus, it is running in total ethical way for developing
world and Sri Lanka as well in the area of energy supplying and generating (Pearce
et al., 2013).
In this context, below figure is showing the energy generation in Sri Lanka from the
various sources like Hydropower, Thermal-oil, Thermal-coal as well as other
renewables.

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Source: (Nelder, 2009)
Analysis
Coming to the LECO’s analysis from the sustainable development goals
implementation point of view, two of the United Nations Sustainable Development
Goals (SDGs) have been selected and they will be utilised for providing
recommendations on how the LECO could improve further in these areas
(Schaltegger et al., 2017).
LECO is a Company established in the year of 1983 for supplying electricity in Sri
Lanka. Moreover, formation of LECO was done through acquiring assets of local
authorities for creating a modern as well as efficient distribution network in Sri Lanka.
In terms of SDG-7 and SDG-12, objectives have been achieved by the company
even far above the expectations as evaluated post 29 years of its operations in Sri
Lanka. In this way, LECO being a utility is benchmarked high in the South East Asian
region.
The two SDGs are as follows:

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SDG-7: Affordable and Clean energy
The LECO is already working in the direction of providing affordable as well as clean
energy to all. SDG-7 is about ensuring affordable, sustainable, reliable and modern
energy access for all amid the year 1990 and 2010 (Sachs, 2012), as per the results
of this SDG, 1.7 billion peoples accessed electricity which is a progress to be proud
of. Yet the globe’s population is continuously rising, hence more people will require
clean, cheap energy for lighting their homes as well as streets, using mobile phones
and computers, as well as doing their day-to-day business. LECO should work to get
addressed that energy issue, because fossil fuels as well as greenhouse gas
emissions are creating extreme changes in our global climate which is leading to
huge critical problems on every continent worldwide (United Nations Development
Programme, 2018). Hence, LECO can make our system more energy-efficient and
finance into clean energy sources like solar and wind so that more affordable
sustainable energy can be produced and accessed (United Nations, 2018). Here,
few recommendations are quoted for the LECO to provide more clean and affordable
energy to more peoples for longer time in order to achieve SDG-7 effectively:
 LECO must try to meet increased electricity demands in a cost-effective way
as well as protect the environment
 Use of solar energy is not been done from the LECO yet, which is must be
added to the process of acquiring energy for the supplying process (Lu et al.,
2015).
 Use of biomass energy is not been seen through LECO yet, biomass has an
enormous capacity to provide affordable energy; hence it must be utilised
(Watson et al., 2010).

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 Geothermal energy is enormously available in the nature which needs to be
extracted by efficient methods so that power system can be improved with
more renewable energies, thus LECO should use geothermal energy
effectively.
 LECO can use waste of many biological processes to generate electricity and
hybrid systems of renewable energy generation can be further utilised for the
affordable energy distribution (Birol, 2018).
SDG-12: Responsible consumption and production
All attempts of LECO in past 29 years have been seen dedicated towards producing
responsible production as well as consumption of energy among all the public of Sri
Lanka. In this way, LECO is very well working to initiate this way of consuming and
generating electricity on-premises. Still, there are many more recommendations for
the LECO to help the nation for achieving the SDG-12 effectively (Dresner, 2008).
SDG-12 is about ensuring sustainable consumption as well as production patterns all
over the world (Reports Shell, 2017). As it is well-known that few peoples use a lot of
energy, and on the other hand few people use very less energy as they are not able
to do so (Sustainable Development Goals, 2018). In fact, a huge portion of the
world’s population is utilising very less energy for meeting even their basic
requirements (United Nations Development Programme, 2015). Hence, an attempt
of equally distributing the energy all over the world so that a globe where each and
everyone gets whatever they require to thrive and survive (Bass & Dalal-Clayton,
2012). Therefore, few recommendations for the LECO to help for achieving the SDG-
12 effectively are as follows:

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 LECO should motivate public for consuming energy in a way that protects our
natural resources for our children and other upcoming peoples, and their
children in future (Kaygusuz, 2012).
 LECO should manage the natural resources more proficiently as well as
dispose toxic waste in better way to preserve the environment
 LECO can help in cutting per capita food waste globally by providing cooking
fuel at low prices to all urban as well as rural public
 LECO can motivate businesses as well as consumers for reducing and
recycling waste of their daily life for producing less waste per day so that
environment can be saved (Nilsson et al., 2016).
 By providing energy at low costs to the industries which are utilising energy
wisely and responsibly, responsible consumption can be achieved.
 By hiking prices of energy for those customers who consumes more than
required energy more often, responsible consumption can be achieved
 Furthermore, responsible consumption initiates the responsible energy
production for the energy generation companies.
 By utilising more kinds of renewable resources from the nature, LECO can
help those countries which have normally not consumes a lot of energy for
moving in the direction of more responsible consumption arrangements
(World Bank, 2015).
CSR Activities of the LECO in Sri Lanka
According to global CSR standards and practice, LECO developed Sri Lanka in
following ways:

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 LECO has improved the relevance and quality of education at all possible
levels.
 LECO has enhanced access to education; through providing equitable, high
quality, cost effective, modern as well as sustainable health care services all
over Sri Lanka.
 LECO has helped the nation of Sri Lanka while structuring high standard,
modern and well-organised infrastructure and services in order to improve
access to well-built roads, railways, power, ports and safe drinking water
(Tilakasiri, 2013).
 Through manufacturing smart energy meters LECO has promoted the
application of R&D as well as modern technologies in order to enhance
competitiveness worldwide.
 LECO has modernised the legal as well as regulatory framework for
promoting the business environment (Tilakasiri, 2013).
Conclusion
In conclusion, there are countless profits of switching to LECO. LECO is a
transparent, affordable, green energy provider to people by the peoples who actually
care about the community.
LECO operate through putting renewable energy straight into the national grid, and
the more peoples utilise them for their provider, the more renewable energy is being
directed into the grid, and hence the very less amount of energy is utilised from fossil
fuels. In this way LECO is doing a lot in the direction of achieving sustainability in the
area of energy, education, health as well as economic development. Although the
company has set all the required vision and mission for achieving energy

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sustainability yet there are some areas left behind from paying attention for the
further improvement. The above discussion has proved that suggested
recommendations to the LECO for further improvement are really essential for the
effective establishment of 17 SDGs for the global public. LECO is using renewable
energy resources like wind, nuclear and tidal, in an efficient form to provide
affordable, clean and accessible energy for all. Furthermore, extension of using
renewable energy sources can be easily implemented through introducing solar,
geothermal and biomass energy source for generating electrical energy into our
system. As SDGs are the drivers for the overall development of the nation and world
hence all the people must work together in order to achieve each and every SDG by
the year 2030. In whole, it can be concluded that business ethics are most important
while obtaining sustainability in every sector. Additionally, energy supplying industry
is ought to be ethical so that world can survive during the upcoming future.
Therefore, replacing fossil fuels usage with the renewable energy resources can
eliminate many development problems and address energy issues of the whole
world. Moreover, energy sustainability is the key to world’s sustainability in each and
every area of the community.

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