Analysis of Ethical Issues and Solutions: Bank of America Report

This report delves into the ethical dimensions of Bank of America's operations, examining various aspects of ethical concerns within the organization. It begins with an introduction to the company's commitment to ethical values and its impact on business functioning. The report then presents the facts, highlighting Bank of America's efforts in corporate social responsibility, including its investments in community development and employee welfare. A stakeholder analysis is conducted, identifying key stakeholders and potential conflicts arising from ethical issues. The PESTLE analysis provides an overview of the political, economic, social, technological, legal, and environmental factors influencing the bank. The report also outlines ethical issues that have emerged, such as mortgage securities fraud, and suggests solutions, including financing sustainable businesses and adopting greener approaches. A pluralistic ethical analysis is employed to determine right and wrong approaches, and various ethical theories are considered. The report concludes with a discussion of decisions made by stakeholders in light of the 2008 financial crisis and provides references.

Running head: BUSINESS MANAGEMENT
Business management
Name of student
Name of University
Author note
Table of Contents

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Introduction......................................................................................................................................2
The facts...........................................................................................................................................2
Stakeholder analysis........................................................................................................................3
PESTLE analysis.............................................................................................................................4
Ethical issues emerged.....................................................................................................................5
Solutions to the ethical issues..........................................................................................................7
Pluralistic ethical analysis................................................................................................................8
Options using ethical theories..........................................................................................................8
Decisions made by stakeholders in light of the 2008 financial crisis..............................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

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Introduction
The report is prepared to discuss the various aspects of ethical concerns related to the
different types of situations within the organization Bank of America in UK. The company
happens to be inclined properly with the values and ethics of the organization and so it has
maintained a good culture and ensured successful business functioning as well. To demonstrate
the ethical concerns, the topic will illustrate the environmental, social and governance leadership
that will be responsible for managing the growth of the organization as well as deliver long-term
value to the shareholders or investors (bankofamerica.com 2018).
The facts
Bank of America has maintained various ethical theories and concepts to become
corporate socially responsible and at the same time, maintains a good culture to enable
successful business functioning and deriving positive business outcomes too. The organization is
one of the industry leaders within the banking industry that has a huge market share and manages
low carbon and sustainable business practices to fulfill the ethical standards and responsibilities.
The minimum wage for the employees on an hourly basis is also good, i.e., $15 per hour, which
makes it one of the best companies to work in all over United Kingdom (Schaper et al. 2014).
The company is believed to maintain ethical standards because of the activities undertaken to
become socially responsible and contributing to the society largely too. The company invested a
whopping of $2B to create partnerships that an address the issues regarding the economic
mobility, workforce, education and development of community along with the fulfillment of the
basic needs and requirements of the service users. Due to this, Bank of America has gained
reputation and created a positive mindset among the service users, furthermore positioned itself

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properly within the banking industry in United Kingdom. The company through the development
communities has achieved good reputation where more than 200,000 hours have been dedicated
for the training and development of youth (Wild, Wild and Han 2014). The collective ethical
theory is associated with the making of management decisions and maintains ethical
relationships within the bank whereas the individual ethical theory maintained the rules of
morality and focused on the personal interests at first for creating a healthy business atmosphere
where people could work in.
Stakeholder analysis
The most important stakeholders of the organization are Vice Chairman, investors or
shareholders, Head of Investor relations, Head of Wealth management, customers, managers and
the employees of the organization. When ethical issues arise, there could be conflicts and
misunderstandings between the workers, which could result in degraded organizational
performance as well as lesser revenue generation (Czinkota, Kaufmann and Basile 2014). There
were various environmental, social and governance issues within the banking sector, which
created difficulties in maintaining a proper culture at Bank of America. This also resulted in lack
of transparency and clarity, which furthermore created environmental and social risks as well as
hindered the management of a proper risk framework within the organization. It was analyzed
that the investors made lesser investments, which created difficulties in financing the low carbon
and sustainable business that were required to address the changes in climatic conditions and the
demands o the natural resources (Benson-Rea, Brodie and Sima 2013). To overcome this kind of
problem, the shareholders provided a whopping $58 billion for managing clean energy as well as
maintain energy efficient techniques, conservation of water and ensure successful sustainable
transportation. This has also fulfilled the needs of many other people because the investments

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made have created job opportunities for many people and even managed environmental finance
efforts with ease and effectiveness. The employees are provided with information about the
sustainable business practices along with the environmental, social and governance issues that
shall be managed to ensure successful business functioning within the banking industry of
United Kingdom. The customers were provided with the good quality banking and financial
services and their queries have been answered as well through effective customers’ services to
achieve the ethical standards and maintain consistency in business all throughout (Haufler 2013).
PESTLE analysis
Political – The corruption among the political parties have created unstable political conditions
whereas the policies for foreign investments have created impact on the bank too. The wags
legislation, mandatory employee benefits and pricing regulations are managed properly to favor
the trading partners and the business itself to improve the potential for the workforce and
maintain stability while managing the political matters.
Economic – The inflation rate, rate of interest, foreign exchange rate and economic cycle can
impact the economic condition of the organization. The rate of unemployment and fluctuations in
currency value could also impact the business.
Social – The culture, demographics and skills of the people are important social factors that are
considered and the company has managed shared values and beliefs to create an impact on the
marketers and even understood the preferences of the customers in the market. This helped in
designing marketing messages for the Money Center Bank industry customers too.

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Technological – The technological advancements have given the company a competitive edge
and even influenced the value chain structure in the financial sector, furthermore allowed to
enhance the offering of new products and services in the market.
Legal – The employment law, data protection act and health and safety laws are imposed within
the company to maintain the safety and health of the workers and even provided good
opportunities of employment to people. The data protection ct helped in ensuring that the data
and information of customers are kept safe and secure.
Environmental – Bank of America has adopted sustainable practices to maintain an ecological
balance in nature and maintained the air and water pollution regulations. The recycling of wastes
and attitudes towards greener products furthermore enhanced the sustainability measures’
efficiency at Bank of America.
Ethical issues emerged
The ethical issues mainly emerge when there are conflicts regarding the rights and
responsibilities, questions arising due to the limits and obligations related to the safety and health
of the individuals working within the company, responsibilities for the various stakeholders and
conflicts of interest at Bank of America. The issues were mainly related to the allegations put on
the organization and the wrongdoings of the company until the company reaches a settlement to
overcome the uncertainties and prevent distraction of further litigation (Potgieter and Coetzee
2013).
Few of the ethical issues include Mortgage Securities fraud activities, Auction Rate
Securities scandal, Bond fraud, unfair overdraft scheme, etc. The Bon fraud involved Bank of
America settling with WorldCom investors or shareholders who bought the bonds from the

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company. The shareholders stated that the company should have been aware of the huge
numbers of frauds happened at WorldCom, which was not done. Bank of America reached a
settlement finally by closing the arguments and they were not satisfied with the rate of return on
investments too. During the mortgage securities fraud activities, the investors or shareholders
lost a lot of money on the mortgage backed securities that were purchased prior to the housing
collapse (Van Der Aalst, La Rosa and Santoro 2016). After the concerned time, the settlement
was much more than the actual profit achieved by the company. The ethical issues also arose due
to the lack of maintaining environmental, social and governance standards, which not only
hindered the investments in the team, but also created difficulties in creating an environment
where all the team members could thrive for excellence and work in coordination as an unit. It is
critical to foster sustainable growth and development and even create scopes and opportunities
for the employees to perform efficiently (Hond et al. 2014). This could not only support the
employees’ financial, physical and emotional wellbeing but would also provide better wards and
incentives to them for keeping them motivated and encouraged to perform better.
It was found that Bank of America misled the investors or shareholders about the
mortgage backed investments made by the Merrill Lynch unit. Few of the employees were also
involved with the rigging of bids when the marketing financial contracts were linked with the
municipal bonds. The Home loans offered by the bank assessed and reviewed millions of dollar
in an illegal way, which lead to the violation of certain agreements too (Feldman, Bahamonde
and Velasquez Bellido 2014). The accounting cover up was another issue along with the
disclosure of private information of the clients to the marketers and the third parties without the
permission of the clients. The credit cards provided by the company involved an arbitration
service that was termed to be biased because it benefited the bank more rather than its customers.

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The employees were even forced to work overtime who were called as client manager, though
they did not perform their true managerial or leadership roles properly. Therefore, these are the
ethical issues that created obligations on the money safety matters and even created problems for
the investors due to lack of rate of return on investments (Taghian, D’Souza and Polonsky 2015).
Solutions to the ethical issues
Deployment of a good amount of financial capital could be beneficial for creating
opportunities and develop a positive environmental impact. Other approaches to resolve the
issues and maintain ethical standards included financing of low carbon and sustainable
businesses so that the changes in climatic and weather conditions could be resolved and the
demands on natural resources should be met with ease and efficiency. The undertaking of
greener approaches for maintaining sustainability and bringing out environmental benefits could
also be effective course of actions undertaken to overcome the problems (Kronlid and Öhman
2013). This also included the incorporating of solar energy into the business operations and
designing energy efficient buildings, furthermore uses renewable sources of energy for energy
conservation. Bank of America could also expand the Catalytic Finance Initiative for handling
the challenges of financing clean energy and furthermore advance in innovative financing
structures. The sustainable approaches undertaken by the company would also deliver value-
based products to the customers, reduce the costs of operations and at the same time ensure
successful sustainable forestry and management of renewable energy projects that have been
undertaken (Edwards and Kirkham 2014).

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Pluralistic ethical analysis
The pluralistic ethical analysis is adopted to determine the approaches that are right or
wrong. It might be incompatible with the personal and moral norms, rules and regulations. It
enables international engagement, which favors working with the other societies as well as
considers various aspects related the societal and environmental contexts. It also includes treatment
of value in children, environment, waste management as well as management of ethical business
practices to maintain the trust and loyalty of the customers. The ethical pluralism also includes
management of information and keeping it secured and safe so that others cannot access it. The
customers’ data and information are kept secured so that no other can access it (Müller et al.
2014). The Pluralistic ethical analysis has driven economic and social progress as well as
extended capitals to individuals through making of investments in women’s economic
empowerment, community developmental activities and ensuring economic viability too. The
theories concerned with the ethical approaches made sure that the religious views and opinions
of the employee within the workplace are respected and the consuming habits and spending
behaviors are managed properly too.
Options using ethical theories
The theory proposed by Friedman in the field of economics was related to the
consumption habits and behaviors along with the saving decisions made by the people. The
behaviors are often influenced by permanent changes in the income structure rather than the
changes in income that are considered as ephemeral. The theory influenced the permanent
income hypothesis and even proved that the short term tax increase results in decreasing the
savings and maintains a static or balance level of consumption all throughout. The free market
theory enabled the people to pay for things purchased or generate income regardless of what the

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other people think. The stakeholder theory enabled Bank of America to increase profit level for
the owners by becoming socially responsible and making lives of people within the community
easier.
The Kantian ethics theory considered two different types of actions including any
unethical practices that are prevented. It could be done unethically though might be the subject of
happiness for that person, still it would be advisable not to perform such kind of action, rather
respect the human beings to achieve the goals and objectives.
The Judeo-Christian theory considered the religious views in terms of the Judaism and
Christianity; it could either refer to the Christianity's derivation from Judaism or could be the
management of shared values between the two religions. Acording to the theory, ethics should be
maintained within the organization and the religious views of people working there should be
respected along with supporting the traditional family values too. It would not only prevent
discrimination within the workplace of Bank of Smerica, but could also maintain proper business
ethics and values, further maintain honesty and fairness in terms of the business operations and
processes.
Decisions made by stakeholders in light of the 2008 financial crisis
After the financial crisis in 2008, Bank of America made decisions regarding the
management of sustainability, understood the cultural and ethical norms to balance the
reciprocity and partnership working for the organization. The company also made useful
decisions about obtaining potential suppliers who could deliver the best quality supplies and
additional resources for producing the products and services to fulfill the needs of the customers.
To make the workers more skilled, training and educational facilities were provided for

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strengthening their expertise and knowledge and furthermore ensure better business outcomes
(bankofamerica.com 2018). Decisions were also made regarding the supplier diversity and to
make it successful, the impact investing program was introduced as well. It not only helped in
meeting the needs of clients, but also favored the process by providing information to the
shareholders regarding the investing process, platforms, guidance and resources. The
development of workforce was managed by participating in leadership summits and important
decisions were made to develop better career opportunities for the employees of Bank of
America (Schaper et al. 2014).
Conclusion
The report was developed to focus on the business ethical theories along with the various
ethical concerns related to the business functioning. The ethical issues were related to the lack of
investments and rate of return on investments, not being able to manage the mortgage backed
securities and even not following the sustainable measures. The stakeholder analysis helped in
understanding the roles of various stakeholders who were associated with the maintenance of
ethical standards and overcoming of environmental, social and governance issues too. Greener
approaches and introducing the Catalytic Finance Initiative were major approaches undertaken to
overcome the ethical issues while the Pluralistic ethical analysis was also adopted to make people
influenced to make investments and furthermore expand business.

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References
bankofamerica.com. (2018). Bank of America - Banking, Credit Cards, Home Loans and Auto
Loans. [online] Bank of America. Available at: https://www.bankofamerica.com/ [Accessed 23
Mar. 2018].
Benson-Rea, M., Brodie, R.J. and Sima, H., 2013. The plurality of co-existing business models:
Investigating the complexity of value drivers. Industrial Marketing Management, 42(5), pp.717-
729.
Czinkota, M., Kaufmann, H.R. and Basile, G., 2014. The relationship between legitimacy,
reputation, sustainability and branding for companies and their supply chains. Industrial
Marketing Management, 43(1), pp.91-101.
Edwards, M.G. and Kirkham, N., 2014. Situating ‘giving voice to values’: A metatheoretical
evaluation of a new approach to business ethics. Journal of Business Ethics, 121(3), pp.477-495.
Feldman, P.M., Bahamonde, R.A. and Velasquez Bellido, I., 2014. A new approach for
measuring corporate reputation. Revista de Administração de Empresas, 54(1), pp.53-66.
Haufler, V., 2013. A public role for the private sector: Industry self-regulation in a global
economy. Carnegie Endowment.
Hond, F., Rehbein, K.A., Bakker, F.G. and Lankveld, H.K.V., 2014. Playing on two
chessboards: Reputation effects between corporate social responsibility (CSR) and corporate
political activity (CPA). Journal of Management Studies, 51(5), pp.790-813.