As nominations open for the Observer Ethical Awards, we look at how UK businesses behave and whether an ethical approach could increase growth.

Firstly, in other the news, businesses say they want clearer government initiatives and, in the run-up to the Budget, there’s hope for fairer tax measures and reductions in red tape. And for travellers there’s news about EU roaming charges.

Top news stories

Small businesses want the Budget to bring in fairer tax measures and a reduction in red tape

Members of the Forum of Private Business said these were the key issues in the run-up to Osborne’s Budget announcement on March 18.

Small businesses confused by too many government initiatives

The Business, Innovation and Skills Select Committee found the provision of business support too “vague and complex”. The Federation of Small Businesses wants the initiatives simplified.

Economists prove cold weather hurts small businesses the most

Economists from the Centre for Economics and Business Research found that periods of very cold weather lower quarterly GDP growth by 0.6% below typical levels. The report warns that smaller businesses are at a disadvantage when poor weather arrives.

UK has sixth-largest male-female pay gap in EU

Women earned an average of 19.7% less than men in the UK in 2013. Two thirds of the directors, executives and managers are men, while two thirds of office workers are women.

News for travellers: EU mobile phone roaming charges remain until 2018

Despite both the European Parliament and the European Commission saying roaming charges were too high and should be scrapped, EU governments have said they should remain at least until the end of 2018.

Key dates for your diary

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How an ethical business approach could help your business

The Observer Ethical Awards are ten years old and times have changed since they were launched. Now most businesses are aware of ethical issues.

But it seems that consumers don’t feel they are acting responsibly.

This may be in line with rising consumer expectations for ethical standards but it seems that businesses may be falling short. We look at why it matters and what businesses can do to make their business more ethical.

Why ethical business matters

And it’s not just consumers that expect ethical behaviour. Andrew Crane, director of the Centre of Excellence in Responsible Business at York University and author of the book Business Ethics, says, “There is a consumer segment that is concerned about ethical issues but to some extent almost everyone is.

“So companies can incorporate those benefits into a product that looks good, has the same price and quality and styling of products consumers are looking for. Companies with CSR programs are also seeing its benefits for engaging and retaining employees.”

And there are clear facts that back up this approach. Ethical businesses can:

• Increase sales: a study by DePaul University found that companies that have a commitment to ethical principles have better levels of sales and revenues than companies that don't.
• Better customer loyalty: 91% of consumers say brand behaviour influences their buying decision, according to study by 23red.
• Enhance reputation: research by Burson-Marsteller showed that a CEO's ethical reputation helps their business attract investment capital, recruit the best employees, and limit the damage from any crisis.
• Retain employees: 94% of employees say it is “critical” or “important” that the company they work for is ethical and one in three have left a job for ethical reasons, according to research by LRN.

How to build an ethical business

So, what steps should you take to make your business more ethical?

Build an ethical code

Setting out what you believe in makes it easier for your employees and your customers to understand what’s important to you.

To get buy-in from everyone, it’s a great idea to ask the whole team for their input. You can then use this to create the final document. Don’t forget to share it - on your website, in your premises and through conversations.

Make sure an ethical approach applies to your day-to-day work too

When talking about ethical business it’s easy to become focused on projects like recycling and volunteering, but ethical behaviour needs to extend to all parts of your business.

Consider the policies you have in place for your employees and how you handle everything from flexible working to grievances. If your employees know that they are treated fairly and that the business is ethical, it’s likely to create a better working environment and save time on recruitment. Make sure employees have a way to raise any concerns and that these are listened to.

Also think about your customers. If you offer discounts only for new customers, or if you quote higher prices and then offer significant reductions, it’s likely that your customers won’t think your business is ethical, even if you follow an ethical code. Customers dislike these types of sales tactics so consider whether it fits with the rest of your ethical objectives and if an alternative approach may work.

Ensure you have a clear policy for how issues are handled, from complaints to returns. To keep your customers happy, make sure you deal with any issues quickly and fairly.

Set some targets and celebrate success

Sometimes companies spend time developing an ethical code but then don’t actively use it. To make it an intrinsic part of the way you work, it’s important that you have targets and know how you’re doing. Take time to celebrate successes to keep your ethical approach at the front of everyone’s mind and to help your company go from strength to strength.