The moral argument for doing good should be reason enough for companies to behave responsibly, argues Sir Geoffrey Chandler
The ‘business case’ for ethical behaviour is now on every agenda. Given
the restricted horizons of the typical boardroom, it may be a necessary
tactical weapon to persuade companies to embrace the full range of
their responsibilities. But in terms of strategy and principle it is
fundamentally flawed.
That it is needed at all lies at the
root of public mistrust of business, an activity whose trustworthiness
is ranked in opinion surveys with that of journalists and politicians.
It suggests that profit comes before principle, money before morality.
It would be pleasant to think that ethical behaviour pays. But it is
clear it doesn’t necessarily do so.
More fundamentally,
I don’t believe ethical behaviour should depend on its paying. To
suggest – as the business case essentially does – that doing right
needs to be justified by its economic reward is amoral, a
self-inflicted wound hugely damaging to corporate reputation.
Moreover, the business case, unlike principle, is an impossible guide
to the many decisions a manager faces in real life. Bribery can and
does pay if you can get away with it, which companies can and do. Until
full disclosure is enforced and the market can punish bad behaviour, I
suspect that as good a business case can be made for unethical as for
ethical behaviour. The challenge to companies is to close the gap
between their practices and the values of society, today enshrined in a
range of international instruments of which the foremost is the United
Nations Universal Declaration of Human Rights.
If there
has to be a self-interested business case for ethical behaviour, it
does not lie in bolstering the profitability of the individual company,
but in ensuring the survival of the market economy. For good companies
there is a real business case for law and regulation which ensure a
level playing field and prevent undercutting by the unscrupulous. We
need to see market forces – the most potent influence of all – brought
to bear on company behaviour other than solely financial results.
Disclosure and reporting of the triple bottom line are fundamental to
enabling the market to work on a longer-term basis than is allowed by
money alone.
Doing right because it is right, not because
it pays, needs to be the foundation of business. If we are to preserve
the most effective mechanism the world has known for the provision of
goods and services – that is the market economy with the public limited
company its main instrument – then it has to be underpinned by
principle. Financial failure can destroy individual companies. Moral
failure will destroy capitalism.
Sir
Geoffrey Chandler was founder chair of Amnesty International Business
Group between 1991 and 2001, and a senior executive with the Royal
Dutch/Shell Group
