The Business Ethics Blog

What’s in a promise? Sometimes a promise is big news, even if we’re not entirely sure what it adds up to. See, for example, the promise being made by the members of the new “Business Ethics Leadership Alliance.” Members of that alliance (including General Electric, PepsiCo, and Wal-Mart, among others) have been brought together by the Ethisphere Institute to make a highly visible promise that their organizations are committed to a high standard of ethical behaviour.

The unethical actions of a few businesses are creating a negative global impact. The public’s rush to assign blame will negatively affect businesses worldwide. A higher standard for business ethics is expected.

The Ethisphere Institute, in cooperation with leading corporations and global institutes, is designing that higher standard, the business ethics leadership alliance, so the public and investors can more easily identify which companies operate ethically.

Here’s the story, from the Financial Times: US companies launch ethical standards push.

The cynic’s take on this: To the cynic, this looks like yet another round of empty promises, an opportunity for a handful of corporate execs to hold a press conference, wring their hands about the current state of things, and say heart-warming things about how much they value ethics. What are the odds, asks the cynic, that this will amount to any measurable change? Enron had a wonderfully complete code of ethics, full of promises and supposed aspirations. Blagojevich famously touted the importance of ethics, and we all know how much that amounted to, in terms of behaviour. And even if these companies are sincere, seriously, how much can a few companies, even big ones, do to change the overall ethical tone of the world of commerce?

The optimist’s take on this: This is a positive step — a baby step, maybe — but a positive one. It embodies the recognition by some very big companies that, in the modern context, they simply must do business in a way that demonstrates recognition that they have to take into account the interests of a broad range of stakeholders. And where the cynic espouses skepticism that the actions of a few can make a difference, the optimist muses about the possibility that a few big players, making very public promises, could push the culture of business past some sort of ethical tipping point, for the better.

There’s no need to plant one’s feet firmly in either the cynic’s or the optimist’s camp, of course. We probably should view an initiative like this with a kind of guarded optimism, with a bit of wait-and-see added in. One thing we should be clear on, though: at least one of the reasons behind this initiative is bunk, and that’s the notion that we’re at some sort of ethical low-point. See, for example, this quote from the FT story:

Mr Hill [Wal-Mart’s chief ethics officer] said that unethical behaviour was on the rise in corporate America, reversing a trend sparked by the regulatory clean-up that followed the Enron collapse.

If there’s convincing evidence for that claim, I’ve never seen it. People have been saying things like that — the world is going to hell in a handbasket, young people today have no values, commerce and/or politics is increasingly corrupt — for literally centuries. (My friend Andrew Potter calls this sort of thing “declinism.”) Guess what? There was no Golden Era of business ethics. It may well be that we see more evidence of corporate wrongdoing in 2008 than we did in 1908. Why? One reason might be the higher levels of regulation and higher standards more generally (i.e., more business practices are considered wrongful now than were considered wrongful in 1908). Consider also the increase in access to information about corporate behaviour. Part of that is semi-voluntary: companies simply disclose far more about their behaviour, now, than ever before. And part of it is the increased access to information fostered by communication technologies like ye olde World Wide Web. 100 years ago, even 50 years ago, you can bet there was just as much corruption as there is today, going on quietly behind the scenes. And there was surely a heck of a lot more, for example, overt, unpunished racism, sexism, sexual harassment, and general abuses of employees. Things have arguably gotten a lot better, over all, rather than worse.

If promises like those being made by the Business Ethics Leadership Alliance really are going to be effective, they probably should aim at continuing the general, lumpy, upward trend in ethics, rather than halting the so-called decline.
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Thanks to LH for the story.