The Business Ethics Blog

As the teaching term draws to a close, an ethics professor’s mind inevitably turns to the significance of the grades that get assigned in an ethics course. Part of my job — part of every professor’s job — involves assigning grades. Grades are supposed to reflect achievement in the course. A student who performs inadequately gets an ‘F’. Most students (performing adequately-to-well) will get a ‘C’ or a ‘B’. Exceptional students get an ‘A’ or even the occasional ‘A+’. Those grades serve as a signal both to the student, and to anyone reading her transcript, just how well the student did in my course. In a History course or a Finance course, the meaning of grades is pretty obvious. You either learned the relevant history (and theories about history) or you didn’t. You either learned how to apply various financial models or you didn’t. But what does it mean when a student gets an ‘A’ in Ethics? Many people seem to find that question perplexing, because ethics is both a subject of study and a guide to behaviour. When a student gets an ‘A+’ in Ethics, does that mean they are excellently ethical?

As it happens, I recently had the opportunity to reflect on the question of high marks in ethics in a different context, namely the context of corporate ethics. I recently made an appearance on CBC Radio’s The Current, during a segment about the significance and challenges of corporate ethics rankings. Corporate ethics rankings are published by a range of think-tanks, magazines, and NGOs, and purport to hand out grades for ethics (or corporate social responsibility, sustainability, corporate citizenship, or what have you.). One of the issues we discussed on air was the fact that the results of ethics rankings are frequently counterintuitive, and sometimes downright shocking. There have been cases, for example, in which tobacco companies have topped corporate citizenship rankings, and others in which oil companies have done remarkably well on sustainability rankings. Some critics have been quick to point out the irony; others have taken those results as reason to dismiss a particular set of rankings altogether; still others have thought that such results cast doubt on the entire project of ranking companies in terms of ethical performance.

Again, what does a high grade in an ethics mean?

Now, when I hand out an ‘A’ in my Ethics class, I hope it is clear that that is in no way an endorsement of the student’s character, or of his or her capacity to make reliably excellent ethical judgments. Twelve weeks isn’t enough time for form much of an impression of each student’s character, and I don’t have an objective means by which to certify the quality of their real-life ethical decisions. So an ‘A’ in my class just implies that a student has gained a superior command of a certain body of knowledge — knowledge of the key concepts, and an ability to apply them to cases. It implies an appreciation of the key debates concerning corporate ethics (e.g., just how far down the supply chain do a retailer’s obligations extend? How should managers balance the duty they owe to shareholders against the duties they have to other stakeholders?) It means they have demonstrated an understanding of the key psychological and institutional barriers to good ethical decision-making in the world of commerce. But does it mean they are ethically ‘good’ people? Most emphatically not.

Now, my hope is that a richer, more sophisticated understanding of the relevant concepts and issues will lead to better decision-making in the long run. But proof of that causal link is hard to come by. So, as is generally the case with university courses, I settle for educating my students, rather than aiming at the less plausible target of transforming them. The grades I give only represent a measure of students’ level of accomplishment as compared to the set of criteria outlined in the course syllabus. And it is entirely possible to do well in my course while at the same time being an awful human being.

The same is true for corporate ethics rankings. A grading system for corporate ethics gives grades on the basis of some system of evaluation, some system of measurement. It generally won’t measure ethics directly, but settles for some set of proxies that, taken together, give us some hopefully-meaningful estimation of a company’s capacity for ethics. Of course, there are differences. Unlike a university ethics class, in many cases corporate ethics rankings do measure actual performance on some subset of ethical issues. Has the company in question been cited for regulatory violations? Has it reported numerous workplace injuries? Are women well represented on the Board? And so on. But such measures are inevitably rough, and inevitably leave important questions unasked. And sometimes, corporate ethics rankings look at more abstract markers. Has the company got a code of ethics? Does it have a robust compliance program? In other words, they ask whether the company has the capacity to deal appropriately with ethical issues, rather than looking at actual ethical performance. That’s not a criticism of those measures; it’s just an inevitable fact about systems of measurement.

So we shouldn’t automatically be alarmed, or even surprised, when companies that we think are ethically reprehensible do well on a corporate ethics ranking. We should simply remember that any grading system only grates performance against some set of measures. Those measures can of course be smart or dumb ones — dumb inputs mean dumb outputs. But the key, really, is to remember that a system of measurement only measures what it measures. And in some cases, an imperfect measure is better than no measure at all.