Ethics and CSR
I was at a talk at the Institute
of Business Ethics a couple of weeks ago, where the discussion was about
Ethics and the City. It focused naturally on the events of the last 4 years and
the poor performance of City management in showing leadership and ethics.
Unlike Enron which managed to suspend its Ethics policy before it went bust,
this financial mismanagement happened in spite of every large bank
having CSR reports winning plaudits and awards from bodies like BiTC, of which
all the major banks just happen to be members.
The speaker suggested that the fault lay with light government
regulation and what we needed was heavier regulation and greater enforcement;
time to see the guilty in prison. A vote winning proposal to be sure!
But the presumption of more regulation is that regulation
itself and the regulators themselves are ethical: more ethical than bankers
perhaps, but sufficiently ethical to change the way business is done?
Governments do not command any great respect, so there seems
to be a fallacy in this argument. How can CSR help to remedy this situation? CSR
has had many detractors, who suggest that it is simply window dressing, and
events like the banking crisis go a long way to proving them right. CSR
practitioners have to take much of the blame for having allowed reporting to
become the standard by which all CSR activity is judged, rather than looking
more deeply at the structure of CSR. By considering corporate CSR objectives,
strategy and management, looking beyond the big consulting firms cosy
‘assurance’ reports, it is possible to get a clearer picture of what is
actually happening and how in tune management is with its stakeholders.
How many companies do we see developing new values, signed
off by the CEO, for the workers to read on the walls of the office to make them
better people! And these values only resonate if we see those same people
living those values. If there are real values in an organisation they rarely
emanate from the top, more often coalescing from the core beliefs of the silent
majority who work in the company. They can be reinforced by good leadership,
but are not created by it, with some notable exceptions.
Shareholders are guilty too, pushing for ever greater
returns, focusing on quarterly results, churning stocks and failing to look at
long term value and corporate objectives.
We need to articulate what we really mean by ethics; it’s a
complex subject, but one which receives little priority in education at a time
when the role of religion in setting the ethical framework has all but
disappeared. It is becoming more complex, particularly at the frontiers of
science where immensely complex ethical problems are being forced upon us. The
business issues are relatively straightforward but we need to address them with
rigour and CSR practitioners should be at the forefront of this debate.
Tom Peyton
Have suspected that ethics is a concept that falls foul of the 2nd law of Thermodynamics in that everything tends to maximum disorder and minimum energy. Left on its own iron will turn to rust and reversing that behaviour requires enormous energy.
ReplyDeleteIrresponsible conduct has aways been a part of human nature but often practiced by a few who easily lead others. A good question is what happens to those who turn against responsible conduct?
Reining in such behaviour requires intervention but by whom? Religion and Politics have a pretty poor track record here but maybe incentives are needed. In business CSR can do that but it only counts when the deliverables are readily measured and individuals can feel they have made a contribution. It is all about Leadership.