Going beyond corporate social responsibility – moral and ethical responsibility in business

When corporations cause harm to the society, their corporate licences can be revoked, fines and other sanctions can be imposed under the law or society can withdraw its patronage and profits, placing the corporation’s existence in jeopardy.

Many corporations invest significant resources in philanthropic acts which are collectively packaged and promoted as corporate social responsibility (CSR).  CSR reports offer the public some proof that corporations are acting responsibly and are contributing to the well-being of the society.

Some corporations have established corporate codes of ethics to set standards of business practice that go above the base-line requirements of the law.  In addition, corporations define moral values that shape the corporate culture, with the expectation that these values will be evidenced in the personal and professional conduct of employees.

We now live in an information age in which corporations are under constant public scrutiny.  The actions and implied intentions of corporate agents are very often judged, using moral and ethical principles as the standard, and not just the base-line requirements of the law or the content of CSR reports.

A case in point –

Citizens of Lac Mégantic, Québec, were outraged at the delayed response of Ed Burkhardt, president of MMA, the company whose derailed train carrying crude oil devastated their small town.  During his first (and only?) visit to Lac Mégantic five days after the disaster, Mr. Burkhardt focused his communication in his brief contact with the population, on potential legal liabilities and insurance claims, blaming an employee and implying that the fire department may have played a role in the disaster.  The widespread outrage at Mr. Burkhardt’s reaction is understandable and justified.  His behaviour demonstrated his concerns were primarily focused on base-line legal responsibilities.  And yes, there is much that is ethically and morally wrong with a corporation’s president enjoying the comfort and safety of his office and home many miles away from a disaster area where hundreds of people remain homeless, jobless and in the case of nearly 50 people, lifeless, as a result of the corporation’s actions – regardless of who eventually is found to be legally liable for the disaster.

The BIG picture

Corporations must accept that they are not only legal entities with legal obligations.  Corporations have moral and ethical responsibilities to ensure that their actions, whether intentionally performed or accidentally caused, do not harm the society.  This, in my view, is the BIG picture.

Putting public safety above profits is the true test of whether or not a corporation is acting in a morally responsible fashion.  The swift response and remedial actions of Johnson and Johnson in the Tylenol capsule crisis  in spite of multi-million revenue losses, demonstrated that corporation’s recognition of its self-imposed obligation to avoid harming the public even though it did not directly cause the contamination of the capsules.

Focus on what’s important

Because moral and ethical responsibilities are self-imposed, corporations should find specific, clearly defined ways and means of ensuring that they are fulfilling these responsibilities.  A few suggestions:

• Annual training for employees on the code of ethics – Each employee should review and sign the code of ethics, attesting to their understanding and compliance.  Part of the training should include likely scenarios in which employees will need to apply the corporation’s ethical and moral standards.
• A moral audit committee – Establish a committee that addresses situations that present ethical and moral dilemmas for employees and for the corporation.  In addition the committee should periodically review the ethical and legal implications of the corporation’s business practices.  For example: pricing and special promotions, supplier relationships and the award of contracts, competitive positioning in advertising and potential conflicts of interest in talent acquisition.
• Whistleblower’s hotline – The provision of a secure way for employees to disclose business practices and employee behaviour that are contrary to the company’s code of ethics and corporate values.
• Protocol for crisis management – The protocol should include guidelines for transparent communication and codes of conduct for the corporation’s representatives that focus on empathetic, remedial actions and intentions of the corporation.

See the BIG picture.  Focus on what’s important.

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