After the financial collapse of 2008, the saying "business is business" is no longer valid.
The pursuit of profit without ethical considerations leads to negative consequences, as can be seen from the questionable practices of companies such as Amazon. Ruth Strange of consumer non-profit Ethical Consumer Movement revealed, "We estimate that in 2021 the UK public purse could have lost up to £500 million from Amazon's corporate tax avoidance alone."
Successful CEOs have acknowledged the crucial link between moral decision-making and positive financial performance.
Dr Zaren Rowhi Ahmed, founder of Gift Wellness and author of The Gift, advises that CEOs can spearhead growth and ethical compliance by adopting a 'triple bottom line' approach that puts people, planet and profit first.
She said, "Being rooted in purpose and fairness is key to directly linking product sales to charitable activities, creating a virtuous cycle that benefits all stakeholders and the environment. This approach not only strengthens consumer trust and loyalty, but also engenders a strong, unified corporate culture driven by shared values."
Ahmed revealed that organisations perceived as ethical by their employees achieve better business results. They enjoy higher levels of engagement, retention and productivity.
She added, "The Triple Bottom Line is not just a moral compass; it is a strategic advantage that drives businesses forward in today's conscientious marketplace."
Consumer spending on ethical products in the UK is growing at around 30% a year and investment in investment products based on Environmental, Social and Governance (ESG) is expected to grow at 12.9% a year.
Against this changing landscape, companies like PensionBee are leading the way in responsible decision-making. Its CEO, Romy Savova, emphasized the alignment of responsibility and profitability.
She said, "Many companies are considering their accountability to a wide range of stakeholders who influence the success of their business. Often, when the interests of one stakeholder are at stake, it can have a knock-on effect on the state of relationships with other stakeholders. You can do good business and do the right thing."
Bruce Cartwright, chief executive of global professional membership organisation and business network for chartered accountants ICAS, believes ethical leadership should be an integral part of the UK Corporate Governance Code.
"We need leaders to promote ethical leadership and create a publicly available code of conduct/ethics for their companies. ICAS has been vocal about the need for sustainability reporting to be equivalent to the level of detail and scrutiny given to financial reporting," he said.
Highlighting Britvic as a laudable example, Cartwright noted the adaptation of market offerings to sustainable products, which was driven not only by ethical considerations, but also by an understanding that it was good for business.
As we approach 2024, there are continuing challenges that impact climate programmes and supply chains.
Stephen Tang, a leadership expert, pointed to instances of moral failures in leadership in 2023, highlighting the need to transition to ESG and stakeholder capitalism.
"Although it promotes a flexible work-from-home policy, Zoom requires employees to return to the office. This decision appears to be contrary to the company's values of encouraging and enabling hybrid and remote working for its customers," he warned.
Tang emphasized "ESG and stakeholder capitalism" as frameworks that could lead to better moral leadership.
Applying ethical values beyond politics
CEOs have a key role to play in driving ethical practices, as highlighted by Ildiko Almasi Simsic, a social development specialist and author of What is Social Impact?
"To align their actions with their values, CEOs are key to fostering cross-departmental collaboration: the ESG team may be responsible for the human rights policy, but it is the procurement team that puts it into practice through supplier due diligence, audits and social impact provisions in contracts," she said.
A policy is not enough, there needs to be a system in place with clear, actionable steps and results.
"The procurement team should have a supplier folder with a standard set of documents that address contextual risks at sector, country and industry level, due diligence reports and, where necessary, on-site audits. Compliance with legislation is one thing, but understanding the profound impact of equitable/income pay at the household level is another," she added.
Ultimately, the question remains: can companies that are perceived as ethical by employees show better business results?
According to Almasy Simsic, the answer is a resounding yes. In this evolving landscape, ethical considerations are not just a moral compass, but a strategic advantage that drives businesses forward in today's conscientious marketplace.
"This typically translates into greater efficiency and better business results, as mission-driven employees are usually more than willing to go the extra mile," Simsic concluded. /BGNES
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Patricia Cullen, Business Leader
