Three Ways Companies Are Getting Ethics Wrong

Is the explosion of standards and products around corporate social responsibility making your company more — not less — vulnerable to ethical missteps?

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Making business decisions that are both ethically and strategically sound has always been incredibly tricky. Leaders are called upon to act in a manner that is consistent with their personal values, builds solidarity and trust among diverse stakeholders, enhances their company’s reputation, and prevents scandals, while also being mindful of the bottom line.

This leadership challenge is getting ever more complex. Investors are measuring companies against environmental, social, and corporate governance (ESG) indexes. Employees are demanding extensive diversity, equity, and inclusion (DEI) commitments. And customers want to buy brands that are tied to strong corporate social performance (CSP).

As counterintuitive as it might seem in the burgeoning ethical complexity of ESG, DEI, and CSP, a few companies have found that when it comes to ethics, simpler is better. They meet the demands listed above by rejecting the notion that ethics are necessarily complex. They refuse to abdicate their ethical responsibilities; they craft value propositions that do not lean on social value initiatives to obscure or distract from how the company creates financial value; and they are transparent about how they do business with all stakeholders.

Don’t Outsource Ethics

It isn’t surprising that today’s complex ethical demands have spawned equally complex products and services from companies such as Ethisphere and RobecoSAM, and major consultancies like Deloitte. It is also easy to see why well-meaning leaders looking at the myriad variables behind ESG, DEI, and CSP calculations would throw up their hands and call in a consultant. But outsourced solutions to ethics don’t build employee solidarity or earn customer goodwill. Nor do they prevent scandals or help leaders sleep at night.

For example, Starbucks has been a longtime client of Ethisphere, but this partnership has not protected the company from ethical scandals. In 2018, Starbucks outlets nationwide were forced to shut down for a day of sensitivity training — an event whose design was also outsourced — after a store manager in Philadelphia called police to remove two Black men who were waiting for a colleague to arrive before placing their orders. Then, it seems that the sensitivity training Starbucks paid for had unexpected consequences: A year later, a barista in Arizona asked a group of police officers to leave the store after a customer complained of not feeling safe.


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