Tags: Corporate governance, Ethical Values, Supportive Environment
The Ethics Study author, Rob Hayward, shares his personal reflections in our latest guest blog.
Over the last twelve months, we’ve had the privilege of interviewing business leaders for the first Ethics Study, conducted in partnership with the IBE.
From the very first conversation, it was clear that these were no ordinary discussions. Whether driven by a shared sense of uncertainty, or by interacting with leaders in their home environment, the leaders we spoke with were reflective, discursive, open to “thinking out loud” and testing new ideas. In wide-ranging conversations, we discussed the impact of the pandemic, the tough dilemmas that they faced, and what they believed would be the critical elements in building back better.
Our findings from more than 80 interviews, together with the insights from our survey of 750 companies worldwide, are captured in the Ethics Study. But what follows is a more personal reflection on the themes that stand out most clearly to me as I reflect on our conversations:
1. Business leaders’ understanding of ethics has changed: In our work at Principia, working closely with companies to build more ethical organisations, we often encounter two views of ethics in business. The first conflates ethics with compliance, and reasons that if something is permitted, then it must be the right thing to do. The other regards ethics as something amorphous or fluffy, with no relevance to core business.
But one of the immediate impacts of the pandemic was to present leaders with innumerable decisions where the right thing to do was not determined by the rulebook. Instead, leaders faced decisions that demanded moral judgement and the ability to manage in the grey.
Where once they may have asked simply “what can we do?” – perhaps accompanied by a call to the lawyers – leaders now find themselves needing to ask “what should we do?”. And they often find the answers in an approach that prioritises values and principles – the cornerstones of ethical business – as much as traditional, financial measures of success.
2. The crisis acted as a stress test for progress in integrating purpose, ethics, and values: Throughout the crisis, companies who had invested time and attention in translating statements of purpose and values into decision-making frameworks reaped the rewards in quicker, better, and more consistent decisions. Conversely, those for whom purpose was simply a boilerplate statement on the company website rapidly found themselves without the tools to navigate the crisis.
One of the recurring themes in our conversations was the acknowledgement that to meet rising expectations on business, companies need to continue building new capabilities that give their people the responsibility, the capability, and the motivation to make good, ethical decisions.
Leaders know that closing the gap between aspiration and action – not just making commitments to more ethical business, but living up to them – will depend on embedding ethics and values into everyday decision making, and constructing new measures of success that can monitor and track performance beyond traditional financial metrics.
3. Leaders are moving beyond the tyranny of the “win-win”: For the last decade, business leaders have made ever more ambitious declarations on sustainability. But the contribution of the private sector to global challenges remains sluggish at best.
Talking to business leaders, there has often been a sense that they would have liked to do more, but that they have been hampered by a lack of interest from investors, a lack of sophistication from consumers, or a lack of coordinated action from governments – all of which have forced leaders to manage trade-offs between short-term profitability and their desire to do the right thing.
This year, a sense of frustration is palpable, with leaders asking themselves why they and their peers have often been too cautious in overcoming systemic obstacles to action. But alongside this frustration is a renewed commitment to move beyond excuses for inaction, and towards an approach that strengthens the resolve of business leaders to do what they know to be right – even when it means sacrificing short-term returns.
And while leaders underline the need to engage across their ecosystems and drive coordinated action towards systemic change, they also believe that they cannot let others stand in the way.
The financial crisis of 2008 was a watershed moment for corporate sustainability, as many companies began to more stringently align CSR activities with their core business, and integrate environmental, social, and governance issues into day-to-day decisions and operations.
Our conversations with leaders suggest that this year, the same could be true for ethics in business. In an environment of rising expectations and ever more complex demands, business leaders see purpose, ethics, and values as a route to more consistent decision-making, competitive advantage in their sectors, and long-term, sustainable success.
But as they translate aspiration into action, they are realistic about the scale of the challenge, and the commitment that it will take to enable their people to do the right thing, every day.
Download The Ethics Study
You can also listen back to our webinar with Rob Hayward and IBE Chair, David Grayson here...
Chief Operating Office, Principia
Rob Hayward is the lead author of The Ethics Study, the most extensive research study ever conducted on ethics in business. Rob is Chief Operating Officer at Principia, the leading global network and advisory firm on organizational ethics. Prior to joining Principia, Rob spent a decade at Accenture Strategy, where he led Accenture’s research partnership with the United Nations on responsible and sustainable business, overseeing three editions of the UN Global Compact-Accenture CEO Study, the world’s largest study on corporate sustainability. Rob holds a degree in Modern History from the University of Oxford, sits on the board of trustees of Shelter, the UK’s largest housing and homelessness charity, and is Chair of Shelter Scotland.