‘I have a passionate belief that businesses can do their businesses ethically,’ said Philippa Foster-Back, Director of the UK’s Institute of Business Ethics. ‘It may cost but doing the right thing by others takes courage,’ she told the 30th annual Caux Conference for Business and Industry in Switzerland. She was speaking at a plenary session on ‘Integrity and Accountability’.

‘I have a passionate belief that businesses can do their businesses ethically,’ said Philippa Foster-Back, Director of the UK’s Institute of Business Ethics. ‘It may cost but doing the right thing by others takes courage,’ she told the 30th annual Caux Conference for Business and Industry in Switzerland. She was speaking at a plenary session on ‘Integrity and Accountability’.

‘Behind my motivation is a concern that trust is lacking in society today,’ she said, illustrating her point with a Mori opinion poll, which showed that only 28 per cent of the British public trusts business leaders to tell the truth. ‘Business leaders have always been at the top of the lower quartile’ of Mori’s annual integrity survey, Foster-Back said. Doctors were consistently at the top of the list of the most trusted profession and Foster-Back had concluded that ‘we tend to trust those whom we can see’—implying that business leaders remain faceless and remote.

But all is not lost. Employees, above all, can highlight the ‘say/do gap’ between what a company professes and what it practices, she said. And now even the business case for ethical practice, it seems, has been proved. A major IBE study finds that companies with codes of ethics perform better financially than companies without codes, she told the conference.

IBE surveyed major companies that had had ethics codes in place for at least five years. The result was unequivocal. The research paper, entitled ‘Does business ethics pay? Ethical and financial performance’, published last April, claims that ‘there is, for the first time in the UK, good prima facie evidence that large companies with codes of ethics:

Ethical companies showed far more stable price/earnings ratios than companies without codes, and dramatically outperformed on an Economic Added Value graph. Foster-Back highlighted Shell as a good example of corporate openness and transparency. Its annual survey, ‘People, profit and planet’, reports both good and bad news, she said, including instances where the company could do better and even bribery and corruption cases, ‘where people have attempted to bribe them, or their own staff who have been caught’. ‘The best reason for being ethical is because it is the right thing to do,’ Foster-Back concluded. ‘Until all boards and investors are convinced that business ethics is worthwhile, there remains a need to prove the business case.’ IBE is now researching why and how codes of ethics are effective, she said.

Conference Report

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© Caux Initiatives for Business, 2003