As we all try to find our way through the uncertainty that is 2020 and the global Covid-19 pandemic, we seem to have stumbled into a rare ethical moment.
As a community, a country and a species, it seems that 2020 has presented us with a whole slew of new ethical issues unique to the moment.
Rarely have people been so aware of how their personal behaviours can impact the public good, the tension between individual liberties and community wellbeing, and, especially in Australia, the trouble with state-sanctioned force as a means of maintaining peace.
It seems that, at this particular moment, the question ‘what is the public good?’ is being collectively asked.
So, from an ethical perspective, how are businesses around the world responding to the Covid-19 challenge? And what impact are these new circumstances having on ethical thinking in business?
Corporate social responsibility
A newly published academic paper from the University of Manchester and the University of Birmingham, The impact of Covid-19 pandemic on corporate social responsibility, looks at the way firms and organisations have responded to the crisis.
The results are heartening.
“Inevitably this crisis has put companies under test for its commitment to ethical business conduct and corporate social responsibility (CSR),” says the report. “Some may argue that the financial strains, both short-term and long term, caused by the outbreak could significantly pushed firms to pursue short-term gains, sometimes even through fraud and misconduct, and reduce long-term CSR investment, probably due to lack of slack resources and mounting pressure for survival.”
“Fortunately, we have observed that many companies not only have resisted unethical business practice during this crisis, but also have proactively engaged in various CSR activities, particularly those that can offer immediate help and assistance to the fight against the virus.”
“It is becoming even more important to understand what drives some firms to be more ethical and socially responsible, particularly when resources are restricted and survival is under threat.”
One thing that the pandemic has exposed is industry’s vulnerability to extraordinary external forces. As the business environments look set to remain turbulent, what are the implications for business ethics?
The optimistic view is that Covid-19 pandemic will accelerate ethics programs in business, as organisations begin to link long-term survival with better conduct.
“Probably the more relevant and pressing question is not about whether to invest in corporate social responsibility or not, but more about how to invest in CSR to achieve the mutually beneficial and interdependent social/environmental and economic goals,” says the report.
“We can envision the post-pandemic period as a one that the thriving businesses are those with strong CSR commitment and effective CSR strategies and efficient implementations.”
“Greenwash, pinkwash, and lip services will no longer survive closer consumer and public scrutiny.”
While the University of Birmingham’s report hopes for the best, there’s no denying these are turbulent times. As such, business environments can change overnight, and with them, the ethical landscape.
“We are in the middle of the fastest transformation the global economy has ever experienced,” says Andrew Gordon, forensic and integrity services leader with EY.
“Extreme pressures can lead to moral and ethical decisions that organizations must respond to at speed and under increased scrutiny. Leaders must have confidence that their employees at all levels will act with integrity.”
“Yet, tone from the top is important, and we can clearly see that some employees do not have faith that their boards and senior leaders will be making the right choices. Now is the time to ensure that leaders act in a way that demonstrates to all their stakeholders a commitment to doing the right thing now, next and beyond.”
The company’s Global Integrity Report 2020 found employees divided on whether the pandemic conditions represent a net gain or loss for their company’s ethical standing.
“The majority (90%) of respondents surveyed during the crisis believe that disruption, as a result of Covid-19, poses a risk to ethical business conduct, but there is a concerning disparity between boards, senior management and employees on the implications for compliance.”
While 43% of board members and 37% of senior managers surveyed believe the pandemic could lead to change and better business ethics says the report, only 21% of junior employees agree.
“The survey highlights that signs of an integrity disconnect at different levels within organizations were evident even before the pandemic with more than half of board members (55%) believing management demonstrate professional integrity, but only 37% of junior employees sharing the same sentiment.”
“In addition, over half of board members (55%) believe there are managers in their organization who would sacrifice integrity for short term gain.”
Rather than being a product of the times, it seems that the myriad challenges of the pandemic have simply magnified problems that existed long before the first positive cases emerged.
“Lack of trust and integrity was already a challenge before Covid-19, but the pandemic has heightened some of these risks,” says Gordon. “What is important now is how organizations deal with this risk, what action they take, and what frameworks they put in place.”
“Senior management must take the lead and ensure the right approach against unethical conduct by putting integrity at the center of operations and assessing their corporate culture and strength of compliance programs.”
“Organizations that commit to doing the right thing, even when nobody is watching, will emerge from this pandemic stronger and more united.”
Ethical values, properly embedded
Could a commitment to ethical values now – and ensuring those values are embedded in the fabric of the business – be what ensures profitability over the long term?
“The pandemic is far from over and the decisions taken by companies over the next 12 to 18 months will be vital in securing a sustainable future for their businesses, their workforce, their customers and the communities they serve,” says Mark Chambers, IBE’s associate director of governance.
“Decisions and approaches will be under ever greater scrutiny and will be challenged more forcefully and publicly by a wider range of stakeholders. Companies will need to explain and justify the choices they have made and why options which might have been more successful were discounted. Decisions that don’t work out well will be judged with the benefit of hindsight, and hindsight is always 20:20.”
Nevertheless, there really are good reasons to be optimistic, says Chambers.
“There have been many more heroes than villains in this crisis,” he says.
“For a large number of companies, staff at all levels adapted quickly, embraced unusually high levels of empowerment and showed incredible innovation in solving difficult new problems despite extraordinary levels of uncertainty and pressure. People who wanted to do the right thing but had previously struggled for permission found their moment. Those companies are looking to find ways of normalising some of these successes and, in particular, the positive cultural aspects of the crisis response.”
“Embedding a programme of business ethics can be a great way to achieve that and to deliver on the unifying business purpose that has been a vital guide for many companies through the crisis.”
Ensuring that your whistleblower policy, procedures and platform are up to the task is crucial to navigating these uncertain times. Contact Report It Now to discuss how ethical behaviour can be supported in your workplace.