There is good news from Britain for anti-capitalist protesters—and bad news for unscrupulous business fat cats—on several counts. It seems that a cultural shift is taking place in the corporate world, thanks to investor pressure, public opinion and legislation.

There is good news from Britain for anti-capitalist protesters—and bad news for unscrupulous business fat cats—on several counts. It seems that a cultural shift is taking place in the corporate world, thanks to investor pressure, public opinion and legislation.

Firstly, a new ground-breaking report* by Britain’s Institute of Business Ethics suggests that the most ethical companies are also the most successful financially. Being good pays. ‘These are important, even momentous, findings,’ comments The Observer newspaper. They suggest that companies which have had codes of ethics for at least five years are also the best run.

Secondly, there is now a serious backlash against the ‘perk ethic’ of rewarding company bosses with seven-figure payoffs when they walk away from failing businesses. Britain’s Trade and Industry Secretary, Patricia Hewitt, has published a Reward for Failure paper which, for the first time, links directors’ golden handshakes to their companies’ performances. Shareholders have been allowed to make recommendations on boardroom pay, but this has never been binding. Now, pension fund managers have led a furious charge against excessive payouts, at a time when, in the UK, pension funds account for some 60 per cent of all stock market investment.

Thirdly, the British government is taking tough new measures against business corruption, with a new Bill to extend corruption offences even beyond the provisions of an OECD anti-bribery convention. ‘There are no grounds for complacency and the Bill should give everyone pause for thought,’ comments Will Kenyon of PriceWaterhouse Coopers in The Times.

Finally, Transparency International, the anti-corruption watchdog, has quietly and without fanfare published its Business Principles for Countering Bribery, and has been conducting in-house company workshops to make sure the code is put into practice by employees. As Kenyon comments, ‘The bottom line for business is to ensure that there is clarity within an organization about what is appropriate.’

All this is good news for those who otherwise see big business as inherently greedy. It suggests that while profits are essential for employment and survival, they are not the ultimate paradigm. Such new measures also strengthen the hand of those in business who, from their own moral scruples and personal motivation, want to be ethical and not give in to peer pressure in order to outperform the competition.

There is also a much wider issue: the potential for a new class war between the world’s haves and have-nots, already manifest in anti-globalization protests, which can be fuelled by unscrupulous and greedy capitalism. Global security issues are at stake in the ethical and moral practices of the captains of business and industry.

Michael Smith, co-National Coordinator, CIB, UK

*Does Business Ethics Pay, ISBN 0 9539517 3 1
www.ibe.org.uk
info@ibe.org.uk

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© Caux Initiatives for Business, 2003