BBC R4 Sunday show: faith and business ethics,

I contributed to a pre-recorded “package” for BBC Radio 4’s Sunday programme on an inter-faith initiative to produce (actually to update) a code of business ethics. This is the sort of thing I mulled-over as I prepared…

The Institute of Business Ethics has produced a document, Towards Ethical Norms in International Business Transactions, which revisits the 1995 Interfaith Declaration: A Code of Ethics for International Business.

This sort of stuff in general…

I have said a lot already about the general uselessness and even danger of Corporate Social Responsibility mantras in the developed world. No need to repeat it here. But there is a peculiar set of problems to consider when multi-national firms dabble in the “developing” world.

On the face of it, their temptation to exploit poverty and weak regulation is very great, and ought to be condemned. But, on the whole, even if their behaviour is exploitative, their investment is often invaluable. And, anyway, even at their worst they will often be less bad ethically than indigenous exploiters. Indeed, it may only be the exploitative margin which makes the trouble of doing business – of doing some good – in poor countries at all worth it.

Look at it another way, however, and one sees that firms serving rich Western consumers and shareholders ought to consider themselves bound to behave rather well, since they can to some extent choose where to do business and can afford to eschew unacceptable business environments.

In the real world, we have seen what look like useful codes of practice for MNCs in the Third World. They cover, say, child labour, forestry or fisheries practices, mine safety, and “Fair Trade”. Some seem too idealistically framed as Western wish lists. The good ones tend, I think, to be industry-specific, realistic and checkable. They tend usefully to stop firms getting into a “race to the bottom” (a race which they may find unedifying anyway).

Where things go wrong, though, is in anything which tends to the loftily aspirational or vague. Firms which reach for the skies may merely plumb new depths. In particular, the gap between rhetoric and achievement can become very wide. Firms may become dishonest as well as cruel.

Firms are not people

The bottom line is that firms are not moral entities in the way people are. They cannot love and they cannot be altruistic: they do not have the necessary equipment of empathy, nor the “bank” of resources from which to disburse largesse. They are, in a crucial sense, out for what they can get. There are of course constraints on what they can do as they pursue wealth. Their own self-interest makes straight criminality generally counter-effective. They must anyway obey the law. They must honour contracts. My own strongly held belief is that firms could be better players in the social scene if they were boldly honest, especially in not affecting to be fond of their workers or customers.

In the Third World, they may have to be active rather than passive in pursuing decency. Local law or law enforcement may not by themselves keep firms clear of very bad behaviour. But in the developing world, where the hazards are greater, firms will need double doses of honesty, and be doubly averse to windy moralising, if they are to keep themselves morally safe.

The inter-faith dimension

The latest inter-faith effort at codifying corporate decency seems especially relevant in the poorer world. It is open to the usual charge of such codes that it insists that high moral standards are good for the bottom line. Actually, though, it is a fair guide to moral virtue that it involves self sacrifice, and that is hardly compatible with increased profits.

More significantly, it is also keen to show that the promptings of the Abrahamic faiths are pretty well in line with each others’ but also with those of secular bodies such as the UN, whose business codes the documents quote approvingly. This latter is an interesting alignment, since it lets one wonder what the faiths hope to add to the secular efforts.

It turns out that the religious code seems to want firms to adhere to the Golden Rule (“do as you would be done to”). But this is impossible for firms: no boss could sack anyone, or even charge a proper price, on this premise. The code discusses the need to “respect (love)” one another. Well, respect is perhaps easy enough to demand, and is a normal secular requirement. The bit in brackets – about “love” – is impossible to firms.

You may say that my interpretations of moral requirement is personal or partial. I can cheerfully concede that they are, and then go on to say that this is why business codes should steer clear of the moral, which is almost always in effect a matter of taste, or choice, or whim. That is why I insist that when a firm decides to declare itself moral in some way, the least it should do is the decent thing: it should be honest about the moral choices it has settled on, and check that they have been properly-agreed to – or at least understood and accepted – by shareholders, employees and customers of the firm. To this extent, the code is not capable of the very universality the interfaith document’s authors seek.

The specifically religious moral injunctions in the interfaith document look to me to be incapable of operation by a business. To that extent the document takes other such codes –  themselves flawed – into new realms of implausibility. But of course any firm would be entitled to try to enshrine them, and would be – I imagine – a bad business, though quite possibly a very good charity.