Ethical PR: Time for business to take an ethical stand - As ethical obligations loom ever larger, companies are weighing the reputation benefits of codes of practice and considering how to present them to the public

Once, only doctors, lawyers and preachers had ethical obligations.

Once, only doctors, lawyers and preachers had ethical

obligations.



But Shell’s public relations disaster over Brent Spar changed all

that.



Three years later, over half the UK’s largest companies (57 per cent)

have a code of conduct.



Where the Body Shop led, others are following. Clothing retailer C&A has

set stringent employment rules based on fundamental human rights.



When its independent ethical auditors found child labourers on a

spot-check visit to a factory in India, the company pulled all its

business from the importer for six months until it remedied the

situation.



Gavin Grant, head of media and internal communications at The Body Shop,

says: ’Ethical business is absolutely essential. It connects you very

powerfully with various audiences. It is hard to forge strong

relationships with people you don’t feel strongly about.’



However, a report published last week by the Institute of Business

Ethics (IBE) showed that, while companies may be re-evaluating how they

do business, there are still big gaps between fine intentions and

effective action (PR Week, 4 December).



The process often does not involve staff, suppliers, investors or

customers - the very people to whom companies are making promises or

from whom they require an ethical standard of behaviour.



According to the report, 89 per cent of 178 top 500 companies did not

consult employees in drawing up their codes and only nine per cent

involved external stakeholders. And, although 94 per cent did

communicate their codes internally, only 13 per cent introduced any

formal training. Only five of the companies which responded to the

survey actually issued copies externally.



British American Tobacco (BAT), for example, instructs its senior

managers on its code, but does not publicise the code outside the

company. According to BAT corporate and regulatory affairs director

Michael Prideaux: ’Saying ’hey, we’ve got one’ and publishing it, that’s

the easy bit.’



There are also risks in taking a high-profile public stance. Critics and

the media are relentless in their pursuit of companies which try to

capitalise on their ethics.



Even the Body Shop has had its problems. In 1996, it stood accused of

exploiting the Kayapo Indians of Brazil and has had to fight back with

details of how it has tightened up its relationships with indigenous

people to ensure they do not become dependent on the company.



Foreign Secretary Robin Cook is still suffering the fall-out from the

mismatch between his vaunted ethical foreign policy and the supposed

endorsement of the use of mercenaries in Sierra Leone.



Martin Le Jeune, head of the new business ethics division at Fishburn

Hedges and co-author of the IBE report, understands companies’ aversion

to putting their heads above the parapet.



However, he adds: ’The risk of not telling people about a code of ethics

is actually greater. You are likely to attract more criticism if you

have only paid lip service and the code is not embedded in corporate

culture. What Shell has woken up to, for example, is that if it starts

telling people what it is doing and why, it will actually improve the

product.’



Shell took three years to consult all interested stakeholders

worldwide.



This culminated in a new code of practice for the whole organisation and

a public commitment to sustainable development and human rights,

publicised in the Shell Report earlier this year.



The second edition is out in April, promising both independent auditing

and public feedback. As Mark Wade, a member of Shell’s social

accountability team, says: ’You have to be seen to be good.’



Pressure is coming not just from consumer and City groups. New Labour is

playing a large part in creating a culture of openness. The Public

Interest Disclosure Act, which comes into force early next year, will

give greater protection to whistleblowers who can prove they were forced

to go to the media because of the lack of a formal system for reporting

internal wrongdoing.



This will bring the UK closer into line with the US, where codes of

conduct have become much more prevalent since the Federal Sentencing

Guidelines were revised in 1991. US courts can now reduce fines on

companies which misbehave by up to 95 per cent if they are able to prove

that their internal ethical stance makes them good corporate citizens

despite any proven fault.



The checklist includes firstly having a code, then someone with overall

responsibility for compliance. Management must be aware of it and have

communicated it to staff. And the code must form part of disciplinary

procedures.



A whole range of consultancies are gearing up to meet the challenges

that a greater focus on ethics will create. PricewaterhouseCoopers is to

launch an ethical practice in January, headed by Sheena Carmichael, who

has run her own firm, Ethos, in the same field for five years. She says:

’There will be huge opportunities. There are no firms in the UK which

take ethics as seriously as they should do.’



The Institute of Public Relations and the Institute of Social and

Ethical Accountability are also trying to rectify that with a conference

on the subject on 19 January. IPR president Peter Walker says: ’There is

a significant role for PR professionals. We have to ask the awkward

questions. The credibility of a business depends on its ability to

deliver what it is promising.’



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