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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