Managers, examples for ethical behaviour?

According to a study, many leaders believe that if employees know the ethical goals, they will practice them in their daily activities. But it seems that this is not enough. Employees forget the ethical goals, which leads to huge scandals.

If people didn’t learn about ethics from their parents, it is the task of the executives to learn it. Although the company has a vision statement, we find that employees don’t apply to it. Employees and executives never had an ethical discussion at work that dealt with day-to-day problems.  The biggest problem seems that employees see unethical behaviour of their own bosses. For example: while a good client had been overbilled, the manager suggested not to tell it.

How can managers solve this problem? First they have to give good ethical advices. They have to make clear that profit is not the most important purpose, on the contrary ethical goals of the company are crucial.  

Sources:  

http://edition.cnn.com/2010/BUSINESS/10/22/opinion.samuelson.ethics/index.html

http://www.google.be/imgres?imgurl=http://jeremylatham.com/images/toastmasters-meeting-chair.jpg&imgrefurl=http://siglaptoastmasters.wordpress.com/2008/04/12/where-to-look-for-speech-topics/&usg=__KSnV6Dt6U2f_samzxWD318bX1UI=&h=299&w=450&sz=25&hl=nl&start=0&zoom=1&tbnid=_pCWDFvqQBByZM:&tbnh=142&tbnw=198&prev=/images%3Fq%3Dethical%2Bstarts%2Bat%2Bthe%2Btop%26um%3D1%26hl%3Dnl%26sa%3DN%26biw%3D1680%26bih%3D889%26tbs%3Disch:1&um=1&itbs=1&iact=hc&vpx=1202&vpy=564&dur=408&hovh=182&hovw=275&tx=115&ty=105&ei=_ITpTNzLDsTKjAfCjMWFAw&oei=_ITpTNzLDsTKjAfCjMWFAw&esq=1&page=1&ndsp=41&ved=1t:429,r:31,s:0

Cornette Guillaume

What is ethical investing?

Is investment all about capitalism run wild? Or can the words ethical and investment be used together in one sentence?[1]

First of all, I’d like to state that this article is a way to build further on a previous post (by Jonas Van Liedekerke, Ed.).  I think that in the future more and more investors will think twice or even more about a plan or project to invest their money into. Projects that could harm the environment, cause pollution, exploit people and/or children’s rights will no longer have a surviving chance in the market field.

"Most people aren't interested in what happens to their money once they put in their bank or pension," he says. "What we need to do is to show them that ethical finance is all about making money and at the same time doing some social and environmental good."[2]

This statement shows that people don’t care about what bankers do with their money. They are concerned about the protection and interest rates the banks are willing to offer, but that’s it. In present times, bankers and relations managers should make their clients aware about the projects that are invested with their money. That will improve the relation and thrust between the client and the bank.

"It is important to remember that one person's ethics are not necessarily the same as another's," says the ASX. "A decision to invest in socially responsible investment funds will depend on your own values as well as your overall portfolio and financial planning goals."[3]

In my opinion, investors will have to keep this statement in the back of their heads. No one is the same. Every person’s character is based on different values and can’t easily be predicted. I think the best solution for this problem is to perform surveys to get to know the different views of the consumers.

To conclude, I believe that ethical investments are possible in the nearby future. The results of green energy being produced by wind mill parks, solar energy plants or bio mass are a way to prove this.

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[1] 

[2] 

[3] 

Mathias Aper

Even a bank can be ethical

Concerning ethical behavior and financial performance, the following topics: fair trade, financial fraud, corporate social responsibilities, ethical investments and ethical consumerism have been explained, illustrated and discussed. Another topic within this movement towards social responsibility is ethical banking.

An ethical bank takes interest in the welfare of the community, serves the disadvantaged, and supports progress in the sustainability of the society. It also tries to avoid doing business with corporate entities who act unethically and immoral. Furthermore, there is not only a commitment to internal ethics, but also to the wider external ethics. This is what separates ethical banks from conventional banks. External ethics means that the bank is concerned with the environmental and social impact of its business practices such as the loans they provide or who they invest in, whereas internal ethics has to do with codes of conduct within the company such as customer satisfaction, wages, the well-being of employees,…Some of the wide range of ethical banks are Triodos Bank ( The Netherlands ), Reliance Bank ( United kingdom ) and Cultura bank ( USA ).

The most effective way for an ethical bank to fulfill its social goals is to adopt the ‘carrot-and-stick’ approach. This approach is based on interest differentiation: companies who cause more environmental and social damage have to pay higher interest rates in order to borrow capital than ethical responsible corporations. Another way is to develop ethical investment funds. The social banks can also encourage its borrowers to reduce emissions and save energy.

As banks play a major role in our economy, I believe ethical banking is the most effective way to implement financial ethics in our society, only on condition that practically all banks follow the socially accepted rules. This could be achieved by more governmental regulation.

Kenn Crombé

http://en.wikipedia.org/wiki/Ethical_banking

Jeucken, M. "Banking and sustainability—slow Starters are Gaining Pace." Ethical Corporation Magazine 11 (2002): 44–48.

http://www.ethicalinvestment.co.uk/Ethical_banking.htm

Sustainability, let’s get some reputation

Not every company acts sustainable, but companies do realize that being sustainable can improve their reputation. But what does sustainability means? In general, sustainability tries to solve the social, economic and environmental issues as good as possible. But each company has a different activity with different views. Therefore, it could be that only one particular aspect of sustainability is important for businesses.

Improving reputation and trust are the main reasons why companies would act sustainable. Many companies have good intentions about being sustainable, but never act sustainable. This is a big problem, and also a reason why sustainability should be bound to every business strategy. Also, a lot of companies don’t mention the negative externalities of their sustainable initiatives. Some products aren’t recyclable, which could be very negative for the environment and the health of other people. That’s why companies should meet the cradle to cradle standard and make most of their products recyclable.

My opinion is that companies only deserve a good reputation if they really act sustainable. The only way to know this, is to check and control them. Sustainability and accountability are two words that suit each other. A tip for those businesses with sustainable intentions: less talking, more action.

Source: Business Ethics

Van Liedekerke Jonas

Ethical consumerism, I have my doubts …

Comment on Guillaume Cornette’s opinion:

I disagree when Guillaume says that if Nike pays more respect to the human rights and produces ethically, people would be willing to pay a little bit more for Nike’s products.
First of all, Nike has made a pretty bad name during the past few years. And the well-known rule that negative information concerning trade practices has a greater impact on consumers than positive information, makes it even more difficult for Nike. Making the public realize Nike has developed itself into a more ethical brand, takes many years.
In many surveys of consumers' attitude, it is mostly proven that people claim they would reward companies for their positive ethical actions, but I think that in reality less people would in fact do so. Personally, I think that surveys don’t reflect actual behavior correctly.
Furthermore, in this case the media plays a major role. If the media had not criticized Nike for its unacceptable behavior, Nike would not have been facing so many social implications of business ethics and less consumers would have chosen to shop more ethically.   
In addition you could ask yourself how many people are able to pay a bit more. 
Finally, we must not forget the individual differences between consumers.

How many people really search for an ethical-proven symbol at the back of a product?
Isn't it mainly the price that makes people choose what they shall buy?
In a nutshell, I figure that the degree a company’s ethical commitment does not have a direct positive impact on consumers’ perception.

This does not mean I believe Nike should not pay respect to human rights and act ethically. On the contrary, I think child labour and other corporate discriminations must be punished severely. There should be more laws to prevent unethical conditions and more international commitment is necessary.

Kenn Crombé

Child labour in India

Child labour does not only happen in India, but it is a human rights issue that affects many places in the world. In India, many children under the age of fourteen are employed in carpet making factories, glass blowing units and making fireworks with their bare little hands.

Seema, who is only nine years old, works in the fields of a cotton seed farm. Every day, she has to get up early to get to work. To make a decent profit, the farmers attract cheap labourers. That means they have to employ kids like Seema.  Every year, more than 400 thousand labourers under age are being forced to work in cotton seed farms across India. They need to provide a small income for their starving families that live on the edge of absolute poverty.

In Northern India, situations like this are common. The exploitation of little children for labor is generally accepted to make poverty easier to be endured. Carpet weaving industries pay very low wages to child labourers and force them to work in bad conditions.

 

These children are held back from getting proper education and will later on suffer the same conditions their parents are currently living in. It ends up in a vicious circle of everlasting poverty. As a reaction on Guillaume’s (Cornette, Ed.) article on child labour, I would like to state that organizations that ban child labour already have a label that represents their ethical code of conduct. I think this is the only solution to make a distinction between the companies that strive for corporate governance and the ones that violate the ethical way of entrepreneurial activity.

 

List of sources:

http://www.merinews.com/article/child-labour-in-india/135987.shtml

http://www.childlabor.in/index.htm 

Mathias Aper 

 

Child labour

First of all I will react on the previous blog. Like Jonas said, Starbucks has changed the lives of many farmers. But  there are still some factories, which employ children and pay low wages.

Perhaps you wear a jeans, without knowing it was made by a seven-year old child from China, where children work 12 hours a day. Up until 1820, child labor was very common. Enterprises would do anything to reduce costs.

Before the industrial revolution child labor was not a big problem. But since 1700, children were forced to work in mines, factories, etc. In 1788, more than 60 % of workers were children, because there

were no laws. Since 1830, the government of the U.S. made laws to reduce child labor. Although there were laws, the laws were ignored. Eventually the National Child Labor Committee was founded, which inspected companies. More and more companies have drawn their own code.

I think that laws help to prevent child labor, but in many countries companies violate these laws. Therefore I suggest to give the companies, which pay respect to human rights, a label.  So everyone, who buys a product, can see if their product is produced ethically.

http://www.buzzle.com/articles/history-of-child-labor.html

Cornette Guillaume

Ethical investment, the future of investing

Ethical investment is a term that was introduced about 10 years ago. Since then, the amount of ethical investments has quadrupled. Investing ethically is all about lending your capital to an institution, which will use your money to invest in companies that act sustainable and ethical. Mark Robertson, from yourethicalmoney.org, says that your investment only has an impact if you put your money into an ethical financial institution and not in a bank that doesn’t have ethical lending policies.

The quantity of ethical investments is still too small compared to other investments. In the UK, ethical investments only represent 1% of the investment market. So how can we raise the amount of ethical investments? The answer lies with us, the investors. People have to get convinced to invest in these ethical funds. The only way that people could get convinced, is by showing them the benefits of these investments. Ethical finance is about making profit while helping social and environmental issues.

A lot of people still believe that investing ethically leads to less profit, but Mark Robertson doesn’t share this view. He assures that you can make as much as profit as other special funds, you only have to find a good fund manager.

I never heard of these investments before. But after reading this article, I might invest ethically in the future. The example of the Westmill Wind Farm co-op is amazing. These turbines can supply enough green energy in a year for 2500 homes while its investors get nice annual returns. 

Source: The Guardian

Van Liedekerke Jonas

The only way to do business long term

Unilever, the second biggest producer of consumer goods in the world, has come up with an ambitious plan for the future. Unilever’s corporate vision is to create a better future in which billions of people can increase their quality of life without increasing their environmental footprint.[1]

More and more of the world’s larger companies start thinking, planning and acting towards a more durable program of business making. Primarily, it’s because consumers and customers want it. Lots of young people are choosing to buy brands that represent a ‘Fair trade’ way of producing. These types of brands, such as Oxfam, Ben & Jerry’s Fair trade ice cream, etc. are more desirable brands. Secondly, it feeds the creativity and innovation. Without it, organizations would not be able to bring new products on the market. Finally, sustainability helps businesses such as Unilever to grow their market shares. Above all that, it is a cost-reducing way to save money in the future.

According to Jonathon Porrit, who is an environmental campaigner and an adviser to Unilever, businesses need to exploit –in a positive way- the current market that begs for change. "There is no way of arriving at a sustainable world that does not involve businesses making money," he said.[2]

I think that in a world where creativity, innovation and growing economic activity are central, environmentally friendly processes should be considered a priority. We need to take the next generations in account. Otherwise, the costs we bring to the nature will keep leveling up. And these impacts will consequently translate into higher business costs.

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List of sources:

[1] http://www.sustainable-living.unilever.com/the-opportunity/

[2] http://www.bbc.co.uk/news/business-11755672

Mathias Aper 

Starbucks, an ethical multinational

Starbucks, the multinational coffee producer, decided in 2009 to become more durable. Even though they still make millions of dollars of profit, they are now taking the environmental aspect into account. This gives Starbucks the label of green corporation. But not only the environment is important for Starbucks, they are also the biggest buyer of fair trade coffee, which is a social aspect.

To help the environment, Starbucks will make all of their cups recyclable and reduce their water and energy consumption. As for the social aspect, Starbucks set up Coffee and Farmer Equity (Cafe) Practices. This guarantees that the farms, which sell coffee beans to Starbucks, meet labour and environmental standards,  like minimum wages and water and agrochemical usage. Starbucks has also sent a part of its employees to these farms, where they had to work, to create an emotional connection between the product and its staff. Starbucks hopes that this will motivate the personnel and that these employees will share their stories with other colleagues and customers.

I think it’s great that a multinational like Starbucks buys fair trade coffee. Also, the results of their Cafe Practices is amazing. The lives of these farmers has changed dramatically. These practices have helped the farmers to increase output while reducing cost and to increase their yield.

Sources:  1 - 2

Van Liedekerke Jonas

Nike, an ethical brand?

Although Nike is one of the largest athletic clothes brands, many critics accuse the company for paying low wages and offering bad working conditions. Nevertheless only few people know that there clothes are manufactured in sweatshops. Nike has tried to improve the working conditions, but has it become an ethical brand?

Nike was founded in 1972 and all clothes and shoes were produced in China and Vietnam, where minimum wages are the lowest in the world, which means less costs. These unethical activities were discovered by groups such as Education for Justice, Students Against Sweatshops, etc. Nike is not the only company who acted in an unethical way, but these groups focused on Nike, because of its leading role. In 1987 the factory workers began to protest. Because of the political and public pressure, Nike decided to improve working conditions and increase the minimum wage. Eventually all factories got a company Code of Conduct, which ensures that the conditions of safety requirements are respected. But despite this code, it seems that the human rights are still ignored.

As one of the major player on the market, Nike should pay respect to the human rights. This would not necessarily mean that their benefits would be less. On the contrary, if people would know that their products are produced ethically, they would be willing to pay a little more. What do the others members think about Nike and his activities?

Used sources:

http://www.ehow.com/about_5485125_nike-sweatshops.html

http://thedawgdude.blogspot.com/

Cornette Guillaume

Profit and decency

The view that maximising profit is the only thing that counts can’t survive in this age of globalisation and instant social media. Reputations of companies can be destroyed immediately if they don’t behave sustainable. Ofcourse, some industries can afford to avoid these environmental and social concerns. Mobile phones are an example of this. They look innocent and harmless, but the Congolese army, who causes violence and uses forced labour, controls a lot of the trades in minerals used in phones.

Big business plays a very important role for the future as well as environmentally, socially and economically. Corporate behaviour will be controlled as it starts to play a major role, especially for developed countries. The relation between western companies and the developing world could lead to two different directions. If western companies act sustainable, resources will be sensibly husbanded and developing countries will become more wealthy, which leads to new markets with new businesses. If western companies ignore responsible behaviour, this could lead to an environmental, social and economic dystopia where nationalism and protectionism would be key-words.

I do agree with the fact that corporate behaviour becomes more and more important, but the view of maximising profit has led to the big economy we have today. Still, sustainability is necessary for the future. The Gulf of Mexico oil spill, which was a recent event, has affected the reputation of BP and is well-known around the world. This is a great example that fits in this context.

Source: The Guardian

Van Liedekerke Jonas

How stress and pressure affects financial performance

Nobel Economics Laureate Milton Friedman mentioned that a business, which is only artificial, cannot have responsibilities, only people can have responsibilities¹. Besides, in a free-enterprise system, it are mainly the corporate executive, the business managers and their decisions in coordinating the company that creates  the identity and culture of the corporation. Taking those two facts into consideration, it seems that the commitment of a company to ethical codes of conduct, strongly depends on the corporate leaders and their ethical behavior.

Recent study² has proven that stress and workplace pressure affect both ethical acting and leaders’ recognition of ethical dilemmas. In addition, it seems that decision makers sometimes compensate themselves in an unethical way caused by a lack of reward and frustration over poor teamwork. Eventually, acting unethically towards your staff, other decision makers and clients leads to negative corporate relations within and outside the company, consequently affecting the corporate culture, efficiency and therefore its financial results. This means that maintaining good business interrelations is of great importance. A way to do so, is for instance more positive feedback on what has been accomplished and enforce the bond and loyalty with the corporate executive and its staff.

In my opinion, I can fully understand that moral issues and extensive negotiations combined with stress, brings the corporate leader to a certain level of unethical behavior.

For example, imagine you are a crisis manager and it is your responsibility to remove employees from their job in order save costs. In this case, I believe that acting strictly is a ‘must’, although this implicates an ethical burden on the crisis manager.
I’m convinced that great leaders are those who have high stress tolerance and are able to operate effectively in stressful situations.

Kenn Crombé

¹ Friedman, Milton, ‘The Social Responsibility Is To

Increase Profits’, New York Times Magazine, September

13, 1970, pp. 32–33.

 ² Ethical Decision Making in Organizations: The Role of Leadership Stress, Marcus Selart, Svein Tvedt Johansen,2010,

    http://www.springerlink.com/content/545337233h013508/fulltext.pdf

Fraudulent financial reporting … much is at stake

Companies have enormous ethical responsibility. When a business collapses due to financial fraud, practically everybody suffers. Accounting scandal ‘Enron’ is a fine example. Enron was an American energy company that was forced into bankruptcy almost a decade ago. Employing 22,000 people and having plenty of shareholders, Enron’s staff of executives and former president Jeffrey Skilling used accounting loopholes and poor financial reporting to hide billions of their losses. Above that, Arthur Andersen, one of the “Big Five” accounting firms, shredded documents related to Enron’s audit. When the scandal unfolded, both Enron and Arthur Andersen were doomed to pull the plug. In the end, thousands of employees lost their job, innumerable shareholders possessed worthless Enron stock and billions were lost.

According to Business Finance Guide, Rosemary Peavler ¹, it is primarily the lack of ethics in finance that leads to a fall. She clarifies that long-term viability and not short term profit is to be the objective of the company to stay alive. Besides, if a corporation strives for ethical responsibility such as the control of pollution, it shall be more respected in the long-term, attract more investments, stimulate business and finally improve the balance sheet. Another point is that just too much is at risk during fraudulent activities. Not only countless employees, investors and shareholders are hurt in the process, but other countries and sectors of the economy are affected as well. Also the society suffers. All in all, moral as well as ethical foundations are being disrespected  heavily. Rosemary explains that it is the responsibility of all business to promote sustainable development and raise the standard of living. I could not agree more.

I figure that to curb fraud even more, ethical commitment must be shared throughout the entire organization, the corporation has to be open in its communication about fraud and stronger control mechanisms such as external audit is to be implemented. My point of view is that pursuing business ethics and eliminating fraud opportunities is crucial for a company to strengthen the chance that it will survive in the long-term. Even more, I think that a lack of business ethics within a corporation almost automatically leads to fraudulent behavior.

¹ http://bizfinance.about.com/od/fraud/a/Financial_Ethics.htm

  http://business-ethics.com/2010/04/29/1302-enron-on-broadway-no-accounting-for-bad-behavior/

Kenn Crombé

“How to overcome the gorilla down the road”

Joe Runyan, a first time entrepreneur, came up with a refreshing idea for the dry cleaning industry. In 2004, he founded Hangers Cleaners (Kansas City), an environmentally safe project. Its biggest challenge is to survive against the multinational company of Proctor & Gamble, which is well known for its household brands and healthcare products.

Like Hangers Cleaners, you can find hundreds of creative and sustainable projects being set up today. Sustainability is the key-word of the 21^st century. Mr. Runyan found that liquid carbon dioxide was a perfect alternative for the aggressive chemicals that are used by traditional dry cleaners. His business plan was to drive throughout the city using a handful of vans, picking up the clothes and immediately charging the customers. I think his idea has lots of potential. You gain the thrust and confidence of the clients. Above that, he offered this service without extra payment. Later in 2008, however, P & G opened a similar eco-friendly dry cleaner, not far from Hangers Cleaners.

Joe Runyan now has to think fast. One way to differentiate from a big name such as P & G is to gain the thrust of the community. To do so, he can try to form partnerships with local companies, charities and set up his work there. Another option is to focus more on the use of vans. He eventually decided to make a combination of several options.

A project such as this has a heart, I think. Mr. Runyan followed his dream and thought all things through before making his decisions. In my opinion, it’s a perfect example of ethical behaviour in an organization, because the entrepreneur of our story has reached success without the risks of harming the environment.

Link to article

Mathias Aper 

Ethics and profit

The goal of most companies is to make a lot of profit. There are two types of companies, which both act in a different way. A first group wants to make as many profit as possible and is very selfish. A second group also wants to make profit but in a way that benefits the community and the environment. This means that they take stakeholders and the nature into account.

The reason why companies wouldn’t act ethically, is because the costs would increase, which leads to less profit.

But acting ethically could lead to good publicity and success. Companies can receive an ethical brand image by paying fair wages and expelling less carbon dioxide, fair prices,… .

Personally, companies should act ethically, but in this economic crisis profit has to be made to support the economy. Although profit has to be made to help us through this crisis, we should take the future (fair wages, global warming, …) into consideration.

http://www.bbc.co.uk/schools/gcsebitesize/business/environment/acompetitivemarketrev1.shtml

Cornette Guillaume