Business Ethics is a term for the ethics involved with owning and operating a business. The term can speak to many different issues in business, such as misconduct within the company, how employees are treated, diversity and discrimmination within the workplace, and environmental sustainability.
The concept of there being moral implications involved in business isn’t a recent topic of discussion–academics have been discussing the subject for centuries. In ancient Greece, philosopher Aristotle wrote about commerce and trade in his book Politics (De George). For example, he describes a fair trade as one in which the exchanged items or services are of equal value, and he condemns greedy businesspeople (De George). Aristotle, Socrates and Plato all recognized that although someone may know what’s right and wrong, it doesn’t always mean their actions reflect it (Detienne et al.). The Greek term they used to describe this behaviour is “akrasia”, but today it is called the “judgement-action gap” (Detienne et al.).
In North America, modern business ethics rose out of the tumultuous era of the 1960s. Throughout this time period, there were many societal issues in America that impacted the development of modern business ethics. Among these are the civil rights movement, the environmentalist movement and increasing criticism towards the Vietnam war and the “military-industrial complex”. It is thanks to campaigners for these movements that corporations began creating programs to address these issues. For example, an initiative some companies took in response to the environmental movement was to lower carbon emissions (De George).
Since then, several nations around the world have adopted laws to promote ethical business practices (De George). For instance, in 1991, the United States created the U.S. Federal Sentencing Guidelines for Corporations, a piece of legislation that incentivized business owners to create programs that fostered ethical behaviour within their company (De George). This was done by offering a reduced penalty to organizations that were found guilty of ethical misconduct if they could show that they had “taken appropriate measures to prevent and detect illegal and unethical behavior” (De George). Some of these measures include incorporating ethics training and creating a code of conduct (De George).
¹ The military-industrial complex is a term coined by former President Dwight D. Eisenhower in 1961 described an alliance between the government, the military and companies supplying military equipment which profit from war (“Military-industrial complex”).
In 2000, the United Nations created the UN Global Compact, which is a list of ten principles that are meant to guide businesses towards ethical practises (“UN Global Compact”). Over 16,000 companies from over 160 countries have endorsed it and have signed on to abide by the principles it outlines, including Canada (“UN Global Compact”). New signatories to the Compact continue to join today.
Although strides have been made to educate students on business ethics and prevent misconduct from occurring, there is still a long way to go in creating more fair and honest workplaces. A 2020 report by the Ethics and Compliance Initiative (ECI) surveyed 14,000 employees from 10 countries around the world about their opinion surrounding ethics at their place of work (“The State of Ethics”). They found that roughly one in five respondents from the United States reported they worked in organizations with “a strong ethical culture” (“The State of Ethics”). The study found that globally, 14 percent reported this (“The State of Ethics”). The ECI also found that roughly eight in ten employees reported ethical misconduct in the workplace (“The State of Ethics”). Among the types of misconduct the study outlined, favoritism, conflicts of interest and dishonesty by the management towards other employees were the most prevalent (“The State of Ethics”).
Companies are also facing increasing pressure to create more equitable, conscious and safe workplaces in the wake of social movements. Beginning in 2018, the MeToo movement shed light on and opposed sexual harassment in all forms, including in the workplace. The Black Lives Matter (BLM) protests against police brutality in the summer of 2020 lead to calls against anti-black racism in the workplace.
These movements, and others, have had incredible influence on the actions of individuals and of businesses. After Greta Thunberg rose to global prominence for her campaigns for the environmental movement, there was a surge in positive action from companies surrounding carbon emissions (Laville). Gold Standard, which works to ensure projects from other organizations are environmentally sustainable, experienced a four-hundred percent increase in individuals and small businesses who paid for carbon-offsetting through their organization (Laville).
Despite the immense pressure these movements put on society, many businesses are still resistant to creating change. For instance, a study found that only 15 percent of respondents reported that MeToo had the biggest impact in the workplace, their career and opportunities (Ferrante). During the BLM protests, only ten percent of the 150 most popular brands in the United States even engaged on social media about racial justice (Blecken). This is evidence that there is plenty of room for further improvement by businesses surrounding these issues.
In addition to this, business ethics have become increasingly important since the creation of the internet. Because the internet allows the public to access a wealth of information about a business with the click of a button, it also means scandals are increasingly visible to customers and investors (Schroeder). This, in combination with the pressure from the public in the wake of social movements as described above, has led to companies putting more emphasis on business ethics in their practices in an attempt to curb misconduct (Schroeder). According to an ECI report from 2019, there are a growing number of organizations that provide ethics training and use it as criteria when evaluating employees (“Strong Workplace Ethics”).
Though there is a long history of business ethics and hard-fought social movements in North America which have yielded many positive changes, companies still have more work to do in curbing misconduct and creating an equitable workplace. Ultimately, business ethics have been a very important topic for centuries, and continues to be significant today.
- Blecken, David. “How Brands Can Sustain Black Lives Matter in 2021.” PRovoke. 10 Feb. 2021, https://www.provokemedia.com/latest/article/how-brands-can-sustain-black-lives-matter-in-2021.
- De George, Richard T. “A History of Business Ethics.” Makkula Center for Applied Ethics. 17 Nov. 2015, https://www.scu.edu/ethics/focus-areas/business-ethics/resources/a-history-of-business-ethics/.
- DeTienne, Kristin Bell et al. “Moral Development in Business Ethics: An Examination and Critique.” Journal of Business Ethics. 2019, https://doi.org/10.1007/s10551-019-04351-0.
- Ferrante, Mary Beth. “Two Years After #MeToo Started, Report Finds Companies Are Not Taking Enough Action.” 13 Nov. 2019, https://www.forbes.com/sites/marybethferrante/2019/11/13/two-years-after-metoo-started-report-finds-companies-are-not-taking-enough-action/?sh=7636a8195981.
- Hagel, Jack. “Ethics, reputation, and compliance gain as corporate priorities.”1 Mar. 2015, https://www.journalofaccountancy.com/issues/2015/mar/business-ethics-and-compliance.html.
- Laville, Sandra. “’Greta Thunberg effect’ driving growth in carbon offsetting.” The Guardian. 8 Nov. 2019, https://www.theguardian.com/environment/2019/nov/08/greta-thunberg-effect-driving-growth-in-carbon-offsetting.
- “Military-industrial complex.” Reaching Critical Will. https://www.reachingcriticalwill.org/resources/fact-sheets/critical-issues/6738-military-industrial-complex.
- Schroeder, Karisa. “3 Reasons Why Business Ethics Is Important.” Redlands Business Blog. 4 Mar. 2021, https://www.redlands.edu/study/schools-and-centers/business/sbblog/2019/may-2019/3-reasons-why-business-ethics-important/.
- “The Value of Strong Workplace Ethics.” SpriggHR. 20 Feb. 2020, https://sprigghr.com/blog/hr-professionals/the-value-of-strong-workplace-ethics/.
- “The State of Ethics & Compliance in the Workplace.” Global Business Ethics Survey. 2021, https://www.ethics.org/global-business-ethics-survey/#non-member-download.
- “What is the UN Global Compact.” UN Global Compact. http://www.unglobalcompact.org/what-is-gc.