In my previous post I talked about the need for a “whole of company approach” to business ethics, which has clear authority and commitment from the Board. But what does an effective Business Ethics/Integrity function look like, and are we seeing this in practice?
Firstly, some thoughts on effectiveness:
Break down barriers.
Ethical issues rarely present themselves in neat silos and a company’s response often requires the involvement of multiple departments and specialisms. So why not have one team of all the talents? For example, Corporate Responsibility/ESG and Business Ethics often address the same or overlapping issues, but are rarely in my experience part of the same team. In addition (contingent on company profile), I would expect a Business Ethics/Integrity function to include expertise from other areas, including Legal, Audit, Policy management, Procurement/supply chain and possibly more (e.g. HR). This expertise might arguably be most effective integrated in one team, rather than e.g. a ‘virtual’ team or different departments reporting to the same notional head.
Speak with one voice.
Fusing otherwise independent teams together should bring real breadth and diversity, but also more balance to ethical decision-making (e.g. between say, minimising legal risk and maximising positive societal impact). This should enable the Business Ethics/Integrity function to truly speak with one voice, funneled through a Chief Ethics Officer (or equivalent). This individual should have direct Board access (or more preferably, a seat on the Board) with an independent reporting line; making it clear that ethics has a seat at the table when material decisions are being made. This is in contrast to a Business Ethics/Integrity function which sits within Legal and is led by the General Counsel (or equivalent). In this (quite common) scenario, there is potential for conflict (e.g. in crude terms, between baseline compliance vs. genuine ethical leadership).
Avoid the superficial.
Much of business ethics is about transparency. Often easier said than done, but companies should avoid the superficial and communications-driven compliance. Changing a team’s name from “regulatory compliance” to “business integrity” does not make a company more ethical (although it sounds good and is at least a nod in the right direction!). Likewise, going after the soundbite in terms of ethical priorities is rendered meaningless without substantive commitments, open reporting and recognition of deficiencies. All of this requires a long-term view and consistent commitment from the highest levels of a company.
Are we seeing this approach in practice?
Probably not, although progress is being made. These are very much my own thoughts to generate the conversation – what are your views and do my proposals survive reality?