Corporate Social Responsibility beyond the ethical minimum – start the talking
Corporate Social Responsibility is more than merely fulfilling a legal duty. Wim De Groof says we need ‘management by values’ with a culture of social dialogue empowering the ethical performance of a company.
Many believe that the word ethical is equal to lawful. For them, compliance with labour and environmental standards is often seen as ethical behaviour and a sign of good business ethics.
But, there is of course a clear difference between law and ethics. Obeying the law is the minimum level of ethical conduct in society and ethical behavior includes more than simply legal behaviour. Law just wants to achieve an ‘ethical minimum’.
So, when a company complies with (inter)national labour and environmental standards it basically just fulfills it legal duty. Being ‘within the law’ is an import step but clearly not enough in order to claim the status of ethical company.
A company that behaves ethically is one that contributes to the achievement of equal participation, one that reduces inequality, works towards eliminating poverty and environmental disasters and ensures that economic growth benefits all. Ethical behaviour is an ethical attitude beyond the law, and companies need to understand that following the law is just ‘doing the basics’.
Companies must therefore move away from a ‘global compliance mentality’ in which a company is more concerned about meeting the minimum standards. So, stop checking the compliance boxes of audit reports and get to business – real ethical business.
But what to do when even the minimum is not achieved? Is doing business beyond compliance with (inter)national standards even possible? Does the global economy operate with two markets: one for cheap but unethical produced products and one for ‘fair trade’ beyond the ethical minimum produced products?
A simple answer is no, a global economy cannot afford a double streamed market. Markets are connected and as long as inequality exists conflicts will arise. Fixing the inequality problem is a must, not an option.
The good news is that more and more companies adopt ethical values in the core of how they manage their company. Those are the firms that go beyond compliance and do not rest when achieving the ethical minimum.
Going beyond that ethical minimum means that ethical thinking and an ethical way of doing business is an integral part of the corporate culture. Consequently, as happens so often with codes of conduct, the ‘ethical behavior code’ of a company is not designed at the table of a Human Resources Manager or a compliance officer but is an integral part of the agenda of the CEO and the board of directors.
Companies need to move to a ‘management by values approach’ according to Kirk O. Hanson, director of the Markkula Center of Applied ethics at Santa Clara University. [1] This management by values approach goes further than any compliance approach and changes fundamentally the way companies do business. Companies shift from codes of conduct to ‘ethical conduct’ and envision a business model based on ethical behaviour that intends to link profit with integral economic development.
The ‘management by values’ approach has similarities with the methodology used to adopt International Labor Standards (ILS). Like the ‘management by values’ approach, the adoption of ILS is an integral approach in which all stakeholders are involved.
The ILO’s unique tripartite structure ensures that ILS are backed by governments, employers and workers alike. International labour standards therefore lay down the basic minimum social standards agreed upon by all players in the global economy.
Social dialogue is the key component of the monitoring process of ILS. Social dialogue is based on the simple concept that sustainable solutions for (ethical) problems are found in dialogue and active involvement of all stakeholders.
Social dialogue requires a management style based on mutual respect and values. It relies on the belief and conviction that all actors have a role to play in the development of a society, each with his or her capacities, background, cultural beliefs, knowledge, failures and successes. A ‘management by values’ approach embodies the culture of social dialogue and thus empowers the ethical performance of a company.
By promoting social dialogue, a company creates the conditions for higher ethical performance beyond compliance with the standards.
So, let us start the talking! Because seriously, how difficult can it be?
[1] See: the 10 step approach to a ‘management of values’, Kirk O. Hanson, executive director of the Markkula Center of Applied ethics at Santa Clara University.
Wim De Groof is a highly experienced International Consultant, passionate about Industrial Relations, labour standards and human rights. His 20+ years international work and life experience are driven by his strong believe in community empowerment and worker participation. He has a strong focus on the relationship between labour standards and company performance. He specialised in Industrial Relations and the impact of human resource management on pro-poor economic development in emerging economies.
Sue Ellson
December 5, 2014 at 5:32 am
Corporate Social Responsibility beyond the ethical minimum
Excellent insights Wim, thanks for sharing – plenty to act on there and let's hope more organisations move from compliance to management by values…