Business Ethics: how to make ethical decisions

Post author image. Alastair Loasby
Alastair Loasby, Responsible Business and Strategy Campaign Director at Business in the Community (BITC), shares discussions on ethical business from BITC’s Business Response Forums.
Alastair Loasby smiling

We have seen businesses pivot substantially and disparately in response to the Ukrainian crisis, just as we did at the start of the COVID-19 pandemic. Business in the Community’s (BITC) ongoing series of Business Response Forums facilitate BITC members to share their own experiences. They act as a “safe space” for discussions, allowing members to share their experiences under the Chatham House rule.

If you are a BITC member register for Business Response Forum: Ethical Decision Making, taking place on
23 May 10.00 – 11.00.

Recent discussions at Business Response Forums have highlighted five key considerations that informed changes in business behaviour in March 2020 and March 2022.

  1. What are the legal (and sanction) implications?
  2. What are the feasible options for our business model and resources?
  3. How will this affect our employees and broader communities?
  4. What are the risks of inaction, whether financial, reputational, and humanitarian?
  5. What are the risks of action?

This action highlights inaction. Why do firms that pulled out of Russia continue to work in other conflict zones, accept child labour in their supply chain or expand in countries with state-sponsored human rights abuse? Why can’t some companies writing off significant losses in Russia, afford to pay employees a living wage during the cost of living crisis? How can some businesses break the law when sacking colleagues, yet others let refugees live in empty office blocks?

Of course, each case is different and complex, but inaction and silence show a gap in business ethics. A gap that harms people and the planet, while exposing firms to reputational, financial and legislative risk.

Three categories of ethics

An ethics framework can guide better decisions and partially fill that gap. Without wading into a philosophical thesis, there are three main categories of ethics.

The first is “duty”: What rights, rules and duties should be followed? What would the “just” decision be? An example here would be Fujitsu’s Code of Conduct or Triodos’ minimum standards for investment, which help ensure they don’t fund or perpetuate harm. These are boundaries for decisions but cannot cover every eventuality.

The second, “virtue”: What is the ideal way to behave? The Nordstrom employee handbook was famously short: “use good judgement in all situations. There will be no additional rules.” This led to brilliant (albeit wildly varied) customer service, from employees driving for hours to deliver clothes so a customer could attend a family occasion, to changing customers’ flat tyres. Better still, your corporate values should define your ideal behaviour, they should be more than a screensaver!

Finally, “utilitarianism”: Which decision yields the greatest good and least pain for everyone? My favourite way of putting this into action is the “ad absurdum” rule. If everyone made this decision or action, would it still be a good thing? This rule was indispensable when I created a social enterprise, leading to a business model and decisions that my co-founder and I could proudly stand by.

Developing a framework for ethical business

Ideally, your ethics framework will be a combination of all three. For example, NatWest’s Yes Check demonstrates how ethics can help employees at every level of a business make better decisions.

  1. Would others say I am acting with respect and integrity? (virtue)
  2. Does what I am doing keep the bank, our customers, and communities safe and secure? (duty)
  3. Am I acting fairly and being inclusive? (virtue)
  4. Have I sought out, listened to, and taken different perspectives into account? (utilitarian)
  5. Will this advance our purpose to champion potential and help people, families and business thrive? (virtue)

Asking questions like these in the face of complex issues and crises might yield uncomfortable answers, but being a responsible business means being an upstander, not a bystander. Businesses, like countries, have immense power and influence. In President Obama’s words, “if we care, the world will care. If we bear witness, then the world will know. If we act, then the world will follow”.  

If you are a BITC member join us at Business Response Forum: Ethical Decision Making on 23 May 10.00 – 11.00 to discuss with other business leaders their experiences and explore how future decisions can be made ethically.

If you are not a member, join our network to drive progress in your organisation.