God, Mammon and ethical business - a recipe for failure?

The short version: how achievable is ‘ethical business’, really?

The longer version: businesses and financial institutions increasingly offer products and services touted as an ethical alternative. This leads me to some questions I can’t answer.

Firstly, where is the line between ethical and unethical? Can you hold a company accountable for the activities of every single supplier it does business with (e.g. even, say, stationery suppliers)? Can you hold a company accountable for the relationships its suppliers has with other companies (e.g. where a supplier is a wholly-owned subsidiary of a corporation that also deals in arms)?

What happens when ethical problems are found? As the BBC story below suggests, ‘ethical’ companies don’t necessarily have the resources or access to thoroughly assess every supplier. Even if ethical problems are found later at a supplier, it may not be contractually practical to change or end the contract. What then?

Is it just a case of ensuring your terms and conditions state up front that you can’t be held responsible for everything, but have ‘good intentions’, or is that insufficient? Is there a need for a legal definition of what an ‘ethical business’ should be able to guarantee to its customers?

[ BBC: ‘Ethical’ ISP tainted by WorldCom – that’s where I got the God and Mammon reference from ]


And all you people who use MCI (a WorldCom company) for your long-distance service are ‘tainted’ too…

Christian Aid did nothing wrong here. They made a business deal for ISP service and picked a company that, unknown to them (or anyone else 15 months ago) had accounting problems. CA did not receive anything that they weren’t entitled to by paying their bills. They got no kickbacks, extra service, etc.

Zev Steinhardt

I think as far as judging the ethical standards of company X goes, what matters most is Company X’s own activities. True, if company X is entering into commercial relationships with Nazi Torture Equipment and Office Supplies Ltd for its office supplies, I’d have concerns, but it would have to be a fairly extreme matter before it would figure very large on the ethical radar so far as an assessment of Company X’s ethical standards goes.

Company X presumably banks with somebody, and that bank almost certianly extends banking facilities, including loans, to other companies engaged in brewing, pornography, gambling or some other activity which is inconsistent with the ethical standards company X has set for itself.

Perfect insulation from all conceivably unethical activity is unattainable. If that is going to be the standard to be aimed at, we might as well abandon the idea of ethical business altogether as wholly impractical. I think a more realistic but nevertheless valuable standard is more useful.

Is there a need for a legally binding definition of ‘ethical’, though, to ensure consumers are not misled? Mom’s Global Death & Destruction Co. Ltd. might own Fuzzy Bunny Ethical Organic Drinks Ltd, which trades entirely separately. Can it still claim to be ethical?

This is what I’m getting at; where is the line, and if it’s unclear should one be defined?

Nobody can define your ethics for you; you have to do that yourself. For example, in the UK, the standards adopted by those who manage the Church of England’s investments preclude invesment in (inter alia) newspaper publishing companies. Many other investors concerned with ethical issues would have no difficulty with investing in newspaper publishing. Similarly some ethical investors rule out investment in, say, oil and mining companies; others believe in focussing their investment in the oil and mining sector on those companies which have the best record on, and strongest commitment to, environmental issues, since they beleive that this is a more effective way of raising standards than an outright boycott. And so forth.

Nobody, not even the state (in fact, especially not the state) can tell you what is “ethical”. You have to take on that responsibility yourself. Mutual funds and the like which hold themselves out as “ethical” or “socially responsible” are very open about what ethical criteria they use. It’s up to the investor to find the fund or investment which most closely matches his own ethical principles.