Review: Business Ethics and Corporate Sustainability

Business Ethics and Corporate Sustainability contains fourteen essays examining mainstream business models with the aim of designing more sustainable systems with regard to corporate responsibility issues, such as the environment and human rights, while reducing overall risk profiles and increasing legitimacy.

Christopher J. Cowton, for example, examines the moral status of corporations, their collective responsibility and systems of blame distribution. While it makes sense to blame a corporate entity as a first approximation, that should be only the first step in determining blameworthiness. Leaving blame as resting with BP for the Gulf oil spill, risks failing to identify and blame culpable individuals. Cowton moves us away from reified notions of corporate moral agency, to focus on methods of tracing responsibility in detail to specific individuals according to governance and responsibility frameworks. People are moral agents; corporations are not.  Johan Wempe advances this notion further, examining notions of role responsibility.

Kevin T. Jackson retraces Aristotelian notions of generosity as a moral virtue and ends with a promising direction in his discussion of venture philanthropy, which in some respects, harkens back to businesses during the Middle Ages. Wouldn’t it be great if entrepreneurs started measuring themselves not by how much money they are able to earn but based on how much good they have accomplished in the world? Mutual assistance was the norm throughout much of history. As Jackson notes,

By placing the notions of generosity, dignity and the common good squarely into the market, perhaps the emerging philanthropy paradigm will show that the market is more multifaceted then normally thought.

Eleanor O’Higgins extends this theme to the private equity industry. After careful examination she concludes the general partners (GPs) interests “seem to be safeguarded, no matter what scenario materializes.” Too often one agency problem (managers expropriating resources) is traded for another (GPs putting their own interests first). O’Higgins calls for a new model where GPs would act in a trustee capacity to benefit all stakeholders. Deals would be done with lower levels of debt and more equity. Disclosure of pay and fees to GPs is key.

Jane Collier discusses the rise of sovereign wealth funds (SWFs). One concern is that only four of the largest SWFs are from countries with democratically elected governments. While the world has largely taken a laissez-faire approach to them, it would be encouraging to see SWFs sign initiatives such as the UN Global Compact. George Enderle discusses the Principles for Responsible Investment, Global Reporting Initiative and KLD methodology for SRI. “As important as voluntary initiatives are, they cannot replace appropriate institutional frameworks at the national and global levels.”

Knut J. Ims and Ove D. Jakobsen raise fundamental issues in their essay, Deep Authenticity – An Essential Phenomenon in the Web of Life, reflecting upon man’s relation to him or herself, to society and to nature, and attempting to draw a line between shallow and deep authenticity. They define shallow authenticity as based on a mechanistic worldview, whereas deep authenticity is based is strongly embedded in society and nature, organically integrated with social and natural systems. “A consequence of eco-centered awareness is that we become more responsible in the social and ecological worlds.”

Key is transitioning away from “economic man” to that of “ecological man,” no longer engaged in self-deception that allows us to avoid facing up to the real problems of the world… the inconvenient truths. Perhaps then we will shift the focus of corporations from maximizing shareowners value to “increasing the enjoyment of life for all stakeholders in the context of a long-term perspective.”

I’ve just touched briefly on several of the essays. Those interested in business ethics and sustainability will find much here for further engagement.

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