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Editor’s letter: There’s more to business than business

Which brings us to BAE Systems. The company asked former Lord Chief Justice
Lord Woolf to identify ethical standards that global companies ought to adhere
to. Lord Woolf’s report makes for interesting reading for companies everywhere.
The background to the whole thing, of course, was the Serious Fraud Office
bribery and corruption investigation relating to BAE’s huge al-Yamamah contract.

But Woolf’s report doesn’t confine itself to such sordid ­ and denied ­
matters. “Business ethics,” he said, “relates to all the activities of a
company, from how it develops, produces and delivers its products and services,
to its interactions with its customers, suppliers, employees and wider society.
It is not” ­ and this is the important bit ­ “as is sometimes construed, simply
in relation to behaviour that might be judged to be corrupt.”

So far so good, and there are a raft of suggestions relating to the need for
the right “tone” to be set at the top of the organisation and the need to create
a code of ethical business conduct that is actually “a living document”, not a
file-and-forget exercise.

All the codes of ethics in the world have a battle on their hands, however,
to prevent the sort of corner-cutting behaviour that people engage in, not to
line their own pockets, but to meet their performance targets and keep their
budget numbers looking good. We struggle to think of any other reason why
executives from bitter rivals British Airways and Virgin Atlantic would even
have thought of being civil to each other, never mind colluding on fuel
surcharges. Why, for that matter, no fewer than 112 companies have been accused
­ but not, nota bene, convicted ­ of bid-rigging by the Office of Fair
Trading.

But as Woolf suggests, there are other ethical considerations that aren’t to
do with corruption, and in this context I was struck by a recent Radio 4 Money
Box report on utility companies that charge their poorest, pre-pay customers a
lot more than their better-quality direct debit-paying customers. The companies
say in their defence that such sub-prime customers have higher costs, and this
isn’t the place to debate the rights and wrongs of it all. The real issue is
that there are many similar examples in most other industries where, whatever
the legal issues, the phrase ‘business is business’ just won’t wash in an
increasingly ethics-conscious world.

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