In the parlance of academic philosophy, “ethics” is the name of a field of study, specifically the study of moral concepts such as “good” and “right”, of moral reasoning such as “it is wrong to do so-and-so because”, and of moral codes and systems. This is a restricted use of the term. In its more general sense it denotes not just moral codes or systems themselves, but how these relate to the more inclusive question of one’s overall character and how one lives one’s life in every respect. Ethics is thus about ethos, about what sort of person one is and what sort of life one chooses to live. One’s morality is part, but not all, of this.

The best way to demonstrate how the concept of ethics is broader than the concept of morality is this: it is an ethical matter what colour you paint the front door of your house, because this expresses something about you and your tastes and attitudes, but unless the colour is so hideous that it upsets the neighbours, it is not a moral matter.

As applied to business, ethics is thus about what sort of company one’s company is, from the point of view of how it behaves and concomitantly how it regards itself and others. It includes the moral standards of the company and all who work in it, moral standards that typically require a more scrupulous standard of behaviour even than that required by law; but it goes beyond this into the realm of company ethos, into its attitudes and how it presents itself to the world of which it is part.

And this, as I never fail to point out to companies when talking to them about ethics, handsomely pays off on the bottom line too: ethics is profitable in every way. Only think; which companies tend to keep their clients and attract others in a downturn? Which companies benefit from seeing their chairmen or CEOs facing the press over embarrassing revelations, or trying to answer criticisms?

Among the examples of ethical win-wins in recent years are some of the major extraction companies which have learned lessons from the barrage of criticism they faced in the past over environmental degradation and treatment of workers in third-world countries. One could name the shining example of a mining company which, when negotiating with host governments, voluntarily contracts to build infrastructure, housing, schools and clinics for staff, to invest in jobs for them when the extraction is over, to re-landscape and restitute the environment and fulfills the contract, not to minimum specifications, but handsomely. This company is welcome wherever it goes, sets standards thereby, and flourishes as a result.

Business ethics is a wide subject. It covers questions of good corporate governance and leadership, and all aspects of behaviour on either side of the legality line relating to creative accounting, transparency, compliance, insider trading, fraud and bribery (when is a “facilitation payment” in a developing country, say, a bribe?).

It covers probity in sales and marketing, pricing and price-fixing, honesty in advertising and the propriety of advertising to children, and involvement in black and grey markets. It covers executive pay and perks, employee relations including questions of diversity and discrimination, affirmative action, surveillance and privacy in working hours, trades union relations, fairness in contracts, and the nature of arrangements over health, safety, leave and training. It covers questions about the impact of new technologies, genetic modification of foods, animal experimentation in research, marketing of dangerous or unhealthy products (cigarettes, alcohol), responsibility for pollution and environmental damage, and degree of product liability. It covers responsibility over intellectual property, including patent and copyright infringement and misuse, employee raiding, and commercial intelligence and espionage. It involves exporting standards and practices adopted in demanding ethical environments to less demanding environments where temptations are greater and ethical behaviour is harder, especially when competitors are cutting corners, a universal problem in the globalised economy.

In short, business ethics challenges reflective and aware business people to ask themselves: what sort of people are we? What kind of company is this? What are our standards? And when they have decided, it then asks that they behave with consistency, determination and courage, to be good citizens of the business community. To repeat; although the value of doing this surely speaks for itself, it is highly relevant that the return for this invisible investment is a very real one on the bottom line, so even self-interest can be invoked to justify it.

The least effective way of making a company ethical is for senior management to send a Code of Conduct round to employees by email. Top-down nostrums have a habit of failing to stick. Companies have to engage all staff in discussing and thinking about ethics in a bottom-up program, so that uptake of principles and resulting behaviours really works, with everyone seeing the point because they have had an input into deciding what is right. This procedure is effective because people know that what is wrong for individuals is wrong for institutions and, if each member of the family is actively involved in identifying the good, they are far more likely to embrace it and live by it in the corporate setting.

Recent major scandals in the business community – Enron and Anderson have become the typically cited examples – are proof of the fact that values have changed, putting ethical concerns at the top of the agenda. A generation ago, Enron would not have been much of a news story, now the world and attitudes – and, in consequence regulatory standards – are quite different. Enron’s conductors committed the crime of fraud, but the crime arose from dishonest attitudes and culpable disregard of the interests of a variety of stakeholders. Such ethical failings are thus sometimes not merely ethical, but serve as natural precursors to criminal behaviour. It is obvious that the latter is unacceptable, but the ethical point is that it is no longer just crime that is so. This is the age when recognition of the great importance of business in the life of good societies has come into its own, and that is why questions of ethics now take centre stage along with the other great questions of business in the global economy.

Businesses that take it seriously are doing well, as proved by levels of return on ethical investment. “Good business” is therefore a good pun; and it nicely sums up the point of business ethics.

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