Why ethics in business will only keep growing in importance
In a world in full transformation such as ours, people tend to re-evaluate their moral principles as well. At the end of the last century, for instance, we were still mostly marveling over the technology of cars while we’re now figuring out how to get rid of them as much as we can. Or how to replace them with the lesser evil of electric vehicles (Just as a side note: the environmental and social impact of mining the metals necessary for batteries is significant and electricity is - for now - more often generated by coal than by green energy, which is not environmentally friendly either).
“But why not call this trend ESG or sustainability, rather than ethics?”, you ask. Because the latter is a lot broader and more fundamental. Humans have been pondering about good and bad for centuries: in religion, in philosophy, in science even. And seeing that humanity is currently experiencing an identity crisis of sorts, I feel that “ethics” is a better fit for what I’m trying to describe. Because this trend goes beyond the neat categories of E, S and G. It’s about how we treat employees, customers, and citizens and possibly, at one point, even robots.
It’s about reshaping the kind of world we (want to) live in.
Ethically sound behavior towards employees
In the era of The Great Resignation, quiet quitting and a raging war for talent, you’d better not be known as “that company that treats its employees badly”. Like the new Twitter regime under Elon Musk. Or the unionization protests at companies like Amazon, Apple, Google, Facebook, The New York Times, Starbucks and IBM. Or Uber drivers protesting over low pay and unsafe work. And let’s not forget about the lawsuits at Google over underpaid female engineers and overlooked Asian job applicants. The urgent need for talent has given a lot of economic power to employee activists and they have rightfully decided that they want to be treated right.
But what some call “employee experience” is actually just about handling your team with the respect they deserve, in ways that allow them to grow, develop their full potential and be happy and fulfilled on the job. It’s just as much about learning and coaching possibilities, fulfilment and allowing a work-life balance as it is about legal benefits and fair pay.
In the simplest of terms: treat your employees as you would want to be treated. Treat them ethically right. There’s really nothing more to it than that.
Ethically sound behavior towards the environment
This is about the E-part of ESG. The time for companies to quietly indulge in practices that are bad for the climate and the environment is gone. Customers, employees and the media are calling companies out when they pollute or greenwash.
A perfect example of that is the major backlash Mercedes-Benz faced with their campaign to promote its electric car range: it featured a series of posters featuring the Mercedes logo over close-up natural images and the slogan ’Nature or Nothing’. Pretty predictable that people would not accept such a radical statement from a car company, even if it was about EVs (which as stated above do (still) have an impact on the environment).
Sustainability-focused consumer review platform WhereFrom even parodied the campaign and replaced the original images with ones of global warming:
The backlash was so severe that Mercedes-Benz distanced itself from the campaign, claiming it was a local Mexican project that was never intended for global rollout and that it did not approve of the English translation.
Beyond condemnation from the public, an increased number of companies are now feeling the direct impact of environmental and climate-related changes on their business. Just a few examples of the burning platform that is forming:
- Factories in China’s southwest – including makers of solar panels, cement and urea – were forced to shut down or reduce production after reservoirs used to generate hydropower ran low in a worsening drought and power demand for air conditioning surged in scorching temperatures.
- Alexandre Ricard, CEO of the Pernod-Ricard Group, stated that “their biggest concern is climate change and its direct impact on harvests, more than supply chain issues”. He said that the data they gathered showed that harvests happen earlier and earlier in the year because of climate change, therefore generating significant issues in terms of stability and production.”
- The water level on the Rhine, Western Europe's most important waterway, was at a record low because of Europe's hot summer, making it too shallow for many ships to pass. Millions of tons of commodities are moved through the Rhine and shipping disruptions are certain to further impact Germany's economy, already reeling from global supply chain disruptions and record high energy costs stemming from Russia's invasion of Ukraine.
And so, environmental and climate changes are moving from an almost abstract and far-off reality (for companies, I mean) to having a direct impact on them that forces them to change. I sincerely hope that their response will be dual: not just looking for ways to up the efficiency again in the short term but finding out how they can diminish their impact on these problems they helped cause in the first place. These huge global problems are actually a business opportunity, in the way that companies could be developing products and services that really help solve them.
Ethically sound behavior towards customers
Customers and users, too, have been drawing the line for a while now. Algorithms - like those of Instagram, Facebook, TikTok etc. - have developed some kind of PR problem because of that. The dark side of Web2 that Web3 is trying to solve is exactly all about the unethical and manipulative use of consumer data. But it’s also about governments protecting consumers from poor product quality and planned obsolescence with laws and regulations.
Next to these experiments in Web3, we also see an increasing number of people who are condemning unethical services and products, like Ex-Facebooker Frances Haugen and ex-Googler Tristan Harris. And let’s not forget about McKinsey which had to settle for nearly $600 million over its sales advice role in the opioid crisis. People and governments are no longer staying silent about injustice to consumer behavior.
In fact, companies should stop treating customers as customers, because that reduces their relationship to a commercial one, whereby the former just want to sell as much as possible to the latter. They should treat them as humans. Let’s start calling it human relations instead of customer relations, which then immediately makes the ethical part unavoidable.
Citizens & AI
As mentioned, citizens, too, are taking their rights and needs into their own hands. We are facing huge problems because of climate change, droughts, geopolitics, polarization or the decline of democracy. And when things go bad, the people rise. That’s how the French and the Russian revolution happened. That’s what’s happening in Indonesia. Or in China, where there is the “lying flat” movement in which young (middle-class) workers and professionals, are opting out of the struggle for workplace success, and rejecting the promise of consumer fulfilment. They no longer want to mindlessly participate in a fast-paced society and technology sector where competition is unrelenting.
Now, this last one is perhaps a weird one, but no less relevant. Some people believe that AI and robots that one point will become sentient. Actually, some – like Blake Lemoine, the Google engineer who publicly claimed that the company's conversational artificial intelligence, LaMDA, could think and feel like a human – believe that this has already happened. Even if it’s (probably) not true, it is wildly interesting that an AI system is able to fool someone who develops this type of system as a living. And if it is, or will be, we will have a lot of thinking to do about how we treat these systems.
Opportunities, rather than threats
There are two ways that companies (and governments) can react to all the ethical (r)evolutions described here. With fear and paralysis because their playing field is becoming a lot more complicated now that people are a lot more critical about everything they do and sell. But why not grab these challenges with both hands and turn them into huge opportunities for creating new products are services that really help employees and consumers or that help solve some huge environmental challenges. Just look at this popular shout of from an Atlassian employee to her company explaining how it allows 26 weeks off, 100% paid, for both mothers ànd father. Or how Orsted transformed their business from fossil fuel-dependence to renewable energy, becoming the world's most sustainable energy company.
These can be scary times, but if we look at them with excitement and an open and change-accepting mindset, then we can help make the world a better place.