Good Ethics and Good Business
Last night, I had the opportunity to deliver the keynote address at the Ethisphere Institute’s annual dinner honoring the World’s Most Ethical Companies. This year’s honorees earned top marks in seven categories: corporate citizenship and responsibility; corporate governance; innovation that contributes to the public well being; industry leadership; executive leadership and tone from the top; legal, regulatory and reputation track record; and internal systems and ethics/compliance program.
It’s no coincidence that the World’s Most Ethical Companies are also among the most successful. Being ethical makes good business sense. Ethical companies are able to leverage to their advantage in the market place the trust and goodwill they’ve established with employees, customers, investors, suppliers, partners, and the public.
Organization bound by ethics are able to recruit and retain the best talent, command a premium for their products and services and more favorable terms from suppliers, and gain favor with investors. Research by the Ethisphere Institute shows that the stock value of the World’s Most Ethical Companies outperforms the overall stock market.
In a world where capitalism has become a dirty word, stained by the actions of the Enrons and Bernie Madoffs of the world, it is easy to forget that free enterprise is itself the most moral and ethical economic system.
The free enterprise system maximizes the virtues we commonly believe to be ethical and good – hard work, self-reliance, opportunity, and the ability to fail and start anew.
Empowering individuals and allowing them to defeat dependence is among the most ethical things that any of us could ever do. In fact, I think that businesses do the very best and kindest thing that anyone can do for strangers – they hire them. That act is immensely more powerful than charity.
Free enterprise places a unique obligation on business – to create economic value which, in turn, allows businesses to provide opportunities to individuals and become agents of progress.
Our collective ability to improve education, clean the environment, feed the poor, and serve children, the sick and elderly are made possible only through the consistent creation of wealth by companies operating ethically in a free enterprise system.
The free enterprise system is not only endangered by politicians but, as importantly, by unethical companies that act badly for short-term gain. That is why the companies celebrated last night should be applauded not only for their standards and hard work, but also because companies with high ethics are the greatest defenders of the economic system that supports all of us.
Last night was an opportunity to tell the positive story of businesses that do the right thing every day. That story doesn’t get told often enough, and neither does the story of free enterprise as the foundation of an ethical, moral and prosperous society.