The risk and promise of business ethics

“The matter has a name: business ethics. And a secret, that is its rules. But my guess is that this matter belongs to the variety of phenomena like the raison d’etat or English cuisine that appear in the form of a mystery, because they have to keep secret that they do not exist.”*

When you look into the real world you can hardly find any substantial objection to Niklas Luhmann’s verdict. Quite on the contrary there is tantamount evidence that business behaves without any reference to ethics, not even to the ethics of rogues. This might be due to the “psychopathic” behavior mode of modern corporations or because the very notion of business ethics misses the point in doing business, which has its ethics already decided: to increase profits. However when you follow Peter F. Drucker in his argument that business management has become such a dominant leadership group in society, along with the empirical fact that this society is first and foremost a society of organizations, you might arrive at Uncle Ben’s axiom that from great powers come great responsibilities. Our modern world is shaped by business, some companies’ market capitalization by far exceeds the GDP of medium sized countries, their products impact and change our lifestyles and cultural norms, shape our perception as well as physical infrastructures of the world, and companies are more or less responsible for the worsening conditions of our planet’s ecosystems. They do not follow market trends, they create them in the first place.

If this is really the case, then entrepreneurial spirit and risk-taking is the only currency in which to pay for business ethics. Ethics in business is a risky business. If the customers would already change their behavior willingly in an “ethical” manner – e.g. substituting a self-owned car with public transportation and carsharing, thus reducing their ecological impact and relieving urban centers from congestion as well as the countryside from large-scale concrete infrastructures – there would not be a need for business ethics. The market would sort it out by itself. If the customers are buying, there is no ethic tension, as Italian philosopher and business consultant Silvia Castellazzi pointed out to me.

Business ethics is not about CSR or good corporate citizenship, for whatever that means anyway. Business ethics is not a filter attached to “unethical” business as usual, but more closely related to entrepreneurship and innovation, to strategic reasoning and change. Most often it is not the big companies that are champions in business ethics despite their listings in business ethics rankings (why the hell did Starbucks make it on that list anyway?). Rather the smaller ones show signs of “ethical excellence”, like Ray Anderson‘s Interface that, on a personal “awakening” of Anderson to the ecological problems for business on a finite planet, reinvented the business case for modular floor tiles and adapted its “Mission Zero”. Or Jürg Knoll’s Followfish that almost singlehandedly created the market for sustainable fish products in Germany. Both examples place ethics as the fundament for their strategic imaginery. You can call that “strategizing as ethics”. It demonstrates that you excel in ethics only when you don’t aim for the low-hanging fruits, the one’s with no ethical tension, but strive for starting change big time. Not because it is an easy win but because it is the right thing to do. This is risky, but ethics is not for free – just as business opportunities arising from putting business ethics into the heart of your company.

*Niklas Luhmann 1993: Wirtschaftsethik – als Ethik? In: Josef Wieland (Ed.): Wirtschaftsethik und Theorie der Gesellschaft. Frankfurt: Suhrkamp. P. 134.