Make capitalism great again

How business leaders can do the right thing

I am relaunching this Substack today focusing on how to Enhance Trust, Honesty and Integrity & Cultivate Success (ETHICS) in business.

My day job is advising financial institutions on their communications policies and practices. But in the past ten years, what some of my (mainly largest) clients say they want, and what I believe to be ‘the right thing’, have often been widely divergent. (If only I subscribed to more progressive beliefs, I might be richer. But you shouldn’t be fooled by progress. Progress is just a word – neither good nor bad.)

I’m talking mainly about matters that are outside the comfort zone of most business leaders, particularly:

• Their impact on the environment (in general), and

• Their impact on people (in general, rather than, you know, actual ‘employees’).

There are many self-professed experts in these areas, but in my experience no actual experts. That’s because such topics are not a question of technique, but of ethical consideration.

Systems have replaced morality

“Dreaming of systems so perfect that no-one will need to be good”

T.S Eliot

The raw materials for making good ethical decisions in complex domains such as environmental and social impact are context and common sense.

But the business managerial class (I use this phrase to distinguish them from genuine business leaders and entrepreneurs) don’t like these things because they aren’t scalable. They are not commodities and they cannot be quantified.

They prefer systems.

And so the market has provided systems.

• Stakeholder capitalism

• Corporate social responsibility (CSR)

• Environmental, Social, Governance (ESG)

Such systems provide a framework that present order and certainty in dealing with nebulous problems.

But they can end up being worse than nothing because they profess to be a solution to ethical behaviour when they are merely abstractions, the opposite of context-laden judgement. Even when applied in a reasonable way, the effort involved in ticking these boxes and paying homage to fashionable phrases sucks all the air from the boardroom, leaving no energy or enthusiasm to discuss real, nuanced, context-specific ethical dilemmas within the business.

As just one example. Many companies have begun rank-ordering their ethical focus by ‘materiality’. I have advised on many such efforts. There has been a growing trend to feature carbon emissions as the highest priority and employee health and safety towards the bottom, if it features at all. (This has even been true for manufacturing companies that have suffered fatalities that year.) In a horrifyingly materialist kind of way, it makes sense. Global climactic catastrophe is ‘literally’ a bigger issue than a few people dying on the factory floor. That’s why materiality is such an inadequate concept. When you adopt a system of ideas, you put the system in charge.

Going full circle

In adopting these systems, politicians and regulators have realised that company executives have over-stepped their remit. They are no longer acting as faithful agents or fiduciaries, and instead have become de-facto political leaders.

In response, a whole swathe of regulation has been adopted, much of it of a very strange ‘voluntary’ sort. But regulation, nevertheless. This has necessitated a huge army of consultants, lawyers and in-house administrators whose jobs rely on such regulation and who encourage and celebrate every new regulatory initiative, in a kind of reverse lobbying effort.

But it also means that business ethics have gone full circle, from individual executives trying to do the right thing, to a systemisation of ethical behaviour, and finally, to a regulation of ethical behaviour.

In the corporate world, ethics and compliance have now become virtual synonyms (when they are virtually opposites.)

Fight acronyms with acronyms

The solution to all this is not a new system or another acronym.

Well, actually it is an acronym.

Enhancing trust, honesty and integrity to cultivate success.

ETHICS. In business.

I truly believe that business executives can do the right thing, they can have their cake and eat it, without over-stepping their remit or failing in any aspect of their duties.

If you want to explore how to do the right thing in business, please keep following.