The Importance of Ethics

Becoming death

Oppenheimer’s quote, originally from the Hindu scripture the Bhagavad Gita – in full, “Now I am become Death, the destroyer of worlds” – hints at the moral quandary at the centre of Nolan’s film and Oppenheimer’s legacy. What he and his team at Los Alamos achieved was an extraordinary feat of science, a rightly heralded achievement. As also noted in the film, Oppenheimer was not taking part in the project out of some twisted bloodlust, rather because he feared what would happen if the Nazis were able to create such a weapon first.

As it happened, the Nazis had surrendered by the time the bomb was complete. In August of 1945, the US government instead dropped bombs on Hiroshima and Nagasaki, Japan. Estimates vary but it’s thought that over the two to four months following the bombings between 90,000 and 146,000 people were killed in Hiroshima and between 60,000 and 80,000 in Nagasaki, with roughly half of those deaths occurring on the first day [1]. Oppenheimer himself wrestled with the weight of what his creation had wrought for the remainder of his life. The question of whether dropping the bombs was a necessary act to bring the war to an end or a grotesque act of chest-puffing genocide continues to this day.

The Manhattan Project was not a business – though it did employ a whole town’s worth of scientists, engineers and their families. But the film is clear that the ethical implications of the work at hand went unconsidered until it was too late. While it may seem tenuous or trivialising to compare such an overtly destructive act to the ethical considerations of day-to-day business practice today, anyone who has read Patrick Radden-Keefe’s searing Empire of Pain [2] about the role of Purdue Pharma and the Sachler family in particular in generating the US opioid crisis, for which the death toll stands in the hundreds of thousands and counting, or has been paying close attention to the devastating climate impact wrought by Shell, Exxon, BP and the like over the past decades and its potential implications for the future of humanity, will recognise that ethics and business cannot be so easily separated. The ethical choices companies make can shape individual lives and entire worlds. It’s vital they’re taken seriously.

Business ethics

Business ethics refers to the standards for morally right and wrong conduct within a business. Businesses are, of course, held to account by law, but as we all know, there are slippery ways around the law. Something can be both legal and wholly unethical.

Business ethics are important for various reasons. As noted, in the most extreme cases, such as that of Purdue Pharma, the decision to downplay the addictiveness of their opioids contributed to or outright caused a deadly epidemic in the US. In less dramatic circumstances, some of the advantages of having a strong ethical practice in place are that it helps build customer trust (thus helping retain customers), improves employee behaviour, and positively impacts brand recognition. The numbers back that up.

Over half of U.S. consumers said they no longer buy from companies they perceive as unethical. On the flip side, three in 10 consumers will express support for ethical companies on social media [3]. A 2021 survey by Edelmen found that 71% of people believe that companies should be transparent and ethical [4]. Similarly a 2020 study on transparency from Label Insight and The Food Industry Association found that 81% of shoppers say transparency is important or extremely important to them [5].

Corporate executives surveyed by Deloitte, meanwhile, stated that the top reasons consumers lose trust in a consumer product company are that the brand is not open and transparent (90%), the brand is not meeting consumer environmental, social and governance expectations (84%), and the brand is engaging in greenwashing (82%) [6]. In case it wasn’t clear, then, ethics matter to consumers – which means they matter to business. And yet a 2018 Global Business Ethics Survey (GBES) found that fewer than one in four U.S. workers think their company has a “well-implemented” ethics program [7].

The businesses that are prioritising ethics, on the other hand, are reaping rewards.

Ethical profits

Ethisphere, an organisation that tracks the ethical conduct of the world’s largest companies, found that the businesses that qualified for its 2022 list of most ethical companies outperformed an index of similar large cap companies by 24.6 percent overall [8]. The Institute of Business Ethics similarly found that companies with high ethical standards are 10.7% more profitable than those without [9]. Honorees on the 2021 list of the World’s Most Ethical Companies outperformed the Large Cap Index by 10.5 percent over a three year period [10].

Not only do ethical companies make money, unethical ones lose it. 22% of cases examined in the 2018 Global Study on Occupational Fraud and Abuse cost the victim organisation $1 million or more [11]. And there are plenty of unethical companies who crashed and burned in a far more dramatic fashion.

Enron

Perhaps the most striking fall from grace was Enron, whose trading price plummeted to a level in accordance with its ethical standards in December of 2001. At the company’s peak, it had been trading at $90.75. Before filing for bankruptcy, its price was $0.26 [12]. For years Enron had been fooling regulators with fake holdings and off-the-books accounting practices while hiding its eye-watering levels of debt from investors and creditors. From 2004 to 2012, the company was forced to pay more than $21.8 billion to its creditors. Various high-level employees ended up behind bars.

Enron is the high-water mark for unethical disintegration. But there are plenty of moral and ethical quandaries for today’s mega-corporations to take on as well.

Ethics today

In the age of data, corporations, especially social media giants like Meta, have a huge ethical responsibility regarding their clients’ data. Extremely sensitive personal information is loaded into these sites on little more than an understanding of good faith on the consumers’ part. How that data is being used (or misused) by these companies is one of the defining discussion points of the age. That’s not to mention the targeting of ads and its potential detrimental impact, especially on the young. Rates of anxiety, depression and suicide in teen and tween girls, for example, surged from 2010, around about the time they first started getting iPhones [13]. A few years ago, Meta’s whistleblower, Frances Haugen, confirmed that the company’s internal data reflected that it was doing severe damage to the mental health of teenage girls. Despite having this information to hand, the company made no attempts to rectify the problem [14].

Meanwhile energy companies like BP, Shell and Exxon are being held to far greater scrutiny as the effects of their environmental wreckage are starting to play out more and more each year in the form of unprecedented spiking in temperatures, wildfires and floods. The company’s responsibility to its profit line is being put in conflict with its responsibility to the planet. Although record profits last year suggest that one is winning out over the other [15].

Companies like Google and Amazon, too, have ethical crises regarding their treatment of workers and data security. While their profits or position of dominance in their respective markets haven’t dropped, reputational damage has been done. Both companies will be working to try and keep the fallout to a minimum.

Implementing ethics

A company’s ethics start at the top. When management acts ethically, employees follow suit. Companies with strong ethical values tend to display their code of ethics publicly, allowing them to be held to account. Some key ways companies can create an ethical environment include conducting mandatory ethics training for all employees, integrating ethics with processes, creating a space where employees find it easy to raise concerns, clearly defining company values, fostering a culture of transparency, and aligning your incentive system with your company values [16].

The importance of ethics

Ethics are vital to an organisation’s longevity. Companies that choose to cut ethical corners may see short term gain, even thriving for decades, but when the chickens come home to roost, as they did for Enron, there’s no coming back. Climate change and issues around data-mining are placing greater scrutiny on companies who have historically been focused on profit-at-all-cost models detrimental to more macro struggles. In cut-throat business environments, morality and ethics can often be sidelined in pursuit of the bottom line. But as the numbers show, ethical companies are often rewarded by customers with repeat business, and reputational damage can prove irreversible.

Like the scientists at Los Alamos discovered, it’s possible to be so focused on innovation and achievement that you’re blinded to the ultimate consequences of your ambition. Sew the ethical seeds early so as not to be undone further down the line when your decisions play their course.