From a Global Ethic to Ethical Decision-Making

On March 26, 2014, Markkula Center for Applied Ethics Executive Director Kirk O. Hanson spoke to an international meeting of the InterAction Council, an association of former presidents and prime ministers, held in Vienna, Austria. Meeting participants included former German Chancellor Helmut Schmidt, French President Valery Giscard d'Estaing, Japanese Prime Minister Yasuo Fukuda, Canadian Prime Minister Jean Chretien, Austrian Chancellor Franz Vranitzky, Nigerian President Olusegun Obasanjo, Malaysian Prime Minister Abdullah Badawi, Jordanian Prime Minister Abdel Salam Majali, and Cypress President George Vassiliou. Former Australian Prime Minister Malcolm Fraser chaired the meeting and gave the keynote address. Besides 12 former heads of state and government, 12 world religious leaders from Christian, Buddhist, Moslem, Jewish, Shinto, Hindu and Confucian traditions participated. Hanson has served as an ethics advisor to the InterAction Council at several of their meetings during the past decade and participated in writing the Vienna Declaration, which concluded the meeting.

Introduction

This paper, one of two to introduce the session focusing on ethical decision-making, draws upon my background as a Roman Catholic professor of business and organizational ethics. In the following pages, I describe the difficulty of taking even a commonly accepted global ethic and putting it to practical use in political and economic decision-making.

The InterAction Council's leadership in promoting a global ethic has been very influential. Not only in the Council's deliberations, but also in the deliberations of the United Nations and many other organizations, there is an understanding that there is no more important agenda than finding and endorsing the common moral agenda of all religions and, indeed, of all humanity. The notion that there is a common moral agenda may have been a radical idea in 1987 when the Council began to promote it, but the idea has gained widespread acceptance and endorsement.

In no way does this suggest this first task is easy. Each religion and each national culture has its own traditional formulation of its moral code. And some religions, including my own Roman Catholicism, have at times made unfortunate distinctions between the rights and worth of different classes of persons, be they slaves or adherents of other religions. Fortunately, Roman Catholicism, and Christianity more broadly, has taken a significant turn in the last century toward a universal ethic and ethical prescriptions and religious freedoms for ALL persons.

Today, there are many exemplary projects by which theologians of different religious traditions are in dialogue with one another to understand the differences and commonalities in their theological and ethical beliefs. In this environment, the Council's document "Declaration of Human Responsibilities" drafted and championed by the Council's advisor Hans Kung, remains a symbol of what can be accomplished by people of good will. This meeting, convening religious leaders of various traditions, demonstrates the power of this vision.

General Problems of Moving from Ethical Principles to Ethical Decisions

Moving from a shared global ethic to a shared understanding of how that ethic ought to guide political and economic decision making is more complex. Ethical choices in political and economic situations depend on context, on available resources, and on the maturity of political or economic structures in which they are made. A simple ethical code for political or economic decision-making and action is difficult if not impossible to achieve.

The most challenging problem is the context. Moral choice depends on how "the good" may be achieved in this particular complex situation. Responding, for example, to human rights violations by one country on its own citizens, will depend on what type of intervention will actually make things better. In one circumstance, the "ethical" intervention may be armed intervention by a coalition of countries, in another the imposition of sanctions, and in another no more than an expression of opprobrium. Similarly, the response by a business to an economic downturn may be layoffs in one case, retraining of workers in another, and paid furloughs in yet another. In some cases the downturn may be short-term; in others there may be no hope of reemploying the workers in the particular industry or firm.

The second challenging problem is the capability and resources of the actor. Military intervention on the other side of the world, or in multiple simultaneous conflicts, may be impossible. A business may find it does not have the financial capacity to retain and retrain all its workers in a downturn.

The third challenge is the stage of development itself. A society which is wealthy enough to provide financial support and retraining for its workers presumably has a greater moral obligation to do so than a society that is at a much less developed stage in its history. Some companies have argued that the same principle applies to them – that good ethical decision making and greater attention to all its stakeholders is something they are obliged to do only when the firm is mature and stable enough to afford it. Responding to this challenge requires developing moral norms and standards that bind any government and any business no matter what their stage of development, but some other standards that indeed will bind only at a more mature stage of development.

Roman Catholic Attempts to Address Practical Ethical Decision-Making

In Roman Catholicism, Popes and national bodies of bishops and other church leaders have sought to describe the proper application of the moral tradition to policy, politics and economics in a series of Papal Social Encyclicals and national pastoral statements. The 1891 Encyclical Rerum Novarum by Pope Leo XIII is regarded as the first of these modern social encyclicals. The 2009 Encyclical Caritas in Veritate by Pope Benedict XVI is the most recent. Pope Francis I on November 24, 2013, issued "Evangelii Gaudium," an Apostolic Exhortation addressing many political, policy, and economic questions. In the Roman Catholic moral tradition, an exhortation does not claim the same level of authority as embodied in encyclicals. In the United States, the national Catholic bishops' organization issues two notable pastoral letters in the 1980s addressing topics of concern to this meeting – one on nuclear proliferation and peace, and the other on economic justice. However, in the shifting debate over centralization and decentralization in the Roman Catholic Church, the Vatican suppressed further such statements by the US and other national bishops' conferences.

The series of Papal Social Encyclicals have established several key themes, among them: the life and dignity of every human person; the importance of family, community and participation by all; human rights and responsibilities; a special obligation to the poor and vulnerable; the dignity of work and the rights of workers; solidarity with all peoples in a global world; and care and respect for the physical environment. An underlying principle in these documents is called "subsidiarity," and argues that decisions and implementation of decisions ought to take place at the most local effective level possible.

In the most recent social encyclical, Caritas in Veritate, Pope Benedict XVI noted, among many other themes, that the market could not exist solely "for itself" and that the market must be made to serve all humanity. Expressing special concern for the wide gap between the rich and poor, Benedict urged business leaders to make decisions that serve all "stakeholders" affected by their work by adopting a principle of "gift" by which economic structures exist to serve all of humanity. In his 2013 exhortation, Pope Francis I developed further the need to incorporate the interests of the poor into decision making, lamenting "an economy of exclusion and a "new idolatry of money."

Some Specific Problems of Applying Ethical Principles in Economic Decisions

As a business ethicist, I have spent my own lifetime addressing the task of putting ethical principles to work in decisions made in business. Many have written about the inherent tension between the capitalist logic and preeminence given to the profit maximization and ethical values. This tension is real and expresses itself vividly today despite noble attempts to reconcile the two.

The most notable attempt to reconcile ethics and capitalism have been innumerable "global codes" adopted by NGOs and businesses which address specific commercial behaviors. Among these are supply chain standards for the treatment of employees and the environment, global environmental standards regarding water use and pollution, commerce in "conflict minerals," and commitments to fight corruption. The hope has been that these global codes and other similar standards would solve four fundamental problems faced by global businesses.

The first is competitive disadvantage. Only by cooperative and widespread adoption of ethical and enlightened business practices will businesses feel they can act responsibly and not put themselves at a competitive disadvantage. The reality is that no "voluntary" global code will ever completely solve this problem. There will always be a business ready to ignore the code's standards in order to save money; there will always be a country where legal standards are more lax and some companies can operate more cheaply.

The second problem is intense pressure from financial markets, which have increasingly demanded of businesses uninterrupted profitability, even on a quarterly basis. Many business leaders, believing good ethical decision-making usually serves long term profitability, feel constrained to avoid decisions that serve humanity and are more "ethical" in order to keep short-term performance at high levels. This, of course, is bad both for the stakeholders whose interests are ignored, and for the economy itself.

A third problem is the lack of legal authority in some countries for professional managers to make decisions that favor the broader human welfare. Corporate charters, in the United States and many other countries, specifically oblige boards of directors and managers to serve the interests of the equity owners, and no one else. While there is some room for business judgments or ethical decisions, they must be argued as being clearly related to the long term interests of the shareholders.

The fourth problem cited by many in business is that there simply is no global ethic or global ethical consensus, and that companies face conflicting ethical expectations from different national cultures. Some business people abdicate all responsibility at this point and say they will meet only the legal expectations in each jurisdiction in which they operate. Indeed, such a "compliance philosophy" has become the dominant working practice of many, if not most, global corporations.

How Progress Can Be Made Toward Global Ethical Decision-Making

Earlier in this essay, I took note of the development of dozens and even hundreds of voluntary codes of commercial conduct. These codes "level the playing field" and give managers some legitimacy to argue that compliance with such voluntary codes is a part of protecting and advancing the long term interests of the shareholders.

No one force will translate the growing consensus around a global ethic into global ethical decision-making, in politics nor in economic affairs. But these voluntary codes and several other specific developments will contribute to the translation.

There is a concurrent global movement to rationalize laws and regulations in selected areas to implement global norms regarding human rights, environmental pollution, corruption, and even consumer rights. These campaigns are being encouraged by the United Nations, by the OECD, and regional economic associations. Among the most significant of these voluntary codes efforts is the United Nations Global Compact, now over ten years old, which has championed 10 principles of corporate behavior and has attracted thousands of companies and associations as signatories. In some specific areas of behavior, this movement has progressed quite far, for example by securing the adoption of anti-corruption statutes in most industrialized countries. As might be expected, the translation of laws into enforced standards is taking longer and is less consistent.

Recognizing that even legal compliance by businesses to existing laws and regulations would result in better behavior and less damage to human welfare, a significant movement for "corporate compliance" has developed in the United States and other countries (this is sometimes referred to as a "corporate ethics movement," but that name is misleading.) Best practices for corporate compliance – adoption of company codes of conduct, educational efforts, investigative and disciplinary procedures – are widely discussed and implemented by most large corporations. Nonetheless, despite such compliance efforts, some argue that corporate "wrongdoing" has become more common in recent years.

In the United States and elsewhere, legal constraints on the ability of boards and professional mangers has provoked a new movement to establish alternative governance laws, authorizing "B Corporations" organized and authorized specifically for social benefit. Almost half of the 50 United States have adopted B Corporation legislation but the number and size of businesses organized under these laws remain very small.

Finally, religious organizations have increased their efforts to address the practical world of political and economic decision making. In my Roman Catholic tradition, there is a growing awareness both that the Church must address practical decision making but also that it must enlist laypersons both from the Roman Catholic tradition and from other traditions in that work. Few church leaders have experience in political and economic decision-making and therefore the expertise to speak authoritatively on such matters. In the wake of Pope Benedict's many comments about economic decision-making in Caritas in Veritate, the Vatican and other Roman Catholic bodies sponsored meetings of practitioners to expand upon Benedict's vision of responsible business. One of those efforts produced a teaching titled "Vocation of the Business Leader," published by the Pontifical Council for Justice and Peace. This document advances the dialogue significantly on how to translate a global ethic into ethical economic decision-making.

The task outlined in this essay has two dimensions. First, one must ask now to apply even a common understanding of global ethics to the complex worlds of politics and commerce – reaching decisions that are genuinely based on that common ethic. Second, one must find ways of implementing a commitment to make ethical decisions in large, bureaucratic, and at times resistant organizations. Both tasks are formidable; both tasks are unending. The political/economic context is constantly changing, requiring discernment and debate over how a global ethic applies today in this instance, and more discernment how it will apply tomorrow in a different context. The nature of our organizations constantly changes also, requiring continual rethinking about how to use the structures and incentives in those organizations to motivate consistent ethical choices.

These realities suggest that there will never be a definitive and lasting answer to how to apply a global ethic in the world of politics and economics. There will be the need for continuing discernment by many different types and levels of organizations – and an openness on the part of political and business leaders to this continuing process.

This essay has focused on ethical decision making in economic organizations. A parallel process of ongoing discernment is occurring in organizations dedicated to political and policy formulation. There is no single principle which will forever determine when humanitarian intervention should be undertaken, for example. Responsible decision-making which respects the rights of all affected, and embraces the responsibilities each party bears, will take continuing dialogue and discernment to respond to the specific details of the individual case and the evolving context. As in business where the struggle between profit and ethics is never-ending, so also in government the struggle between three concerns – humanitarian concern, national interest, and the self-interest of the leaders – will always be in tension.