Is It Time to Reframe Business Ethics?

It’s time to reframe business ethics and how their value in business is calculated, said Stephen Young, global executive director of the Caux Round Table in a meeting of the student-led Net Impact group at the Hyde Park Center November 8.

Business ethics and corporate social responsibility have become buzzwords in North America and Europe, respectively, over the past 15 years or so. Yet the effort to get business executives to think beyond the bottom line and consider a company’s greater impact in society has caused tensions, said Young, author of the book Moral Capitalism.

The problem, Young said, is that top executives wonder what value it will have to listen to the concerns of outsiders while pursuing the firm’s goals of wealth creation and profit making. After all, if a company’s business has a positive net impact on society, it gets no reward but it must often pay for negative impacts.

What’s needed is for business to better value intangibles such as corporate reputation, the role of human capital, or the impact of corporate strategy on a firm’s success. “Intangibles are fundamental drivers of profit, but when you think about intangibles—reputation, employees—you’re moving outside the traditional notion of the firm,” he said.

A “great intellectual challenge” facing business today is figuring out how to quantify the value of and better manage the intangibles, Young told his audience of 25 students. “Businesses succeed where there is good and high social capital. Businesses will not succeed where there is low social capital.”

—Jenn Q. Goddu