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Business Ethics Week Roundup: Does Business Ethics Pay?

News + Events : Business Ethics Week Roundup: Does Business Ethics Pay?

11/15/2012

Business Ethics Week 2012 kicked off with a talk by Paul Herman, CEO of HIP Investor Inc., who was joined by student panelists from the Financial Analysts and Management Education organization (FAME) and Net Impact.

Paul HermanPaul’s talk covered ethics in business, where he discussed various examples of both organizations that seek only profit, and those that seek to do good in the world. This led to the age old question of whether conducting business ethically is profitable.

Ethical Conflicts in Business

In our current legal system, corporations are entitled to all the same rights and protections that people have, including the ability to own property and sue others. Managers of most corporations today operate with the singular purpose of increasing profits for the company’s owners. This drive for profit frequently leads to the destruction of the natural environment, which lacks personhood under US law. This puts corporate profit and the greater good in direct opposition to one another, and is illustrated in one example as professionals in the financial services industry typically advise investors to put their money into the tobacco and oil industries, which carry high rates of return, but also very negative impacts for society at large.

Organizations Working for Change

On the other hand, there are many organizations that work towards the greater good, from governments to nonprofits to sustainable businesses. For example, the government of Bhutan uses the happiness of its citizens as a measure of the overall wealth of the country, rather than GDP, which actually increases with the sale of cigarettes and consumption of medical services to treat lung cancer patients. The government of Costa Rica gives legal personhood to the natural environment, and has sued polluters on behalf of the environment. In the nonprofit sector, microfinance institutions like Kiva and Grameen Bank seek to help the world’s poorest people by giving them loans to jumpstart their entrepreneurial efforts, with the eventual goal of helping them move towards self-sufficiency. 

Doing Good or Doing Well?

Paul’s company, HIP Investor, seeks to provide information for investors on both the profitability and impact on society of various investments. To this end, the HIP Scorecard measures stocks and bonds on criteria that include human, social, and environmental impact, in addition to profit. He described research showing how companies that seek to do good for society have performed better than the market on average, supporting the idea that doing good and doing well are not mutually exclusive. Rather, the two exist on a continuum, and the HIP Investor Scorecard seeks to educate investors and help them understand where on this continuum their money moves towards. Learn more about socially responsible investing and the HIP Scorecard

-- Roddy Louie, MBA Candidate, Emphasis in Sustainable Business, 2012

 


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