Most boards of directors would not agree with what I am about to say, just yet.
In the same way that many didn’t believe what the late visionary Ray Anderson, founder of Interface, once declared: “In the future, people like me will go to jail.”
However, I believe that companies that are doing more harm than good will be judged, sooner or later.
Today, we are witnessing lawsuits on issues that would have been unthinkable 20 years ago, such as environmental and human rights issues in the supply chain.
What was once considered a moral obligation, if considered that at all, is today characterised as a series of environmental, ethical, social and governance issues that companies can be punished for by the street court, which includes by Wall Street, as well as in the courtroom.
While the courtroom might judge a company based on laws and regulation of the time, the “street court” will judge companies by the standards of the day.
Because companies are constantly being asked to adhere to a higher standard by most of their stakeholders, it makes business sense to do some trend-spotting and to ensure that everybody in the company, from the board of directors to the sales agent, has received an “integrated thinking memo.”
The integrated thinking memo should come from the board of directors, who also should ensure that incentives are in place to establish a culture where every employee takes ownership in building a trustworthy and ethical corporation.
I choose the term “ethical” as it varies with the expectations of stakeholders and must therefore be re-evaluated on an ongoing basis by employees driven by purpose and motivation beyond financial gains.
The fiduciary duty of a company’s board of directors is to the company itself as a legal person.
This means ruling in what it believes to be the interest of the corporation and therefore taking into account expectations not only from shareholders but also from other stakeholders.
I therefore will not argue that the fiduciary duty of the board is solely to ensure that a company is without any moral or ethical spots — but it greatly would increase transparency if companies and the board regularly questioned company processes, which in turn can help reveal any amoral or unethical practices.
In addition, the United Nations’ new Sustainable Development Goals (SDGs) can help companies and boards of directors reflect on the long-term goals and purpose of the company.
This reflection would help a company to evaluate its business model and act as a catalyst for better innovation, risk mitigation, brand recognition and of course, better revenue generation.
One hundred ninety-three heads of state and business leaders across the world committed on Sept. 25 to the 17 SDGs, which might not look as if they are deeply business oriented. However, they have real implications for businesses and when aligned with business practices, can help companies and their boards to strategically guide business to achieve them.
With that said, I offer readers this simple questionnaire. It asks whether your business, or a particular business practice, is either advancing or impeding the 17 goals. The result would be an overview of your business’s current position as a sustainable business in the 21st-century economy.
The SDGs can act as a compass for all companies, industries and sectors. While the 17 goals might act as guiding stars, companies need to find, and be true to, their own “northern star.” If you look deep into the founding principles of most companies, most of the time there is an underlying wish to do something big, to move humanity forward and to leave behind a legacy as a leading ethical corporation.
For business leaders, it is a moral imperative to do business responsibly so that they leave behind something for their children and grandchildren to be proud of.
In simple words, yes, the business of business is to do business — but also to do business responsibly and to ascertain the long-term value of the organisation.