Caring for the state of the world makes good business sense

http://www.businessday.co.za/articles/Content.aspx?id=82962
IT IS fascinating to see Nestlé trying to escape blame for its business dealings with Grace Mugabe in Zimbabwe. Defences have ranged from the claim that no CEO could have his finger on the pulse of all operational detail of business units spread across the Milky Way, to more right- wing comment about business’s right to be apolitical. This raises a normative question that cannot be so easily be wished away: do companies have moral obligations at all?

Many people assume that since companies are legal entities, they cannot be susceptible to moral criticism. After all, human beings have bodies and minds, and the basis on which we hold one another morally responsible for this or that is the fact that we reasonably expect of each other to reason and act morally. We have the capacity to think, and we have the necessary free will, it seems, to act in accordance with whichever reasons we deem most persuasive.

It is these capacities to act freely, and to reason morally, that justify attributions of responsibility between human beings.

Companies, being abstract things that do not exist in time and space, do not seem good candidates for moral praise and blame. Morality, it seems, simply does not apply to companies. Right?

Not so. There is no reason to restrict moral norms to human beings. The fact is that companies are not weird creatures. Behind company decisions are those pesky, more familiar human creatures, who do have the capacity to reason about the likely effect of their commercial decisions. Just as companies such as IBM should have foreseen during apartheid how their business dealings with the racist South African government would enhance Hendrik Verwoerd’s capacity to enforce racist laws and policies, so should Nestlé’s management have anticipated that enriching the Mugabes helps to prop up an immoral, thuggish regime.

The whole point of smart sanctions, for example, is to cripple the ability of government leaders and their families to go about their daily lives as if all is well with society at large. These political agreements among the free nations of the world are not intended to be mere political declarations.

They are rightly intended to constrain the actions of signatory countries’ citizens and legal entities in their dealings with immoral political thugs, who have no respect for the substantive rights and wellbeing of their people.

Companies are best thought of as sui generis entities. In other words, they are moral agents, but moral agents of a special kind. Being special — such as not existing in time and space — certainly does not mean, however, that you are exempted from complying with moral and political norms.
The fact is that the behaviour of companies affects social reality. If the Mugabes are able to make a handsome profit from their business dealings, and then parachute into Sandton City for a blissful shopping spree, then they have little reason to think twice about their continued raping of the resources of their country, let alone taking steps to alleviate the suffering of their citizens.
This is not, of course, to single out poor Nestlé. I am not suggesting that you henceforth ignore your chocolate cravings in the name of a business boycott. Goodness knows how many companies are operating in more unambiguously conflict-ridden spaces also without batting a moral eyelid.

But all this does point to a clear gap in the business upbringing of commerce students, and a curriculum gap in the stock modules that are stuffed down the throats of MBA students at business schools.

“Business ethics” would be regarded as oxymoronic by many. But this should not be case. Businesses are social actors whose stakeholders include not only shareholders, but also employees, customers and society at large. While the narrow legal obligation of a company is to maximise shareholder value, the world would be a worse place if legal entities failed to appreciate the effects of their actions on the world from which they, in turn, hope to benefit.
In fact, for the purely selfish reason of ensuring an environment in which their own business dealings can continue to flourish in the long term, businesses should care about the state of the world.

It therefore makes both moral and business sense for companies to care about society.