Business Ethics 

Building an Ethical Framework

frame10 questions to consider in encouraging an ethical corporate culture.

Although we are now several years into the new and landmark regulatory environment that mandates an organizational culture of ethical conduct, there remains little guidance on how to get there. Many companies are engaged in a scramble to create a paper and electronic trail to ward off prosecution, rather than in a well-designed effort to promote or govern the culture of their organizations. This article suggests 10 primary questions every executive should ask—and expect to have answered thoroughly and well—in order to initiate a culture that encourages and sustains ethical conduct.

Communities, Corporations, and the Difference Between Consent and Consult

A World Resources Institute report promotes free, prior, informed consent from communities affected by major projects; an International Finance Corporation report advocates consultation.

A mere two letters separate consent and consult, but that slight spelling shift makes a profound difference in meaning—denoting the dividing line between, for example, lovemaking and date rape.  This distinction extends to the case of negotiations between communities and corporations over major projects such as mines and pipelines, where two models of stakeholder engagement have evolved: free, prior, informed consent (FPIC) and free, prior, informed consultation. Two recent reports play out this split...

How to Wet the Whistle

Corporate whistleblowers might need a monetary nudge, researchers suggest.

For a working paper for the National Bureau of Economic Research, Alexander Dyck, Adair Morse and Luigi Zingales studied 230 cases of alleged corporate fraud at larger companies between 1996 and 2004. They found that, despite the incentives introduced by Sarbanes-Oxley, whistleblowing numbers decreased in post-SOX cases.

In the Wake of Disaster

Facing criticism, Red Cross addresses governance issues.

The American Red Cross announced major governance changes as it seeks to recover from criticism of its performance after Hurricane Katrina and other recent disasters.Critics, led by U.S. Sen. Charles Grassley (R-Iowa), assert the 125-year-old charity labors under an unwieldy organizational structure as well as a culture that discourages criticism.

In late October, the Red Cross released a 156-page report from a special governance committee outlining a wide variety of proposed changes to its structure and practices, from amending its Congressional charter to strengthening its whistleblower processes.

Culture of Compliance

CROs address the challenge of creating a unified approach to corporate responsibility.

In November 2000, I attended the annual Business for Social Responsibility Conference, where I was eager to explore whether the CSR movement could influence internal ethics and compliance programs. I looked forward to a workshop led by the Chief Ethics Officer at Merck and the head of Social Responsibility for Enron.