Will Morris: Every business should be required by law to have its own code of ethics

Will Morris is Global Tax Policy Director for GE, chairs the CBI Tax Committee and is a priest at St Martin-in-the-Fields. He writes in a personal capacity. His new paper is published today by Reform.

I passionately believe that business has the potential to be good: from the innovative and beneficial goods business can produce, to the fulfilment people can find in work, to the ability it can give them to support their families. I also believe there is nothing wrong with encouraging work by seeking profit or creating wealth (both within reason).

But, increasingly, many feel that business does not live up to these standards. In surveys, a third of the public think that British businesses generally behave “not very ethically” or “not at all ethically”. Many people, from the Occupy movement to business leaders themselves, believe that some failure in business ethics helped to cause the financial crisis from which we are still suffering. The recent whistle-blower within Goldman Sachs (who claimed that people within the firm called their clients “Muppets”) will only have strengthened their fears.

I am both a priest and a tax lawyer, which are two opposite ends of the ethical spectrum to many people. But in both roles, while I believe that something has gone wrong, I really believe it is worth trying to fix. In my view the financial crisis showed that a new system of business ethics is needed. It was not so much that business ethics failed; rather, after decades of rapid change there was a vacuum where the ethical framework should have been. We need a new approach strong enough to work in our new globalised world, where more companies are owned at a distance and the positive influence of strong personal bonds and personal ownership plays less of a role.

Some will see this as an attack on business. Others will say that this is all very well but in the real world, nice guys always finish last while the unethical get ahead. I reject both views. It is increasingly apparent that ethical behaviour is good for business as well as for society (and indeed the soul). In a world of social media and instantaneous communication, every business is under more scrutiny by many more people who are customers (or who can influence them). For them, the bottom line is more than a single number, and, whether the analogy is correct or not, they want to know how the business acts as a long-term “citizen”. There are other less obvious, but equally important material benefits. Businesses rely on new recruits for future growth and leadership and these people are judging where they go, and where they stay, partly on their perception of the ethics of the business. Some “unethical” businesses will, of course, always appear to get ahead but they are the increasingly the exception.

The world of tax is a case in point. It is not unethical for big companies to defend their interests, including looking after taxes. It hardly serves any useful purpose – ethical or otherwise – for companies to put themselves out of business by paying a level of tax greater than their formal obligations or their competitors. But clearly businesses (as the CBI has made clear) cannot defend a position that if anything is legal, they can do it. There is an American priest, Richard Rohr, who talks about “living on the edge of the inside”. This means we are on the “inside”, in business, and we honour our responsibilities, but that we also question them constantly. Why are we doing what we are doing? What is the bigger context in which our business operates? By asking ourselves and our businesses these questions, we can underpin a new ethic.

For me that is a Christian ethic. But to reassure you, I don’t envisage a new religious rulebook or a conversion campaign. It is the balanced principles of Christian ethics that I would look to: the robust mix of focus on both motives and ends; of both individual and community responsibility; and recognition of both the benefits and dangers of money. It is what many non-religious people recognise as a feeling of something larger than their own self-interest. It’s about asking “why” we do things, not just “how”.

In the end this depends on all of us as individuals and our personal decisions. To support our efforts, I suggest a simple new law requiring every business to have a code of ethics, to report annually upon it, and train all key leaders in it regularly. This would encourage businesses to think what their code should be rather than respond to yet another detailed set of rules and regulations. Businesses that ask “why” as well as “how” will be stronger businesses and deliver stronger capitalism too.