Scandals put ethics on agenda for global business

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THE business world has suffered its fair share of scandals in recent times; a series of deadly incidents at Bangladeshi factories with links to Western brands, tax avoidance by multinationals, the horsemeat debacle and the banking crisis have all incited public outcry.

Consumers are, as a result, demanding higher ethical standards from businesses, according to Daniel Marten, managing director of Hull-based Bright Ethics.

Bright Ethics, which launched a year ago, offers ethical accreditation to Yorkshire-based public and private sector organisations.

“As a country the UK has changed. We’ve got a little bit more of a social conscience, we are a bit more in touch with our social conscience than we used to be”, Mr Marten said.

Mr Marten said that while consumers’ increased interest in the ethical credentials of businesses has been driven, in a large part, by such scandals, social media has also had a role to play.

“Social media has opened up a whole world of information so we’re not as reliant on just the media as we used to be.”

However, while ethics is moving up the agenda for consumers, the UK is still divided over the issue.

Mr Marten explained: “Half of all people who are quite clearly defined demographically and who, because of pressures in their life, still can only focus on price and quality when they are buying a product.

“Then the other 50 per cent will take into consideration other factors and ethics is very, very important to them, and this is a trend among not just young people but older people as well.”

Market research undertaken by Bright Ethics every few months has highlighted the key areas of concern for consumers who do care about business ethics.

Mr Marten said: “So we poll 1,000 people from all different social backgrounds on what they think of business ethics, whether they think it’s important, and what they consider important when they are thinking about business ethics? Every time they say it is environment, HR, supply chains and taxation.

“They are the four they always come back with.”

Global companies such as Starbucks, Amazon and Google and have come under fire for avoiding paying tax on their British sales.

Meanwhile, the discovery of horsemeat in processed beef products sold by a number of UK supermarkets threw the spotlight on the food industry’s supply chain.

And the image of the financial services sector has been dented by controversy over big bonuses, the mis-selling of financial products and the Libor rate debacle, all in the aftermath of the global financial crisis that saw banks bailed out by taxpayers.

Western retailers, meanwhile, are under pressure to look more closely at trying to improve safety standards at suppliers after a string of incidents at Bangladeshi factories.

The collapse of Rana Plaza, a factory built on swampy ground some 20 miles outside Bangladesh’s capital city Dhaka, ranks among the world’s worst industrial accidents.

The disaster in April resulted in the deaths of 1,129 people, while a fire at the Tazreen factory, also in Dhjaka, in November 2012 killed 112 workers.

Mr Marten said: “There are large shops that more and more people are boycotting because of the way they treat their staff, because of the way they treat their suppliers, and it’s interesting that those companies are not seeing their profits increase at the same rate as they were before.”

He said that ethical companies have a number of competitive advantages. They receive higher quality of human resources applications, said Mr Marten. “There’s lots of research out there around how young people aren’t just looking for a quality pay packet, they are looking for a company with a vision and a mission that gives something back.”

Ethical companies have a higher level of self-motivation amongst staff, resulting in lower staff turnover and better staff performance, he added. They also have a USP which many of their rivals don’t have, opening the way for new customers, Mr Marten said.

Mr Marten said Bright Ethics is working with around 30 companies of all sizes, from those that are fully branded to those going through the audit process.

suzan.uzel@ypn.co.uk