The Game is Changing
By Nate | July 10, 2006
For years, ethics officers have occupied the front lines in the fight to protect and maintain the reputations of their companies. In the legal profession, lawyers play a similar role, protecting their clients from legal risks.
But the game is changing both for ethics professionals and for lawyers, and their role as defenders of their companies' reputations and integrity is becoming increasingly difficult. In a recent article in CNNMoney.com, senior Fortune Magazine writer Marc Gunther correctly observed that "moral liability" is a growing risk for businesses. Corporate America's Hidden Risks, CNNMoney.com (June 28, 2006)
As Gunther explains, moral liability emerges from the notion that companies can pay a dear price, both reputationally and financially, for failure to live up to evolving and ever-changing ethical norms that are defined by society at large but not necessarily codified into laws or regulations. To offer just a few examples, "moral liability" risks and issues have become serious problems for companies doing business with repressive political regimes, companies sourcing products through reliance on alleged "sweatshop" labor, and companies selling entirely lawful products that have nevertheless been deemed by one vocal constituency or another unsafe, unhealthy, or otherwise detrimental to the well-being of a segment of the population.
I won't say whether I believe these developments are good or bad. My own views are irrelevant. But as a great philosopher (I'm not sure who) once sagely noted, "it is what it is," and like it or not, the issue of moral liability decidedly "is." What this means is that for better or worse, the issue is alive, it is ripe, and it is not likely to go away. Indeed, because the internet creates the potential for global flash mobs at the click of a mouse, it is hard not to conclude that moral liability risks (and opportunities) will only grow over time. One can complain about it -- many do -- but you may as well howl at the moon for all the good it will do you.
As an alternative, you can acknowledge the reality of this evolving trend, and prepare yourself to be on the forefront of dealing with it. Ethics officers and lawyers know well where their companies' risks lie, and are equally well-equipped to manage those risks in ways that minimize direct or collateral negative consequences for their clients.
The growth of moral liability presents great risks for business. But it also presents tremendous opportunities for forward looking lawyers and ethics officers to expand their professional horizons and add value to your organizations in the process. Where do you see yourself in this picture?
For more information, see the Resources page at www.ethicalleadershipgroup.com. Another excellent resource, "The Changing Landscape of Liability: A Director's Guide to Trends in Corporate Environmental, Social and Economic Liability", was published by SustainAbility, and is available here