Companies make choices about how to react to events instigated by their own operations, those of their competitors and the marketplace. Where ethics often raises its head is when a company acts legally but not necessarily ethically. This article gives a few examples of the experience of the collision of ethics and law in Nestle and Barclay. The challenge comes mostly from companies who seem to think they are in business to maximize shareholder wealth and not why businesses really exist: to create and satisfy stakeholders, particularly customers. This article states, "There is now extensive evidence showing companies with ethical leadership that acting in a responsible, or principled way is likely to be far more successful, long lasting and and indeed profitable than less ethical ones.”
It gives five reasons why this is so:
- It is moire profitable
- Protect the rand and reputation
- It is the right thing to do
- Customer trust and loyalty
- Investor confidence
Granted, some of these overlap, but the mounting empirical support for being ethical vs. “complying with the law” is hard to refute.
See What is Ethical Leadership and Why Does it Matter?