S+B: Shell and BP seem to represent two corporations that are trying very hard to shift their value systems.
PAINE: Shell is a company I discuss in the book. They’ve developed a road map for change that is continually revised. And they’ve asked the hard questions — about their planning processes, their management systems, their performance metrics, their reporting processes. They are addressing all of those points, and I think the likelihood of their success is much greater than what we see in a typical situation where a company says, “We want to change our values, but we’re not going to change anything else.” I think that Shell and BP will both benefit from what they’re doing.
S+B: At most companies that have articulated a concern with ethics, the issue has tended to be the province of the CEO, or of someone with a title like VP of corporate social responsibility. Are you finding it more institutionalized throughout companies now?
PAINE: System and structures haven’t caught up to the new expectations, and I don’t see widespread understanding of the macropicture. Many companies respond incrementally to appeals for, say, diversity, environmental responsibility, or, more recently, truth in accounting and financial reporting. Everything is treated as a special issue, with its own minibureaucracy.
I’m suggesting that these appeals all flow fundamentally from the same idea — that a corporation should be a responsible agent, a moral actor, whatever term you want to use. Whether the activity is accounting, or hiring, or manufacturing, it needs to be handled in a way that is consistent with basic ethical standards of fairness, truthfulness, and civic responsibility.
It’s actually much simpler to understand, and to manage, if you think of ethical issues and values under one umbrella, instead of as a series of special programs tacked onto this engine of commerce.
S+B: That’s actually not just a legacy of the amoral character of the corporation, but it’s a reflection of the “silo-ization” that is endemic in many large companies.
PAINE: Sometimes you find both a corporate social responsibility group and an ethics group, and they think of themselves as totally separate. Of course, they address different issues insofar as corporate social responsibility tends to deal with civic and external issues, whereas the corporate ethics office tends to deal with individual employee issues. But these are still different manifestations of the same underlying phenomenon.
The moral character of a company really is about shaping strategy at its core. What business are we in? How are we going to run the business? What are our tactics? How will we manage risk? How are we going to develop people? All of these traditional questions for the business must be seen through this additional ethical lens.
Governance and Trust
S+B: Is the CEO really the only “chief ethics officer” you need?
PAINE: The CEO is certainly the “chief ethics officer,” but corporate responsibility is not a one-person job. I think it is helpful to differentiate the stages of change. If you’re launching something new, you need champions. Once the company manages to integrate these ideas into its core management systems, the need for that officer diminishes. Fundamentally, the responsibility resides with all of line management. Still, a commitment to corporate responsibility does entail a certain amount of work that may require additional staff that can do specific kinds of research and analysis, can gather new types of information, and have different problem-solving capabilities. Ultimately, of course, you want everyone in the company to be an “ethics officer.”
S+B: The story you tell about the Johns Manville Corporation is a fascinating example of how a shift in values changed a company. In 1982, Manville was a global supplier of asbestos fiber facing $2 billion lawsuits over asbestos-related deaths and disease. Few people know that four years after it emerged from bankruptcy, it faced another liability crisis with fiberglass and handled the situation quite differently than it had with asbestos.