What does the climate crisis have to do with business ethics?

Many of us in professional services have taken modules in ethics as part of our training and CPD, but many business owners haven’t ever had any training in this area. I am not saying that individuals in professional services are any more ethical than business owners ( lots of evidence suggests not). But there is an advantage of having an understanding of business ethics; in that it can help you spot potential problems and support you in considering issues from multiple angles.

One frustration I have with the climate change and sustainability debates is that they are often framed, especially by accountants, as a profit-first issue rather than an ethical one.

If we stick with the profit framing of climate action, we get stuck with a limited number of positive actions that make similar or more profits, and we don’t tackle the issues that lead to less profits in the short term.

The other issue with this approach is that we are currently not including many vital costs within those profit calculations. We are not bringing in the cost of biodiversity loss, poor well-being, or long-term consequences into those calculations. As a result, we have an inbuilt bias towards short-term environmentally damaging financial decisions.

My challenge to everyone is to start re-framing the sustainability and biodiversity emergency with an ethical lens and see how that challenges your thinking and, ultimately, your actions.

To be ethical, we need to be aware of our own biases and frequently challenge our own thinking as it might be clouding our critical thinking around the climate emergency.

Cognitive biases – We are all much less rational creatures than we would like to think. We are driven by irrational thoughts or judgments, often based on our perceptions, memories, or individual and societal beliefs.

For example, our perception of the damage to the environment that we create personally and how green we think we are is undoubtedly coloured by our own bias. We are all underplaying the damage that we are doing directly and indirectly. “It is just one plastic bottle; it won’t make a difference, and I will just eat less meat this week to pay for it!”

Ethical blindness – Many people act unethically because they simply overlook the ethical dimensions at stake in their decisions.

For example – the misuse of other people’s money – “Mum wanted me to have £x to build “the spa” in my garden, which I earned by caring for her. And I will inherit it in the future anyway, so I don’t see the problem”.

Or we offshored our team to save money, but we didn’t fully consider how the team was being paid or treated, and it was below UK standards.

Framing the problem – How a decision or situation is framed is often a key factor in failing to see the ethical issues, which could be detrimental to a range of stakeholders and have significant repercussions for you.

For example, The framing of the climate crisis as a crisis of carbon emissions only means we are seeing lots of carbon-related tools and carbon-cancellation scams. But we are seeing a lot less of a holistic approach to tackling biodiversity loss, reduction of pollution, reduced inequality & greed, implementation of fair taxes, etc, which leads to slow progress. The framing of the problem and language really matters.

Familiarity risk  – where we encounter a situation that we perceive to be like one we’ve met before and simply treat it in the same way, and consequently miss the new ethical dimension.

For example, “We have always had a quarterly in-person meeting with the client in Edinburgh. It would take too long to take the train rather than fly, and they won’t want it to be done by Zoom; it’s what they pay us for.”

Conformity bias – the chance of unconsciously choosing an unethical action can also be increased by how we behave around other people. This becomes a problem when the ethical dimension of a situation requires scrutiny and a different stance to be taken.

For example – “The director of that B Corp down the road just posted pictures of their trip to Australia, so I can fly this year, too; it’s okay because everyone else is”.

Authority bias – this arises when we have an unquestioning and excessive acceptance of authority.

For example, “The board isn’t interested in tackling the climate emergency this year, and therefore, the team doesn’t risk creating plans or making suggestions to the board as it’s not the priority”. Those in authority often see challenges too late, and they need the teams to be free to flag all issues. Be willing to stand up to authority for what you believe is right; they need you.

Rationalisation – When we are accused of doing something wrong, we are prone to reaching for excuses to explain or justify our conduct. Our subsequent attempt at justification might have nothing to do with why we did what we did but everything to do with our natural tendency to defend ourselves.

For example – “The audit team won’t discuss the climate emergency with clients because they haven’t had the right training, plus the client doesn’t want to discuss it and will probably leave if we do”. The problem is that there is likely to be a fiduciary duty to discuss climate risks, and it could lead to future litigation.

How do we improve decision-making around Business Ethics?

We have to make sure we give ourselves the best chance of making the best decisions. We won’t always make the right decisions, but let’s give ourselves the best chances.

We do this by

• Slowing down your decision-making;
• Have a clear purpose for the business;
• Follow clear ethical policies;
• Creating a longer-term plan;
• Discussing issues with a wider group of people;
• Being aware of your own biases;
• Learning and reading widely;
• Being open to challenge and change.

 

One thing that has always stuck with me when I am thinking about anything “in the grey zone ” is whether I could stand up in front of a barrister in court and justify this decision! Is it the choice of the reasonable person?

Or, to put a climate twist on this – could I look my future grandkids in the eye and truthfully justify my current business decisions?