07 Jan The ethics of governance
Looked at logically, there is nothing particularly notable about the ticking of the clock which unceasingly measures out our days. Yet once a year when that same clock clicks us on from one year to the next we treat the transition as a quasi-magical force, something which will wipe out all the ills of the past and herald a fresh start, a new beginning.
So whether we look at our personal lives or our businesses the turning of the year is seen as a time of resolution and a time to start anew. This thought came through strongly in a speech given by Martin Wheatley, the FCA’s Chief Executive, to the ICI Global Trading and Market Structure Conference in December. Citing 2013 as a time in which the financial world moved on, Martin Wheatley marked out 2014 as a period of cultural transition, of putting “clear blue water between the past and future.”
Key elements of this cultural transition according to Martin Wheatley are culture and accountability; getting “senior management – not just in banks but players in the global markets as well – to be accountable for doing the right thing.” Expanding on this theme Martin Wheatley quoted from Roger Steare’s book “Ethicability” in which he calls for a more sophisticated interpretation of integrity in business “one that is not simply defined by the ethics of obedience – so what is legally right or wrong – but actually looks towards the ethics of care and the ethics of reason.”
This theme of ethics, of not simply acting in accordance with the law but looking at the effect of actions on employees, customers, stakeholders and the wider public is one which started to emerge strongly in the latter part of 2013 and which will feature large in 2014. Whether it is putting customer before profits, taxes before executive pay or environmental sustainability before high margins, the theme of ethics is one which will increasingly occupy those who govern our institutions.
Developing this theme, the International Chamber of Commerce (ICC) in December released a new Ethics and Compliance Training Handbook. Aimed at “fostering a culture of integrity across today’s global markets” the handbook provides advice and guidance in identifying and tackling corruption in business.
What these measures, and others like them, show is that corporate governance is no longer a question of maximising profits and shareholder returns. Governance in 2014 requires a wider viewpoint, one in which “doing the right thing” is the only choice.