The Business Case for Morality
When I told my friends that I would be working at a nonprofit business consulting organization this summer, I was met with their baffled faces. How could a nonprofit calling on businesses to be more sustainable and responsible use a consulting model? Or is this just a nonprofit advocacy group that simply misbranded itself? And when I first learned about BSR, I had some of those same questions. But apparently, an organization can both operate under the business consulting model as well as the issue advocacy model. One of the notable ways BSR succeeds in promoting human rights through engaging businesses is to use the language of business, to give the business case for respecting and upholding economic, environmental, and social rights.
One of my first encounters with BSR was during my initial research of the organization. I had stumbled across a report about the effects of climate change on health. At the time, I thought that the report was just an informative piece giving valid arguments for why businesses should act. After working on several projects at BSR, however, it became clear to me that a recurring theme at BSR, and indeed at many organizations that engage with businesses to promote change, is presenting a business case. The business case for action on topics such as human rights and climate sustainability usually revolves around two factors: brand and risk. Actions that elevate a company into the position of being ahead of others in the field could give the brand a boost in reputation. Some brands utilizing particularly leading practices may even be classified as a thought leader in those areas, such as labor rights or recruitment ethics.
Risk is also a major concern for companies and investors. Salient issues like corruption and climate impact increase risk for companies looking to enter country markets or maintaining their profit margins. For example, a previously peaceful country may be more prone to infighting after climate change affected the abundance of water in certain areas. The changes in status quo would force corporations to either move their operations elsewhere, an expensive endeavor, or the equally expensive endeavor of increasing security. Companies would rather not have to make either choice. The business case here is straightforward: take proactive actions, such as increasing climate sustainability of operation or minimizing destabilizing operations, and it will safeguard the company against costly damages in the future.
Although it makes sense to use the language of business when dealing with businesses, reliance on “the business case” to promote ethical behavior has both pragmatic and moral implications. The simplest argument against the business case is that it may not be appealing for some companies. Some may be willing to accept the future costs for short-term gain. Others may choose to invest in ways to adapt to the changing landscape and profit off the harms they have done, rather than dedicating funds to preventing those harms in the first place. Even if a company accepts the business case for ethical behavior in some cases, there are still many where talking business is not persuasive. If there is such a profit incentive to act morally, all corporations would logically do so.
Making profit the justification for acting in moral ways cheapens the real reasons for respecting rights, not to mention that at times it will be more costly to do right thing and more profitable to be abusive. The reason for not violating human rights is no longer because doing so is wrong, but rather, the consequences of it would cost the company future profits. Normalizing this behavior and attitude towards ethics is dangerous, because it makes it acceptable for companies to profit over people in cases where the two conflict. The system raises the question: should there be a reason to do the right thing other than that it is the right thing to do?
Given the host of issues from using the business case to justify corporate action on rights issues, it may be difficult to see why organizations like BSR still continue to make business arguments. One answer may be that it works. Formulating arguments to respect human rights in terms of profit and risk appeals to the logic businesses use in determining their annual strategies. The reality is that the world has already been subjected to destabilization, exploitation, and injustices, some caused by corporations themselves. But given the speed and drive of businesses, especially given a monetary incentive, they can help . From individual businesses pledging millions to help with the rising cost of housing to the largest multinational companies working together to protect workers’ labor rights, the private sector has been able to achieve that which governments and advocacy groups have not been able. Given these advances made by businesses, it may be that even in the face of the issues of emphasizing the business case for ethical actions, it is still the most optimal path to change.
Many, if not most, companies place returns to shareholders as the highest priority they have. The business case is an important tool for mobilizing corporations with resources to act in ways that preserve and protect human rights, but its flaws necessitates changes in business models and incentives to prevent wrongdoings before abuses can take place. Perhaps best expressed by BSR President Aron Cramer, “Sometimes there isn’t a business case. Sometimes there’s just a right way to do things and it might cost you money.”