THE EVOLUTION OF ETHICS
R&C: Could you explain the concept of business ethics? How does it differ from compliance?
Weghmann: In business, we often use ethics and compliance interchangeably. Although the two concepts are complementary, it seems to be a widespread belief that they are one and the same. But in terms of approaches, perspectives and outcomes, they are fundamentally different. Compliance means adherence to regulatory requirements and clearly defined rules that give little room for interpretation. A clear definition of right and wrong. Ethics, on the other hand, presents us with the challenging task of interpreting and resolving issues based on values and moral concepts, each of which may lead to very different results. More than ever, leaders face the challenge of navigating environments of ambiguity, complexity and unpredictable risks. These challenges extend beyond the scope of compliance. Business ethics offers a unique opportunity to revisit the purpose of organisations and invites us to make strategic decisions based on that purpose, even if it leads to short-term pain.
R&C: How have attitudes toward ethics in business evolved in recent years, and what forces are driving this shift? How do you expect this to evolve in the months and years to come?
Aydt: The role of business in society is ever-evolving, and with that, the expectations on organisations and the way they earn their licence to operate have changed dramatically. Adhering to the law is no longer enough. We care more about organisations’ impact on society and our planet. Three forces have driven this shift. First, radical transparency has led to greater accountability. Second, global challenges have societies looking to corporations for answers. Finally, evolving social norms and rising customer, employee and investor expectations push organisations to focus on corporate citizenship. Looking ahead, the business conditions we have taken for granted will continue to be stress-tested. Today, we see unfavourable trends in corruption, organised crime, the rule of law and trust in business, institutions and democracies. Combined with planetary boundaries and extreme consequences of the climate crisis, like supply chain disruptions and mass migrations, leaders must decide the role of organisations in countering these developments.
Jan-Mar 2025 Issue
Ernst & Young LLP
EY GmbH & Co. KG