Do Ethics Still Matter in Business?
05/21/2025
Americans' Views of Business Survey
JUST Capital released its 8th annual Americans’ Views on Business Survey in October 2024. The results highlighted "the incredibly complex stakeholder landscape facing CEOs today, but they also provided real encouragement for corporations seeking to adopt a leadership role in society going forward."
According to the article, "Survey Says Ethics Still Matter in Business," stakeholder supporters like Darden School of Business Professor Ed Freeman say the answer is 'yes.' Freeman says that the 2024 "survey results are not surprising, as they fit with a pattern of public sentiment for ethical, fair behavior towards employees and other stakeholders such as suppliers, communities and investors."
The survey’s top 10 issues that members of the public identify for business:
- Pays a fair, living wage
- Acts ethically at the leadership level
- Supports worker wellbeing
- Communicates transparently
- Provides benefits and work-life balance
- Supports workforce advancement and training
- Treats customers fairly
- Offers fair pricing
- Creates jobs in the U.S.
- Protects customer privacy
Here is the complete picture.
Interestingly, ethical leadership was ranked second. Recent disclosures of corporate misdeeds seems challenge whether businesses are, indeed, acting ethically. Moreover, the leaders of these businesses had a role in unethical behavior that costs million of dollars for the company and its shareholders. Consider the following.
Boeing: Boeing has lost more than $35 billion since 2019 following the crashes of two then-new Max jets that killed 346 people. For the full year 2024, Boeing logged a loss of $11.8 billion. I've blogged about this before and readers can learn more about my views here.
Wells Fargo: Wells Fargo has paid over $3 billion to resolve violations related to its sales practices and mismanagement of customer accounts. This includes settlements with regulators, lawsuits from shareholders, and payments for customer refunds. The Wells Fargo sales scandal resulted in $480 billion payout to shareholders. Readers can refresh their memory by going to my blog here.
TD Bank: paid a record-setting $3 billion to settle charges that it conspired to fail to uphold anti-money laundering (AML) controls, thereby processing some $670M in illegal proceeds from narcotics cartels. Watch a special broadcast on Ethicast here.
RTX(formerly Raytheon Technologies Corporation) paid $200 million to resolve 750 violations of the Arms Export Control Act and the International Traffic in Arms Regulations. (Read more here and here from Radical Compliance.) In much bigger news, however, RTX subsidiary Raytheon will pay more than $950 million to resolve charges of defective pricing fraud and violations of the Foreign Corrupt Practices Act.
There are, of course, many more corporate frauds during the recent paste, but these four illustrate the scope of those failures.
As for the survey of American views, it's important for a blog such as mine to mention the ranking of: pays a fair, living wage (#1); supports worker well-being (#2); provides benefits and work-life balance (#5); and supports worker advancement and training (#6). These deal with how the company treats its workers, which is an ethical issue. Also, the treatment of customers is highly ranked: treats customers fairly (#7); offers fair pricing (#8); protects customer pricing (#10).
If I were to highlight the ethical treatment of workers and customers with respect to ethical reasoning, it seems quite clear that ethical values such as fairness, compassion, empathy, and understanding would head the list. This gets us back to ethical leadership, which underlies all of these values.
Values of the Ethical Leader
I have blogged many times about ethical leadership, addressing the values that underlie good behavior of leaders that meet employee and customer needs. The ethical leader understands that positive relationships built on respect, openness, and trust are critical to creating an ethical organization environment. The underlying principles of ethical leadership are integrity, honesty, fairness, justice, responsibility, accountability, and empathy.
The ethical leadership scale, developed by Brown, Trevino and Harrison, helps to measure the elusive concept of leadership. It includes several behavioral characteristics of ethical leaders:
- Talk about the importance of workplace integrity and doing the right thing
- Set a good example
- Do not blame others when things go wrong
- Support employees' efforts to do the right thing
- Hold themselves and others accountable for violating the organization's code of conduct
- Give positive feedback for acting with integrity
- Keep their promises and commitments.
Organizations suffer when leadership does not set an ethical tone at the top. The employees may be ethical but acting ethically requires an ethical leader who supports such behavior, not a leader blinded by ambition or greed as occurred in so many of the financial failures of the early 2000s and more recently, those mentioned above.
Stakeholder Capitalism
R. Edward Freeman wrote a book, Strategic Management: A Stakeholder Approach, which argued that companies should focus on employees, customers, communities, and other “stakeholders,” rather than merely on shareholders. Building on the work of scholars before him, Freeman laid the foundation for what is now commonly called “stakeholder capitalism.”
It was not a popular idea. As Freeman put it, “no one cared.”
That context has changed. In the 40 years since Freeman’s book was published, companies have come under increasing pressure to address social problems, from racial and gender equality to environmental responsibility. The result: the world has caught up with Freeman’s thinking and his ideas are getting fresh attention. His book was re-released in 2010.
“He really is the father of stakeholder capitalism,” Kip Tindell, former CEO of The Container Store, told The BiGS Fix. “There's nobody I would rather talk to about this topic than him. I have spent a zillion hours talking to him about it, but there's still something refreshing and new every time.”
Freeman got it right. This is why issues built on a sustainability platform have become so important during the past ten years or so. As educators, we must consider whether to address issues related to the Environment, Society and Governance (ESG) as these are matters that today's students care a lot about, and they represent where our society is going, President Trump's agenda not withstanding.
Posted by Steven Mintz, aka Ethics Sage, on May 21, 2025. You can sign up for his newsletter and learn more about his activities at: https://www.stevenmintzethics.com/.