What: A plea for more simplicity in the approach to ethics.

Why it is important: According to MIT Sloan, successful companies do not outsource their thinking and processes, do not rely on checklists, and do not make big promises. On the contrary, and as also shown in the IADS latest White Paper on sustainability, it is all about being transparent, explaining how money is made in a clear manner to all stakeholders.

Business leaders are called upon to act in a manner that is ethically and socially solid, in addition of course of being mindful of the bottom line. This can be complex, as they are measured through various KPIS: environmental, social and corporate (ESG) governance, diversity, equity and inclusion (DEI) commitments, corporate social performance (CSP) indicators. It can be tempting to process, set up guidelines, and make partnerships with third parties, in order to cope with this complexity.

MIT Sloan argues that on the contrary, simpler is better. This involves not outsourcing ethics, for instance, as shown by the case with Starbucks and Ethisphere, which did not prevent a social scandal in 2018 in the US. The article says that ethics need to be proprietary because they must be rooted in the company’s DNA, as exemplified by Patagonia, for instance.

Another way to address ethics with simplicity is to skip the checklists, algorithms and measurement tools. This is the best way to replace open conversations about ethics by a hamster race to strike the highest score possible. In addition, this can lead to losing sight on the big picture.

Finally, MIT Sloan recommends to drop the grand speeches and replace them by a full transparency, rather than obscuring reality with statements and measurement. The Social Impact Measurement Model from Deloitte is heavily criticized in the article, with the 75 measures and the “go big or go home” approach which does not help the topic. Uber or Pepsi were caught red-handed with big but shallow promises which anyways do not attract the younger generation. The article mentions Target which has consistently set near-term incremental goals, helping to show an honourable result after a few years.

Three ways companies are getting ethics wrong