Ethics officers in all large companies?

Ethics officers in most large companies could be part of our near future

Emmanuel Lulin, Senior Vice-President and Chief Ethics Officer at global cosmetics giant L'Oréal, predicts we will soon be seeing ethics officers in most large companies.

Where once companies and other organisations could rely on the law for ethical guidance, nowadays the rapid speed of scientific and technical innovation is far outstripping the law’s ability to keep up, Lulin told a public presentation co-hosted by Professor Karin Lasthuizen, Brian Picot Chair in Ethical Leadership at Victoria University of Wellington, and Transparency International New Zealand.

Traditionally, he said, there would be a framework for such things as liability and how far you can go with an innovation.

But now, from artificial intelligence to cryptocurrencies, Lulin “could make a list for half an hour of the subjects where the law is absent or too late”.

This is unfortunate, he said, “but we cannot ignore it”.

As well as the pace of innovation, there is more at stake than ever before—in some instances “even the very existence of the human race”.

Consequently, “ethics becomes so important in the decision-making process”.

Lulin joined L’Oréal in 1999 as Group General Counsel for Human Resources and set up the Office of the Group Ethics Officer in 2007 under L’Oréal Chief Executive Officer Jean-Paul Agon.

He and the company are recognised as global leaders in business ethics.

Earlier this year, L’Oréal was named for the ninth time one of the world’s most ethical companies by the Ethisphere Institute, and Lulin has just been selected by the United Nations Global Compact as a  SDG Pioneer for Advancing Business Ethics. In 2015, he received the prestigious Carol R. Marshall Award for Innovation in Corporate Ethics from the Ethics and Compliance Initiative.

L’Oréal has more than 80,000 employees in 70 countries, with ethics officers in all of them.

Its code of ethics was not “laid down from above” but was drawn up with input from employees around the world, including ones in their 30s likely to be in charge in 10 years’ time, as “we wanted from the very beginning to have a code that reflects the thinking of the next generation”.

Lulin also got employees to okay parts of the code referring to disciplines other than their own.

“We’d give the tax guy the chapter on tax but also the chapter on sexual harassment. We’d give human resources the chapter that relates to discrimination but also the chapter that relates to marketing and advertising. So they understand that ethics covers all the areas of activity and as a senior manager they are not just in charge of their speciality. It concerns other areas too.”

The code is translated into 45 languages, as well as braille, so that every employee throughout the company may read it in their mother-tongue.

“Usually with such a translation you would send it to a big law firm and get their translators to do it,” said Lulin. “We decided to do the contrary. I gave it to people who are accustomed to translating novels, literature. I really think literature is more appropriate to express ethics in another language.”

The code was built on seven pillars: comfort in speaking up without fear of retribution; organisational justice with a quick and fair response to misconduct; openness of communication, with information easily shared; clarity of expectation (“I know what is expected from me”); tone at the top, with senior management leading by example; direct management leadership also by example; and trust in colleagues (“working together”).

These pillars sit in turn on four core ethical principles: integrity; respect; courage; and transparency.

Respect, for instance, for the customer and for the brand – in L’Oréal’s case a billion customers, a figure it aims to double.

“Where are these billion new customers coming from? They will come mainly from emerging countries and new economies. What characterises these countries is the fact they are very often – not always but very often – challenging on human rights and challenging on business practices and corruption.”

L’Oréal’s core principles and ethical culture will be integral.

Staff are trained to consider the principles in their day-to-day work and incorporate them into decision-making.

To embed them throughout L’Oréal, the company asked employees around the world to give it proverbs, maxims and quotes illustrating them in their own of the 45 languages spoken, and has now produced a book of them.

“So if you are working in New Zealand and want to talk to your colleague in Russia or Indonesia, you will find a proverb, a maxim, a quote that illustrates these principles and you will be able to say this in the language of your colleague.”

The book is simple on purpose, “but its significance is very strong”.

Lulin said the business case for an ethical culture is irrefutable.

It protects your reputation and assets, mitigates risks, and makes for better governance and running of your company.

At the same time, it gives meaning to your brand, generates trust, enhances employee engagement, and helps you attract and retain talent.

The perils for a company’s bottom line of ethical shortcomings can be seen in the cost to, say, Volkswagen of its emission testing scandal (US$18 billion) or Credit Suisse of its tax evasion (US$2.6 billion).

And Lulin had plenty of other examples.

He thought it “an enormous miss, a failure of the accountancy system” that when we appraise a company we look at the financial accounts but not “the most precious thing, which is the value of the culture of integrity.

“A company – public or private – that has a great culture of integrity is worth much more and is more sustainable than a company that has a weak culture of integrity”.

For Lulin, trust is the currency of ethics and to properly assess the value and sustainability of an organisation we should measure its ability to generate and maintain trust.

“We need the trust of our consumers, our employees, our suppliers, our shareholders and others,” he said.

Lulin did not suggest L’Oréal is perfect.

“I’m not claiming this company is absolutely great and we are super-ethical all the time. Like all organisations, we have a number of problems around the world. What I think is proper and good is the fact we address the issues.

“If you want to find a criteria for what’s different between organisations that are more ethical and ones that are less ethical, I would say it’s not the number of problems they have but it’s the sincerity with which the issues are addressed.”

Test your ethical thinking

In his presentation, Emmanuel Lulin gave the audience several ethical challenges to chew over, the most meaty being this one from the Moral Machine programme at Massachusetts Institute of Technology.

You are the manufacturer of a self-driving car and have to program it to respond to the following scenario. If the car continues on its current course, it will crash into a concrete barrier straight ahead, killing all its passengers: five women, including one elderly woman, a woman executive, a woman athlete and a woman doctor. You can program the car to swerve to miss the concrete barrier and save all its passengers, but in doing so it will hit and kill five men of the otherwise same social make-up who are on a pedestrian crossing after their go light turned green. What do you do?

To further complicate the scenario, Lulin upped the ante by making the passengers in the car a man, a homeless person and three criminals, while the people on the crossing are a pregnant woman, two other women and two male doctors, and they are now jaywalking, with their go light on red. What do you do this time?

The scenarios are a great conversation starter and you discover a lot about the people you are discussing them with.

Future Learning’s answer was for the manufacturer to pass such programming options on to the car owner, so the new technology would not alter the existing moral universe, as the self-driving car would behave in the same way as the owner would if driving the car themselves.

We were rather pleased with that.

How would you handle it?

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