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Center for Global Ethics
International Business for Christians, Muslims and Jews - Code of Ethics
A series of Interfaith consultations began in 1984 under the patronage of HRH Prince Philip, the Duke of Edinburgh, and HRH Crown Prince E1 Hassan Bin Talal of Jordan. Followers of the three monotheistic faiths Christianity, Islam and Judaism took part, under the auspices of St. George's House, Windsor and the Al Albait Foundation and the Arab Thought Forum in Amman. More recently Sir Evelyn de Rothschild has joined Their Royal Highnesses as a patron in this endeavour.
A group of distinguished members of the three religions convened periodically to deliberate on topics of common interest. Theologians, academics and prominent figures active in business and government were all involved. Conscious of and concerned about the effects of violent expressions of religious extremism not only in European and Muslim countries but throughout the world, the participants sought to highlight the importance of the shared moral, ethical and spiritual values inherent in the common Abrahamic tradition. Aware of the implicit danger of religious bigotry and the threats to the essential fabric of contemporary society, they placed a strong emphasis on the benefit of dialogue, forsaking stereotypical portrayal of each other. Constructive dialogue, difficult to conduct at the outset, developed as mutual confidence between the participants improved. A sense of purpose emerged as they recognized the need to overcome prevailing misconceptions and dispel longstanding misrepresentation. The consultations eventually culminated into consensus about a variety of topics including business ethics.
Recent consultations discussed an Interfaith code of ethics for international business, formulated in the light of the religious traditions of the three monotheistic faiths. Discussions of the terms of the code began in 1988, and were concluded at a meeting held in October 1993 in Amman. The provisions of the guidelines reflect the ethical basis indicated in the teaching of the three religions. The Declaration has been drawn up by a group of eminent scholars, clerics, and business people from the three religions following a comprehensive review of the teachings of their respective religions with regard to ethical issues in the conduct of business. They concluded that the Declaration should be based on the shared concern for justice, mutual respect, steward-ship and honesty.
The Declaration illustrates, in a practical way, that people of very different cultures or beliefs often have more in common than is sometimes apparent. It is hoped that the sense of the Declaration will be incorporated into Statements of Purpose or Codes of Conduct. It is offered on the understanding that it will help to facilitate expanding international economic activity, which is beneficial for harmonious international relations and prosperity.
Although the code does not attempt to cover all aspects of business behavior, it incorporates the best of contemporary business practice, as well as indicating the modes of good practice as enjoined by divine injunctions. It is recommended to adherents of the three faiths; and commended to leaders of international business, as well as teachers of business management; whether followers of the three monotheistic faiths or not. Special thanks go to Mr Simon Webley of the British-North American Research Association, for his work on the text.
A. ORIGIN AND PURPOSE OF THE DECLARATION
The globalization of business is well underway and growing. For instance:
- The volume of world trade is accelerating again. In 1992 it increased by 4.5% over 1991.
- Cross border investment for productive purposes is expanding even faster than trade. As a result, cross cultural business relationships are expanding rapidly.
- Stocks and shares of many of the world's largest enterprises are quoted on a variety of stock exchanges and their directors and staff come from many different countries.
This international expansion of economic activity is revealing some serious differences in approach to business operations among some of the major participants.
It was these differences, and the conviction that insights of the scriptures of Christians, Muslims and Jews had an important contribution to make to their resolution, that prompted HRH the Duke of Edinburgh, HRH Crown Prince El Hassan Bin Talal of Jordan and Sir Evelyn de Rothschild to invite a group of distinguished Christians, Muslims and Jews to attempt to draw up a number of principles which might serve as guidelines for international business behavior. The group met four times over a period of a few years and explored in some depth the different approaches to behavioral problems arising in business relationships.
Early in their discussions the participants realized that they had more in common than they originally thought and that the issues they were addressing were timely and important. Drawing on the rich traditions and values inherent in their respective faiths, a common approach was agreed which is set out in the Declaration. Its purpose is to set out an ethical basis for international businesses. It includes some principles and guidelines for practice to help business people, traders and investors identify the role they, and their organizations perform in the communities in which they operate. It also gives guidance in resolving genuine dilemmas which arise in the course of day-to-day business.
The group was particularly pleased that it could agree to issue and endorse the Declaration as it was conscious that the wide spread reporting of the rhetoric and activities by extremist adherents (at least in name) of their three religions had produced in the mind of the general public the idea that only disunity and conflict characterized relationships, including business relation ships, between those of different religious beliefs. The meetings of the group and the resultant Declaration indicate that whatever: their particular insight of the truth may be and it is acknowledged that there are differences they nevertheless all share a common heritage with a high degree of shared values. They also share a common moral basis derived from the Scriptures, which is as relevant today as it has been in the past. The need to relate this relevance to contemporary business issues was felt to be particularly important.
The participants were also conscious that, along with the growth in material prosperity in the industrial world, there is emerging in some quarters a value system which they believe is detrimental to the wholesome development of human beings: selfishness and dishonesty are tending to supplant generosity and integrity. As a result, there is evidence that morality and ethical standards are declining in their respective societies as exemplified by the wide reporting of dishonest and corrupt practices. Part of the; problem is an ambivalence concerning what is considered right and wrong and economic relationships have not escaped this influence. It seemed to the group, therefore, that a reiteration of shared ethical precepts in the form of this Declaration would help to sustain and improve the standards of international business behavior.
It was realized that the application of these principles may be more difficult to apply in some countries than in others because of the different degree of influence that religion has within a given society. Both Muslims and, to a lesser extent, Jews, generally operate within a social atmosphere that is conducive to the influence of their religious precepts being heeded, and where it is normal for moral and ethical concerns to be discussed within a religious ethos.
Christians generally do not enjoy this type of support and guidance. They are more dependent upon personal convictions which often have to be stated in a secular social atmosphere that has little sympathy with them. While the influence of Islamic institutions is more open and obvious, and that of Judaism still strong, the influence of Christianity has come to be personal and subsumed.
All agreed that, in the final analysis, the application of ethical principles is a maser of personal judgment rather than rules; a code can only set standards. It follows that the Declaration (or indeed any code of ethics) is not a substitute for corporate or individual morality, it is a set of guidelines for good practice. It is hoped that it will contribute to maintaining high standards of business behavior. as well as a better public understanding of the role of business in society. Some suggestions on how it can be used are contained in an Appendix.
It is necessary to explain something of the method that has been adopted in producing the Declaration. It draws on the experience of group members and on a number of existing guidelines and codes of conduct which have been used by international organizations such as the International Chamber of Commerce. Individual company codes of ethics, too, have been used where appropriate.
Ethical issues in business can be classified under three general headings:
- The morality of the economic system in which business activity takes place.
- The policies and strategies of organizations which engage in business.
- The behavior. of individual employees in the context of their work.
In the Declaration, the distinction between these categories is recognized, and there may indeed be other levels and sub-categories, but the three selected are those where moral issues most commonly arise.
A second distinction which needs recognition is that while some ethical issues affect all types of industrial and commercial activity, there are others which are distinctive to a particular sector. The outstanding example is that of the provision of financial services (e.g. banking).
A third distinction must also be acknowledged. The legal frame work in which business is conducted is not the same in all countries. For instance, the duties of company directors vary considerably and employment law e.g. legal notice of dismissal or redundancy is hardly ever the same in any two countries. While recognizing that national law applies to a company registered in that country (irrespective of the nationality of its owners and managers), and that it should be scrupulously followed, the laws on the same matter may be less demanding in, say, the country of the parent company. Some areas of business practice which are covered by law in one country may be the subject of self administered regulation or of voluntary codes of behavior. in another. Therefore, some subjects covered by the Declaration I may, in practice, already have the force of law in some countries.
II. THE DECLARATION
The Declaration on International Business Ethics is built on the precepts of the three religions represented at the dialogues. Christians, Muslims and Jews have a common basis of religious; and moral teaching: they are the People of the Book. Four key concepts recur in the literature of the faiths and form the basis of any human interaction. They are: justice (fairness), mutual respect (love and consideration), stewardship (trusteeship) and honesty (truthfulness).
1. Justice: The first principle is justice which can be defined as just conduct, fairness, exercise of authority in maintenance of right. All three faiths agree that God created the world and that justice must characterize the relationship between its inhabitants. Fair dealings between each other and between believers and others is constantly reiterated in the Scriptures as are God's justice and mercy in his dealings with mankind.
2. Mutual Respect: The second principle mutual respect or love and consideration for others is also inherent in the moral teachings of each religion. The word love has many meanings in most languages. But, as is clear from the reading of Scripture, the God of justice and mercy is also the God of love. What Scripture expresses as love is here rendered as mutual respect or reciprocal regard "love thy neighbor as thyself" that exists between two individuals. The application of this has come to mean that self interest only has a place in the community in as much as it takes into account the interests of others. My neighbor in the business context can be defined as any person (individual or corporate) with whom the organization comes into contact in the course of business life. Of paramount importance in this respect is the employee.
3. Stewardship: A third principle shared by all three faiths is that of stewardship (trusteeship) of God's creation and all that is in it. It is a richly diverse universe: "...and it was good". The Scriptures testify to the beauties and wonders of nature as signs of God's goodness and providence. Man is set over it all with delegated responsibility a steward charged with its care and proper use for which he will have to give account. The Scriptures know nothing of absolute ownership: man is God's trustee.
4. Honesty: The fourth principle inherent to the value system of each of the three faiths is honesty. It incorporates the concepts of truthfulness and reliability and covers all aspects of relation ships in human life thought, word and action. It is more than just accuracy, it is an attitude which is well summed up in the word "integrity". In precepts and parables, Scripture urges truth and honesty in all dealings between human beings. It is stressed that dishonesty is an abomination and bearing false witness breaches the basic laws of God. In business dealings, "true scales, true weights, true measures" are to be used. Speaking the truth is a requirement for everyone.
The following guidelines are classified under the three general headings referred to earlier.
1. Business and Political Economy
All business activity takes place within the context of a social, political and economic system. It is recognized that:
- Business is part of the social order. Its primary purpose is to meet human and material needs by producing and distributing goods and services in an efficient manner. How this role is carried out the means as well as the ends is important to the whole of society.
- Competition between businesses has generally been shown to be the most effective way to ensure that resources are not wasted, costs are minimized and prices fair. The State has a duty to see that markets operate effectively, competition is maintained and natural monopolies are regulated. Business will not seek to frustrate this.
- All economic systems have flaws; that based on free and open markets is morally neutral and has great potential for good. Private enterprise, sometimes in partnership with the State, has the potential to make efficient and sustainable use of resources, thereby creating wealth which can be used for the benefit of everyone.
- There is no basic conflict between good business practice and profit making. Profit is one measure of efficiency and is of paramount importance in the functioning of the system. It provides for the maintenance and growth of business, thus expanding employment opportunities, and is the means of a rising living standard for all concerned. It also acts as an incentive to work and be enterprising. It is from the profit of companies that society can reasonably levy taxes to finance its wider needs.
- Because the free market system, like any other, is open to abuse, it can be used for selfish or sectional interests, or it can be used for good. The State has an obligation to provide a framework of law in which business can operate honestly and fairly and business will obey and respect the law of the State a in which it operates.
- As business is a partnership of people of varying gifts they should never be considered as merely a factor of production. The terms of their employment will be consistent with the highest standards of human dignity.
- The efficient use of scarce resources will be ensured by the business. Resources employed by corporations include finance (savings), technology (machinery) and land and natural renewable resources. All are important and most are scarce.
- Business has a responsibility to future generations to improve the quality of goods and services, not to degrade the natural environment in which it operates, and seek to enrich the lives of those who work within it. Short-term profitability should not be pursued at the expense of long term viability of the business. Neither should business operations disadvantage the wider community.
2. The Policies of a Business
Business activity involves human relationships. It is the question of balancing the reasonable interests of those involved in the process: i.e. the stakeholders, that produces moral and ethical problems.
The policies of the business will therefore be based on the principles set out in the paragraphs above and in particular:
- The board of directors will be responsible for seeing that the business operates within the letter and spirit of the laws of the nations in which it works. If these laws are rather less rigorous in some parts of the world where the business operates than in others, the higher standards will normally be applied everywhere.
- The board will issue a written statement concerning the objectives and operating policies of the organization, and their application. It will set out clearly the obligations of the company towards the different stakeholders involved with a business [employees, shareholders, lenders, customers, suppliers and the community (local and national government)].
- The basis of the relationship with the principal stakeholders shall be honesty and fairness, by which is meant integrity, in all relationships, as well as reliability in all commitments made on behalf of the organization
- The business shall maintain a continuing relationship with each of the groups with which it is involved. It will provide effective means to communicate information affecting the stakeholders. This relationship is based on trust.
- The best practice to be adopted in dealings with particular stakeholders can be summarized as follows:
- Consider the social consequences of company decisions e.g. plant closures, choice of any new sites or expansion of existing ones, and the effects on smaller businesses.
- Not tolerate any form of bribery, extortion or other corrupt or corrupting practices in business dealings.
3. Owners (Shareholders)
The shareholders undertake the risks of ownership. The elected directors
- Protect the interests of shareholders.
- See that the company's accounting statements are true and timely.
- See that shareholders are kept informed of all major happenings affecting the company.
4. Conduct of Individuals at Work
The following are based on best ethical practice for employees in a
business. Employees of an organization shall:
- Implement the decisions of those to whom he or she is responsible which are lawful and in accordance with the company's policies in cooperation with colleagues.
- Avoid all abuse of power for personal gain, advantage or prestige and in particular refuse bribes or other inducements of any sort intended to encourage dishonesty or to break the law.
- Not use any information acquired in the business for personal gain or for the benefit of relatives or outside associates.
- Reveal the facts to his superiors whenever his personal business or financial interests become involved with those of the company.
- Be actively concerned with the difficulties and problems of subordinates, treat them fairly and lead them effectively, assuring them a right of reasonable access and appeal to those to whom their immediate superior is responsible. Bring to the attention of superiors the likely effects on employees of the company's plans for the future so that such effects can be fully taken into account.
THE USES OF THE DECLARATION
This Declaration is offered to business people, business organizations and those who advise companies as a basis for sound ethical business practice.
Relevant sectors of it can be adopted by corporations as an international standard of business ethics and be acknowledged as such in corporate Annual Reports.
To be effective, it needs endorsement at the highest level of business management and a means will need to be devised to make employees at all levels aware of its existence. Some ways of doing this are:
- Reproduce it as a simple booklet with a foreword from the Chairman.
- Include it in literature given to all new employees.
- Make it a subject in all internal training courses.
See that the topics contained in the Declaration are included in business training courses offered in colleges and universities. It also requires a method of seeing that its precepts are carried out.