THE OTHER day a City friend rang up and asked me to serve on his Ethics Committee. I was flattered, but not to the point of accepting. I regard committees as the practical alternative to work, and as for ethics, I do not take mine from a committee. They are a growth industry, all the same, and they have made Anita Roddick a rich woman. At Body Shop, the business she founded, they are the added ingredient.
Boots' bath essence may have bubbles, but only Body Shop's has the warm glow that comes from being kind to animals and sympathetic to the Third World. Now Body Shop itself finds its ethics doubted. It has come under fire in an American magazine called Business Ethics, which yesterday published an attack called "Shattered Image". It seems less shattering than some feared, but the mere prospect was enough to upset the pragmatic moralists who make prices in the stock market.
This week they marked Body Shop's shares down, and they had a point. As Body Shop's lawyers said in the course of an earlier tiff: "Many people buy Body Shop products specifically because of the high principles on which the company is known to operate." Doubt cast on those principles would overshadow the whole business. No added ingredient, no customers. To the rescue comes galloping the high command of the Green Army. Jonathon Porritt and Sara Parkin proclaim that though Body Shop is not perfect, it still sets an ethical example: "Which other company even thought of building a wind farm to cover its energy needs in the UK?" Wake your ideas up, Lord Weinstock. Not perfect, though? Poor Mrs Roddick, so ready to set everybody else to rights. She should compare notes with Brian Lassman, the assiduous general manager of a kosher hotel in Bournemouth. He got sacked for turning on the central heating on the sabbath. It just goes to show that however zealous you are, there is always a bigger zealot waiting to pounce on you. That is a worrying thought for the ethical investment managers - or, to put that more precisely, managers who tailor their investments to their clients' susceptibilities.
This business, too, has grown. It can keep your money out of armaments, or tobacco, or (until the other day) South Africa. People's ideas of unethical investment vary. In the same way, the Co-op offers you its own version of ethical banking. You can put your money on deposit there, secure in the knowledge that it will not be lent to fox-hunts. That will shake them. "Terrible news about the Pytchley, George. The Co-op has closed their account, and they're having to rough it at Coutts." Support services spring up. There is an Ethical Investment Service which assesses shares. There are consultants (I came across a firm called Integrity Works) who will help you with your ethics for an appropriate fee.
There is also an Institute of Business Ethics, which encourages companies to have ethical codes. Soon I expect to see ethical audits conducted by ethical auditors. Start your own firm now. I am worried by the notion of a boom in ethics. I expect it to lead to compliance procedures and committee work and the ticking off of points on codes and check-lists. These are no substitute for good conduct, any more than the Cadbury code for company directors is a substitute for good direction.
We had an example five years ago with the launch of the UK Ethical Index Fund. This was designed to meet three different objections. It would not invest in South Africa, or in the privatised services of local government, or in companies which made political donations. Whatever you think of them, these objections are a good deal more ethical than the man who raised the money. This was Robert Maxwell. Ethics provided the old wolf with his sheep's clothing. Others use them as a cloak of language, to cast around their preferences and their prejudices. They can be a loose fit. If I were to suggest that Mrs Roddick was planning to cover unspoilt countryside with large, noisy, ugly, inefficient generating plants, she might reach for her lawyer. Wind farms? Oh, that's different. Wind farming is ethical. A checklist that began with wind farms and went on to rainforests, whales and laboratory testing on animals would accord with many people's feelings. It plainly accords with Mrs Roddick's. That means that she is in tune with her customers, and that makes her a good retailer. It does not make her the arbiter of business ethics. They are not to be reduced to a list of fine feelings. Nor are they some kind of specialised discipline, to be left to professionals and experts - a kind of moral accountancy. If they were, businesses would be easier to run. Hence the temptation to look for a way out, through codes, consultants and committees, or if all else fails, by delegation. It cannot be done.
Businesses have their own ethical character, good, bad or not bothered. We can all recognise them. Sometimes, and dramatically, a business can lose its character and finds that to get it back takes longer. It happened a decade ago to Guinness - a decent company that went rotten at the top. That is where character is made and maintained. Salomon, the great New York investment bank, went through the same sequence, and was then pulled together by a new chairman, Warren Buffett from Nebraska, the plain man writ large. He gave his crew a simple test of business ethics. Ask yourself, he said, how you would feel if your actions appeared on the front page of your local paper, for your friends and family to see. Imperial Chemical Industries, by contrast, was given its character by its first chairman. "We are on trial," said Alfred Mond, "before the eyes of the whole world. We are not merely a body of people carrying on industry in order to make dividends, we are much more. British commercialists and British technicians will be judged by the success we make."
At times, ICI has had to remind itself of that. Marks & Spencer, which can claim to be our most admired company, once had to be reminded of its best asset. Several years ago the directors had proposed for themselves an incentive scheme that was a little on the questionable side. One shareholder destroyed it in one sentence. "St Michael", said Ralph Quartano, "must be on the side of the angels." It took no committee to tell them that, and they would not have found it on a list of sensitive good causes. It had to do with something deeper and more personal, with character and self-respect.
There is more to business ethics than being nice to trees.
*Robert Maxwell, Family and Associates: Our company on behalf of itself, its subsidiaries, directors, employees and agents is bound by a legal undertaking of confidentiality in relation to certain aspects of the business affairs (1987-1989) of the late Robert Maxwell. Please ensure that any editorial copy on this subject is referred to the DT's legal department for vetting prior to publication unless: (1) it is clear that the copy qualifies as a fair and accurate report of legal or parliamentary proceedings; (2) the material in the article is otherwise already in the public domain.
