Fidelis Winter 2015/2016 The Anatomy of an Ethical Lifestyle

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Editorial

Photo by Jesús Laveaga

Dear Reader, At Fidelis International Institute we have devoted ourselves to communicate about the latest issues in the business ethics field. For this reason, we have collected original articles from contributors around the world that are friends of our institution.

In this issue, we try to focus on an idea: Companies shouldn’t separate their corporate values from moral values, and being consistent with what organizations say and do is as important as creating value for its shareholders.

Our first article “Transforming the culture of the organization into the spirit of the organization” has a very interesting approach to organizational culture: shall we still believe that the culture of an organization is enough to help it to be successful? or should we go deeper and develop a spirit of the organization, providing it with a soul, a higher purpose?. This soul can be created in many different ways, being the religious approach one of them, but the principles shown in this article can be applied to universal ethical values, regardless of the personal beliefs of owners or shareholders of an organization.

This issue continues with the invitation to compare what’s legal, legitimate and ethical. Sometimes these terms get mixed-up and can cause confusion among some people, but there is a difference among them.

Sometimes, this difference is like a very thin line.

In Mrs. Sharon March’s article “The Anatomy of an Ethical Lifestyle: How to be fashionable forever”, she gives us some examples of ethical organizations that have been able to manage the balance between financial results and core human values. Mrs. March addresses also a very important topic in this article: Codes of ethics shouldn’t be just a document developed by an organization just to comply with certain trends in the corporate world, but should be a document that guides the behavior of every person related to the organization. The conclusions of this article make us think on the idea that everything is related in this world, even in the corporate world.

Finally, Mr. David Flageman asks if it would be worth for bankers to take an oath that could help them regain customer’s confidence in their institutions and set the beginning of a new era of culture within their profession in which they assume the responsibility they have with society.

I sincerely hope that you enjoy this issue as much as we enjoyed putting it together.

Vicente Arancón Executive Director Fidelis International Institute www.fidelisinstitute.org

Contents 5 Transforming Via degli Aldobrandeschi 190, Rome, 00165, Italy Tel. +39 06 6654 3707 www.fidelisinstitute.org

the “Culture of the Organization” into the “Spirit of the Organization”.

21 Has the Time Come for

Bankers to Take an Oath?

By David Fagleman, Research Associate, ResPublica

By Armando Del Bosque, His Way at Work

Editorial Committee Vicente Arancón Editor in Chief and Executive Director Michael Ryan President

Research Staff: Senior Analysts Christopher Oleson Rafael García Pavón Michael Augros José Ángel Agejas

9 Legal vs Legitimate

Photos in pages: 5, 6, 9, 10, 12-13, 16, 17, 18-19, 20, 21, 22, 24, and 25.

By istock by getty Images.

vs Ethics

By Dr. Alejandro Ordieres Sieres Professor of General Studies Department, ITAM

Junior Analysts Israel Camarillo Rubén Sánchez Alejandra Villalobos FIDELIS ETHICS REVIEW is a biannual publication of Fidelis International Institute, distributed directly by this organization with the address: Av. de las Fuentes 41-A, 4º piso, Lomas de Tecamachalco, Naucalpan, Estado de México, México.

Phone: 52 55 3685 2600 ext. 1013

15 The Anatomy of an

Ethical Lifestyle: How to Be Fashionable Forever

By Sharon D. March, Vice Chair at International R.W. Advisory Group and Ethical Advisor

E-mail: vicente.arancon@fidelisinstitute.org Webpage: www.fidelisinstitute.org Publisher: Vicente Arancón

Certificado de Reserva de Derechos al Uso Exclusivo del Título: En trámite. Número de Certificado de Licitud de Título: En trámite. Número de Certificado de Licitud de Contenido: En trámite. Design by: César García Pavón. Printed by Litografía Gil, S.A., Calle Tolteca Nº 169, Col. San Pedro de los Pinos, Deleg. Álvaro Obregón, México, D.F., C.P. 01180 Phone: (55) 5273 0507 www.litogil.com.mx The articles represent the personal views of their authors, which does not necessarily match , those of the publisher. The liability is limited to the amount the acquirer paid for the magazine. This journal is published with the support of its sponsors.

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Transforming the “Culture of the Organization” into the “Spirit of the Organization”.

By Armando Del Bosque, His Way at Work

The “culture of an organization” is to the “spirit of an organization” what the soul is to the spirit in a human.

Introduction The difference between “the culture of an organization” and “the spirit of an organization” is its level of consciousness. An organization with a high level of consciousness will know why it exists and hence, it will have a purpose way beyond “making money” and it will actively (consciously) pursue it. Organizations are basically made out

of people and assets much in the way a human is made out of a spiritual soul and a body. In this article we go from the individual to the organization, both as living organisms, both with the potential for being spiritual, for being conscious, which in turn gives them direction and meaning.

Soul and spirit There is quiet a bit of literature on soul and spirit but in general there is a consensus that soul means “life”. That is, that the soul (the life) of all living things is what holds living creatures together.

According to St Thomas Aquinas what differs human souls from the rest of the souls is that they have intellect and free will. Those two chief faculties make the human soul a spiritual soul, and since the spirit is eternal, our spiritual soul is immortal.

Spirit comes from the Latin Spiritus which means “breath”.

When we use our intellect to seek God and our free will to love God, we are exercising our spirituality. www.fidelisinstitute.org

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You can learn more about the above at http://www. cts.org.au/2000/soulsandspirits.htm When we seek God (through our intellect) and love God (through our free will) our spiritual soul finds its purpose of being. In a similar way, when we use companies as platforms to seek and love God, such companies also find their purpose, their true and ultimate purpose and thus, they develop their own spirituality, transforming the “culture of the organization” into the “spirit of the organization”.

If we don’t use our intellect to seek God and free will to love God, our soul is still spiritual but we are just not exercising our spirituality, we can say that

our spirituality remains dormant (waiting for the “right conditions” for it to transcend). In the same way, companies that have not yet realized their true purpose may survive, maybe even thrive (in a material sense) for a while but will not transcend until they fulfill the reason they were created for: to be a platform to reach God with the use of intellect and free will of its people.

We can say, that the “right conditions” means God’s Grace, which awakens our spiritual soul by instilling the Holy Spirit in us. Thus, our spirituality is that part of humanity that “connects with” (knows and loves) God, who Himself is Spirit….

Organizational culture and spirituality Humans do not HAVE souls but instead ARE souls, spiritual souls (AND bodies). Much in the same way, companies, which in turn are made out of humans (AND assets), ARE a collection of souls.

This is, the soul is to the human it lives in, what the people are to the company they work in. And that’s why people are the soul of the organization and assets can be compared to the body. So when we say that employees are the most important “asset” of the company it would equate to say that our soul is the most important part of our body…, Using this analogy, a company can go from just having an “organizational culture” to becoming “spiritual” if (at least some of) the spiritual souls that compose it and run it (employees and owners) transcend by realizing their true purpose in life: “to search for and love God” and this is best manifested when those spiritual souls (humans) care for one another.

When it comes to Organizational Culture, “We either control it and shape it or, it ends up controlling and shaping us…”.

From a purely Organizational Culture stand, we can say that an organization will have a rational (knowledge) side, one that operationalizes and creates economic and/or financial value and a free will (to chose to do “the right thing”) side. This

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is equivalent to taking an individual human soul to a company level, where the “spiritual soul” is dormant, waiting to receive the Grace of God. It is when the Grace of God touches the organization that it begins to use its intellectual capacity to “know its employees better” and free will to “love and thus care” for its employees (which means also their families and any person that comes in contact with the company), it transcends from “organizational culture” to “spirituality”.

Traditional definitions of organizational culture talk about a series of common assumptions, values and beliefs that are reflected in how people behave. It includes having certain morals and doing the “right thing”, maybe even “not breaking the law”. To some companies everything goes as long as it is legal, or better yet, as long as you can get away with it, or think you can… (see recent Volkswagen case or further back the Enron case).

It is when we talk about spirituality or the “spirit of the organization”, that we talk about the ultimate purpose, about God, about humanity, way beyond the human law and morals, more into the sublime, which, of course includes not breaking the law, being environmentally friendly, socially responsible, etc.

From a dormant Spiritual Soul to a God seeking Spiritual Soul

From the Culture of the Organization to the Spirit of the Organization

Intellect and free will in an organization When an organization asks itself “why do we exist?” (purpose) and to the answer we ask again “why” and continue to repeat the exercisway past the “to make money…” answer, it eventually gets to some type of “to glorify God…” and this may be worded in different ways: “to create a better world…”, or “to improve people’s lives...”, etc. But for that to happen we have “to start at home” and that means using the company’s free will to love its employees. And how do we love our employees? Mother Teresa said that, if we want to love our employees, we have to know our employees, because we cannot love what we don’t know…. Knowing and loving our employees, means caring for our employees.

Caring goes beyond attending to the physical needs of the human being, it involves the emotional/intellectual needs in order to ultimately tend to the spiritual side (needs) of the employees.

When we as individuals care not only for ourselves, but reach out to our families and further more for our communities, we also go from selfish to selfless. www.fidelisinstitute.org

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So it is when we combine those two dimensions…: 1. human needs (from physical to spiritual going through emotional/intellectual) with 2. reaching beyond ourselves (from me to family to community) … that we generate a Spiritual Strategy for the organization and create Eternal Value or, in the business language Eternal Return On Investment (EROI).

All of the above is reflected in the Caring Matrix (below) we can use to develop the “Spiritual Strategy” of an organization: His Way At Work’s Caring Matrix

EROI

Community tLocal tNational tGlobal

Just like for those plants to thrive, we need to remove the soil, air it, pull out the weeds and take care of pests, for the Caring Activities to thrive, we need to make sure the organization has a clear purpose, mission and values, all tied up and clearly communicated throughout the organization.

Summary A human being is more that a body, the life within is called a soul and further more a spiritual soul if the two differential characteristics of humans to other living organisms (intellect and free will) are exercised to seek (knowing and loving) God. Much in the same way, a company can be considered a living organism (a “colony of humans”) and it is more than it’s assets, the life within is called its people who by using their intellect and free will to seek God develop the “spirit of the organization”.

Families

Employees

Neighbors

Needs

The “culture of the organization” can be likened to a house backyard: it will have plants. The question is whether it will be a beautiful garden or one full of weeds and thorns and that will depend on how much care we provide to it.

Physical

Emotional

Spiritual

Inside of the Caring Matrix we find the “Caring Activities” which fall into one or more quadrants within the Matrix.

As examples of Caring Activities, companies can provide for their employees: healthcare (in the lower left quadrant), marriage retreats (in the middle), prayer groups for employees (lower right quadrant) etc.

There are dozens of Caring Activities and they are like seeds in your backyard, which become a beautiful garden if you nourish and look after them. www.fidelisinstitute.org

In order to prompt people to use their intellect and free will to know and love God we need to know and love people. We do this by caring for them at a physical, emotional/intellectual and (ultimately) spiritual dimension. To achieve that we use Caring Activities but for the Caring Activities to take hold they need to be equally “owned” by all those who work in the company.

This requires some prep work, which includes having clear Purpose (why the company exists), Mission (what the company does) and Core Values (how the company behaves) statements that are linked to each other and profusely communicated throughout the organization.

The end result will be a company’s Spiritual Strategy, which will go further than the “culture of the organization” and lead to the development of the “spirit of the organization”.

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Legal vs Legitimate vs Ethics

By Dr. Alejandro Ordieres Sieres Professor of General Studies Department, ITAM

Every society is a complex web of relationships.

People with different views and different purposes often interact together seeking common goals. Now, what would happen with a society that does not have common rules? How can one walk in the streets of a city without rules that indicate the right of way between cars?

To Friedrich Von Hayek, Nobel Prize in Economics, social and moral standards are conventions and “general observance of these conventions is a necessary condition of the orderliness of the world in which we live, of our being able to find our way in it, though we do not know their significance and may not even be consciously aware of their existence.”1 The general function of rules is to serve as a guide to behavior or actions that must be followed in order to achieve the desired outcome.

A norm serves as a model or an invitation to perform an action and, at the same time, acts, through fear of punishment that would follow on the violation of the norm, as a deterrent principle. Both functions are intended to facilitate the order of the world in which we live and as a way to a healthy coexistence and to prevent the occurrence of conflicts or situations that endanger social harmony.

To ensure human coexistence there are different types of norms: social norms, religious norms, moral norms and legal norms. They all seek to guide human behavior in its various dimensions: social, religious, personal and legal.

Law as a social guide Law is the social norm for excellence because it expresses, clearly and concisely, what is expected from citizens. Thomas Aquinas defines law as “the dictate of reason in order to the common good, promulgated by who has the care of the community.”2 Social norms, especially legal norms, adapt themselves to a pattern of coexistence that reason discovers as the best for itself and have as their main purpose the good of society. www.fidelisinstitute.org

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standards of expected behavior as well as a punishment for non-compliance, that is, sets limits on the behavior of public servants and guides them in their activities.

Therefore, law is not a random act or the arbitrary desire of a representative majority. Instead, law arises from the need to regulate social life in order to achieve the common good that is an asset that can only be achieved as a society. The law comes from of a social group that seeks to interact for mutual benefit and, because of this, society gives itself norms to facilitate its common goals.

Normally, when we speak of laws we mean the positive legal norm but in reality, what has been said, can be said of any rule. In fact, the norm that becomes positive law is often only the explanation of social or moral standards and, in some cases, religious. “Civil law seeks to protect the rights of each individual but not as an isolated being, rather as a member of the community to which he belongs. Human rights and individual guarantees are only examples of civil laws that protect some social customs historically given as moral and religious norms that have defended, without been written, the human person. Civil laws are rooted in a living society that creates them.”3 Some rules are aimed at certain groups in society who are called to perform specific functions within it. Such is the case of public servants on whom are imposed burdens and responsibilities inherent in the nature of their job. The rules governing the behavior expected of public servants are necessarily demanding, since they manage public resources. The legal framework establishes www.fidelisinstitute.org

However, “to rely too much the ethics infrastructure on legislation has its drawbacks, it tends to encourage the search for minimum compliance: the implementation of the sanctions, despite being necessary, is designed more to discourage undesirable behavior that to promote desirable.”4 Moreover, since law depends on its objectivity and adherence to what is stated or contained therein, law appears to have a little flexibility for the daily management of ethical issues. Also it seems to be insufficient because it can’t cover all possible cases of the daily exercise of common life.

Law and ethics are two related worlds but they are not necessarily the same. In fact, ethics is broader than law because it goes beyond, where law can’t reach and gets into intimate and private spheres.

Many actions are not regulated by law but are still subject to an ethical evaluation.

Morality and immorality of law Moreover, laws can sometimes be immoral and there are many examples in history: slavery was legal in several US states before being abolished throughout the union in 1865 by Abraham Lincoln; in the same way, it was illegal in some states of the country, that black people share public spaces with white people, in Nazi Germany it was illegal to help the Jews in any way; etc. Great characters of history as Gandhi, Martin Luther King, Nelson Mandela, among others, opposed legal, but immoral, regimes.

The legitimacy of a rule does not depend on moral goodness or evil but in its legal validity. If a rule is part of the legal system of a country, or at least, not against it, we say that this rule is legal; otherwise we affirm that it is illegal. Someone could argue that the claim of moral legitimacy is built into the concept of legal validity. This may be so, and even somebody could argue that society can’t permit something harmful to itself, “but a claim of moral legitimacy is not yet moral legiti-

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macy. On particular conceptions of legal validity, laws are valid only if they are morally legitimate or only if they are just.”5 In other words, to affirm than an action is legal does not mean it is morally good or socially practiced.

Given that, legality and morality are not necessarily the same thing, and the fact that a norm can be morally good or bad, raises the problem about its moral legitimacy. Not everything that is legal is legitimately good even if, in some cases, some rules help society to have a peaceful coexistence. For that reason, we must be prudent and not easily extract ethical valuations of legal judgments.

Someone can act according to the law and still do morally questionable acts and, on the other hand, someone can break a law and, despite that, act ethically.

Many actions do not break any legal regulation but offend the moral sensibilities of society because they go against an ethically acceptable behavior. Society often fails to distinguish between the legal and the moral and believes that laws should punish evil beyond any physical evidence or what the laws dictate. Likewise, many CEOs may think that if there is no law prohibiting a specific action then, therefore, one is allowed to do it. Although legally the latter is true, this does not imply that legality of an action involves ipso facto, as an inevitable consequence, its moral goodness or at least its ethical neutrality.

Recent scandals that have occurred in Mexico to properties of the ruling class of the country can be better understood in light of this. Indeed, them can fully meet the requirements of the law and therefore not be criminally prosecuted and yet these acts can be, at least, highly questionable from an ethical point of view.

Moreover, it is impossible for law to cover all aspects of daily actions. An omnipresent law would eliminate the individual freedom and lead to the inability to memorize each and every one of the norms for compliance. To pretend that what is moral is precisely what the law allows and that what is immoral is just what it prohibits,

it is a way to reduce ethics to the field of law, confusing principles and common spaces that are not equivalent.

Unlike the moral norms that claim for themselves a sense of universality, “the law depends on the Constitution of each country. The rules proposed are heteronomous and are only fulfilled to avoid punishment that comes from its non-observance.” 6 Moral standards pretend to be above any law and have validity beyond the legality or the acknowledgment of their claims.

To pretend that law is what makes social morality, or to think that mutual agreement, where the rules come, is beyond evil or good, or that good and evil are determined by the human will, is to eliminate ethics as a categorical imperative that imposes norms upon the will unconditionally. The consequences of this view can destroy humanity because it will be enough, with the agreement of the majority (free or manipulated), to justify any type of crime or contempt to human dignity. Do not forget, for example, that slavery was legal and approved by the majority or that Jews were legally hunted in many regimes throughout history.

To hope that law is what builds social morality is to pretend to cancel morals as a different human dimension and to be subjected to the force of the majority or, worse, to the will of minorities who manage to impose their own views. Legal is not the same as legitimate and is not the same as moral. On the other hand, to claim that law is a-moral is to pretend to eliminate an essential dimension of the human spirit that feels reality as good or bad, as noble or vile7 , and to reduce it to a mere democratic act (in the best case), id est, an invention of social control.

Moral, ethics and law are closely related but different. All of them regulate human and social relations. “Moral, that refers to individually accepted values, becomes social morality when they become part of the culture of a society”8 and tends to form part of the law that states, with the strength of its “imperativeness, the moral values that society considers necessary for the order, subsistence and development. Therefore, it has been said that law is the leading social morality.”9 www.fidelisinstitute.org

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But unlike morality and ethics, law has not as its main purpose the improvement of the individual as a human being, but seeks to promote and defend peaceful coexistence of men in society. So it protects, and as it has been said above, only those values that are considered indispensable for human coexistence through established legal rules that are mandatory through the sanction of the state.

The danger of laws is that they give us the illusion of leading a moral life just because we comply with the general minimum required. Rules, regulations, certifications, etc. just give us the bare minimum to coexist based in bad past experiences. Having said that, it’s clear that the main purpose of law and regulations is to assure a peaceful coexistence, meanwhile ethics and moral look for the inner good of the people as human beings.

It is true that many people see in morality the foundation on which rests the validity of the law, because, according to a customary view, making possible the moral (considered as social customs) is a legal goal. And that’s true, law has his origin in the morals of people but it is not limited to it and, a lot less, in today’s multicultural societies where the sources of morality are sometimes extremely different. According to legal positivism, there is no moral foundation of law based on the goodness or badness of the norms but they are founded in the convenience for society of what law is prescribing. From this point of view, law no longer judges the goodness or badness of human acts, but their legality or illegality. Validity is an institutional fact, it depends on shared understandings. But nevertheless, it is quite plausible to suppose that cultures would include a shared understanding of moral legitimacy as a condition of legal validity, even if such a condition is not a formal requirement for having a shared understanding about valid law. As Arthur Applbaum, Professor of Political Leadership and Democratic Values at Havard Kennedy School, said: “what a culture considers to be morally legitimate is not, by itself, morally legitimate. Cultural understandings about moral legitimacy [also] can be mistaken.”10 www.fidelisinstitute.org

Let’s say it one more time: legal is not the same as legitimate. Not everything that is legal is honest and vice versa, not all that is honest is legal. Moral and law in modern legislation have suffered some separation in the foundations of each science even if in the imaginary of society, still prevalent the idea that both share the same sources and, therefore, what is legal is also honest.

Regulations, certifications and rules in business life.

Even if law and morality can agree on the content of an order, they differ in how they demand its realization. Law uses coercion and penalties established by the intervention of a judge who judges the act issuing a condemning or approving sentence; ethics, instead, interpellates personal conviction and personal conscience. Rules, regulations and certifications can be deceived or misinterpreted by those seeking to reach personal goals. Moreover, law only operates when there is a judge or a person that monitors or reports violations to the legal regulations, Habermas believes, for example, that law is not effective unless most people obey it not because they are coerced or bribed to do so but because they accept the moral authority of the law.

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for regulators and legislators as markets have become increasingly difficult to regulate.

So, even if regulations, certifications and general regulatory ethics, are important, they fall short.

Human actions are more complex and varied than the law can foresee. To remedy this lack, the professional world has introduced codes of ethics to serve as guide an orientation there where the law does not say what to do.

However, with the growing variety of cultures and world views that make up modern societies, governments seek to regulate some aspects of practical and social life. The fields in which ethics and morals are not always private or intimate but ascend to the category of public events whose importance should be regulated by the state through the law. This has required the existence of regulatory ethics that is a body of law and practical philosophy that attempts to govern the conduct of enterprises and his executive officers through regulatory agencies. Because of his legal character, it addresses concrete issues like bribery, whistleblowing, transparency, freedom of information, etc.

Regulatory ethics raises new fundamental questions about the economics of business models, organizational strategies, sustainability, regulatory frames, market structures, etc. Accumulation of power on behalf of some great corporations and the inexistence of borders in business that cause the migration of factories to less regulated countries accentuates the inefficiency of the law to protect individuals from large powers that can affect the everyday life of society. The extremely rapid transformation of markets and the increasingly more complex way of doing business poses a challenge

Codes of ethics have emerged on the contemporary economic, social and political landscapes as subjects of intense interest as a way to “regulate” new standards of behavior beyond what is required by law. “What all ethics codes have in common is the belief that those whose behavior a code is designed to guide have ethical responsibilities, obligations, rights and duties. Where codes typically differ is in their understanding of the nature of those responsibilities, obligations, rights and duties.” 11 To institutionalize ethics within corporations, Milton Snoeyenbos suggest that top management should articulate the firm’s values, adopt a code of ethics applicable to all members of the company, set up a committee to monitor compliance and enforce the code, and incorporate ethics training into all employee development programs,12 as a way to integrate ethics in company’s life.

Until very recently, it was widely assumed that regulation of commerce was the responsibility and the prerogative of the nation state. “In the industrialized world regulation imposed by the state was the standard method of ensuring fair competition, respect for fundamental human rights, the distribution of wealth generated by economic activity in accordance with emerging principles of distributive justice, the control of criminal economic activity and the protection of the natural environment.”13 Globalization took away the state’s ability to perform these functions.

Moreover, the thirst for profit has led companies and individuals to push the boundaries of what is legal and permitted. Corporations are now free to seek out those environments in which the laws in place provide the most favourable condiwww.fidelisinstitute.org

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tions for maximizing profits. Poor countries are persuaded by large corporations to create favourable legal environments with the fewest regulatory constraints for them to conduct their business.

Reducing regulatory burdens has become a powerful bargaining tool for governments’ intent on securing existing economic activity and luring new investment. Sanford F. Schram describes this attitude as a “race to the bottom” referring to the competition between states in the American Federalism: “The ‘race to the bottom’ implies that the states compete with each other as each tries to underbid the others in lowering taxes, spending, regulation...so as to make itself more attractive to outside financial interests or unattractive to unwanted outsiders.”14 Modern corporations are immersed in an increasingly complex environment that forces them to use all the resources at their disposal not only to grow, but also to survive. The most important resource of an enterprise is human capital. Every corporation is based on extensive human relations not only among employees but with the rest of society where the company develops itself.

It’s increasingly clear, that what makes endure a business or contractual relationship is the handling of the relationship between the different factors of production, specially society.

not just for profit. Law is not intended to regulate, and shouldn’t every human activity in society.

Thus, ethics and morals have an impact on social life, they are the deepest amalgam that gives unity and peace to every human group.

References 1

2

“Ordinatio rationis in bonum comunem ab eo qui curam

communitatis habet promulgate”. Thomas Aquinas. Summa Theologica, q. 90, a. 4.

3

Alejandro Ordieres y Carlos McCadden. Fundamentos para

una ética ciudadana. México: McGraw Hill, 2010, p. 91.

4

Guadalupe Ocampo García de Alba. Evaluación de la gestión

pública y la auditoría del desempeño. Propuesta para implantar una estrategia de evaluación del desempeño en la Contraloría Interna de la Cámara de Senadores del H. Congreso de la Unión. México: IPN – Escuela Superior de Comercio y Administración, Tesis de Maestría, june 2014.

5

Arthur Isak Applbaum. “Cultural Convention and Legitimate

Law” in Chicago-Kent Law Review. Vol. 74:2 (April 1999), p. 623.

6

Alejandro Ordieres y Carlos McCadden. Fundamentos para

una ética ciudadana. México: McGraw Hill, 2010, p. 117.

7

Cfr. Bochenski, Józef M. Introducción al pensamiento filosófico.

Barcelona: Herder, 1976, p. 76.

8

People are gaining power by the media and social networks and are making count their own values and opinions. Moral perception of society is changing the way corporations are presenting themselves to the world. Ethics matters and, sometimes, a lot. Unfortunately, many CEO’s and actionist look at ethics as a mean to increase their profits and solidify their brands, prostituting the value of ethics in the business world, approaching to a moral vision of business not for the importance of the issue for the survival of society and the company itself but for economic gain that a facade of social responsibility provides.

Frederick Von Hayek. The Constitution of Liberty. Chicago: The

University of Chicago Press, 1992, p.23.

Miguel de la Madrid H. “Los valores en la Constitución

Mexicana” en Los valores en el derecho mexicano. México: UNAM – Instituto de Investigaciones Jurídicas, 1996, p. 261.

9

Ibidem.

10

623-624.

11

www.fidelisinstitute.org

Wesley Cragg. “Ethics, Globalization and the Phenomenon of

Self-Regulation: an Introduction” in Ethics Codes, Corporations and the Challenge of Globalization. Wesley Cragg (ed.)

Massachussetts: Edward Elgar Publishing, 2005, p. 1.

12

Milton Snoeyebos and Barbara Caley. “Managing Ethics”, in

Milton Snoeyenbos, Robert Almeder and James Humber (eds).

Business Ethics. Buffalo: Prometheus, 2001, p. 143.

13

Ethics is not just good for business. As a society, we realize that law, norms and rules are not enough for a pacific and enriching experience of life. Ethics are changing managerial world but I wonder if it is because of the correct reasons and

Arthur Isak Applbaum. “Cultural Convention and Legitimate

Law” in Chicago-Kent Law Review. Vol. 74:2 (April 1999), p.

Wesley Cragg. “Ethics, Globalization and the Phenomenon of

Self-Regulation: an Introduction” in Ethics Codes, Corporations and the Challenge of Globalization. Wesley Cragg (ed.)

Massachussetts: Edward Elgar Publishing, 2005, p. 2.

14

Schram, Sanford F. After Welfare: The Culture of

Postindustrial Social Policy. NYU Press, 2000, p. 91.

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Photo courtesy Mrs. Sharon March

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The Anatomy of an Ethical Lifestyle: How to Be Fashionable Forever

to cut the link between action and consequences and thus eliminating societal responsibility, which is of course in itself unethical. We became an asset-holding society, which eased into a new-age aspect of divorcing morals from discussions and consequences from responsibilities!

By Sharon D. March, Vice Chair at International R.W. Advisory Group and Ethical Advisor

I had the honour to speak with many CEO’s, company owners, directors and other major stakeholders in a company’s health, their views are interspersed herein as well as academic underpinnings are presented. This meshes together the view from the trenches and an ideal world.

When corporate enterprise found “raiding” another successful company was lucrative, we entered the modern era of separating activities that were traditional from its roots. We now separate making money from money generating activities; we separate owning assets and the resulting profit generation. Not that it is bad nor that it is good but this has encouraged ruthless business practices and encouraged business executives

As a manager, Bernie Gross writing in All Business says, you have an ethical obligation to be a role model. A company often doesn’t see it that way; it is more to the tune of what the new-hire can do for the bottom line. Internally the corporations and small businesses should see the imperative to not just follow the large number of laws and regulations that are imposed unto them to ensure correct behaviour but also to adopt everyday ethics on a www.fidelisinstitute.org

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skin-level. The business world should not need a scandal to have, update or promote codes of ethics. It must mean living their code of ethics, checking that each and every level from doorman, mailroom or the top suite, live decent lives. As manager, director, boss or CEO, you ideally want people to emulate you and also to feel free to talk to you about the unethical behaviour they might observe. As a business person, you are doing yourself and society a great favour by setting high internal standards for life and not just for show, but a framed truth that hangs proudly in your hallway is what companies must head for.

Many businesses large and small have ethics classes, yet many businesses don’t live the daily ethics walk. When considering holding one, the class should be structured as an in-depth coverage of what ethics entails and how to live it; it forcibly must include ethics in an international context as some things change as we travel around the world and our workforces are increasing culturally mixed. The internal ethics should remain as the foundation rather than give the illusion to some that some parts of the ethics codes are negotiable. www.fidelisinstitute.org

Some authors of ethics materials suggest that humans are intrinsically evil, having selfish tendencies and a willingness to commit evil. One might disagree so true or not they go on to prove it. As two sides of a coin, we can be good or bad at any given point. We make good and bad choices. In business we have many competing motivations to take our decisions with and thus one (either) side will and must prevail; the question is which side will prevail. Imagine the person who has been a wonderful character throughout his career may slip-up and accepts a small gift before retirement and then loses his job and reputation for taking a bribe (in his mind it wasn’t). Good and bad are not true opposites but actually more similar to nuanced colours in a colour scale than black and white colour choices.

So how evil can a business be? A business cannot be evil but the people within will create this public image. It doesn’t take much for the darkness in us to rise to the occasion; just by subtle cues that guide our behaviour, unaware of the cues, business leaders go down the right path or the one that if found out would destroy their career and company.

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Ethical enterprise must balance two imperatives: actual financial results and core human values. As we grow into a seamless world, with interconnectedness, we literally grow together through technology and grow economically with trade treaties; allowing easier trading between countries and peoples thus becoming one market. This offers a great opportunity to rethink and start afresh, by asking the all-time favourite question about the spot we keep for moral values in corporate and economic activity. Do we have a spot for ethics? We get our economic information on tablets, smartphones, laptops and print media and it should be information that is sourced with ultra-high ethical standards from the media landscape. It is often lacking when we note personal opinions are used in stories, which will change the readers’ opinion on the news story being reported; and in the methodologies used to get stories. The media can and does influence markets; the media has an enormous ethical responsibility which is sadly often lacking.

One popular reason is that they are promoting their own political agenda, as well as the modern individualism, which requires the person to only follow what is good for him or her-self. Business leaders depend on news sources to make many strategic decisions. These decisions could and do affect jobs, national economic growth, and the companies survival. So with a smaller globe our ethics will be challenged even more.

religion will roost together, for the duration of the daily work contract business has with its employees.

When these no longer work in harmony with the employees that are your valued capital, they will simply walk out the door to an environment where they feel consciously or subconsciously that their values fit with the corporate ones you declare.

Business must have ethics; there isn’t an oxymoron there. Business needs ethics to maintain vital relationships from top to bottom even stretching to external structures. Corporate business ethics includes a few principles: striving for goodness, avoid the negative, value of life itself, fair distribution of good and bad, honesty in transactions and conversations as well as with individual freedom.

In conversations with many CEO’s and leaders, I keep finding a sharpening sense of greater understanding that ethics must and does play a significant role in their daily lives. In one of those conversations, I spoke with Hugues Delcourt, CEO of the BIL Group in Luxembourg and others. When an executive believes that pride, not to be confused with arrogance, is a way of living life then one can

Sadly we can see, time and time again, that there are economic enterprises that separate out moral values and to some extent religious beliefs (I maintain that we all believe in something somehow) from the corporate values. We cannot say that these values are separate if you are agreeing on the premise that ethical values are important so on that basis a business is less than good if it sees ethics as a single issue rather that incorporated within all aspects of doing good business, one that is profitable in all senses. How can a place where we spend most of our days and waking hours, be ethics-free zones? How can they be values-free zones, or even dead of any form of religion at all?

Management and staff believe in something and will act based on those values. You, the business leader, must ensure that the business values you hold dear are clear and thus ethics, morals and www.fidelisinstitute.org

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easily see that if the executive is proud of what he is doing, he will tend not to engage in unethical behaviour. A beautiful point because what happens in our children’s’ school and home education when we take out the classes that will qualify them for life rather than monetary success alone?

Yvon Chouinard, the son of a French-Canadian, born in the USA and the owner of Patagonia (the 3rd largest producer of outdoor goods in the world), and who lives the epitome of a socially ethical lifestyle. We can learn from some of his thoughts and one of them is the goals is not to sell clothes and neither to make money but it is about inspiring others by showing them that you can do great business with a “clean conscience” as he puts it.

Ethics is certainly proven to be able to make better profits and longer term success for all involved.

That is powerful. When the media says it’s an unusual attitude (Chouinard) it clearly indicates that the market doesn’t look for good business ethics!

Though ethics is the latest trend, there is no doubt that officially having a code doesn’t make your company automatically have a clean conscience but it allows your business to live it, feel it and breathe ethics every day. The list is long of the enterprises that had great written ethics credos and zero ethics in the boardroom! By his own account, Yvon Chouinard is “the least networked person on earth,” who doesn’t have neither a bank account nor own a cell phone or a computer; now that doesn’t have to be emulated to the detail but it certainly distinguishes him as a man with strong principles of wanting to stay pure. As said earlier in this paper, we are fed news and few realise that we must try to distil our own thoughts to be able to make economically healthy decisions for ourselves and our communities. His principle of being away and unconnected means he is unreachable when he needs his silence or peace. Shouldn’t we all try that sometimes? Being unconnected can hone our senses and clear our thoughts of all the business noise so we can effectively live a healthy life. I’m sure he’s no saint but this is good news none the less. A recent study from Columbia University discovered that we’re bogged down by more than 70 decisions a day; leading to the phenomenon called decision fatigue (your brain just www.fidelisinstitute.org

can’t process decisions anymore).With turbulent markets as we have today, a clear head is a great necessity!

Being sometimes disconnected allows you to read about good things people do and how to emulate it, and through clarity of mind business leaders can have better family lives, giving time to the future generation through their very own example of daily practice of a harmonious professional life. There’s no point in keeping such things as secondary when if we were honest, the future generations would think our work life fabulous if we had only told them that living in harmony with our jobs and family is ethical and thus also great for our business of being on this planet!

Business stakeholders don’t have to be angels to be ethical. As executives rise in power one feels “above” good conduct, by paying less attention to the crucial ethical view, and takes on risky atti-

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what culture we have. To understand why ethics is applicable to each person is to understand that the underlying principles are the foundation of good character and in the business world ethics does not change by sector, industry or level of employment but do require a different application.

The way in which ethics is applied will differ slightly and yet the similarities and underlying points will remain the same such as an expression of trust and mutual consensus (benefit) with a contract.

An enterprise, whether it is financial services, service provider or intellectual services, private sector or public sector, it needs to be managed by managers and leaders who understand the moral implications of their decisions. That all their decisions whether professional or private, will definitely impact their companies, the shareholders and stakeholders, wives, husbands, children and jobs. Morals are not for “other types of people” or only at work but really living a decent life should be normal; walking the talk so to speak within an ethical template. With technology following us all, business closets must be truly clean. If hacked what would your accounts show? tudes, which lead from being lucky to the next level of wrongful conduct. Some of the CEO’s I spoke to felt that they are ethical. In context for sure historically leaders have gotten away with ruthless behaviour. It was even expected of them. Leaders today must keep up with the fast paced business world and keep things running smoothly but must also cleanout bad habits and any wrong doers in their midst. Keeping tabs on what’s going on is vital but at times there’s the limit; keep the mind lucid, the heart in the right place, the ethics above board, the decisions equitable and good and so as a leader you’ll find that you won’t find your picture on the famous front page for the wrong reasons.

Business can agree that it has an obligation to be loyal towards employees, shareholders, stakeholders and clients within reasonable limits, to be honest when executing contracts, to be trustworthy with agreements and to keep promises and agreements whether verbal or written. Just as we are ethical or not, no matter where we live or

I hear so many executives say that morals and ethics are not easily compatible with everyday business. Some reasons are that it slows them down, they feel they have to be ruthless or even their own rules are just on paper. Still others have squinted eyes as they sit in my lectures and a light bulb goes on as they see that it is truly possible and very easy to have mechanisms in place to make automatic ethical reflections at decision time and at any time. Taking ethical actions all the time sets a wonderful example, which is so rewarding for colleagues on many levels, and allows the CEO to be confident that his / her company is in good hands even in the furthest corner away from his supervision. Those employees who have expressed second thoughts about their organisations’ behaviour (in reality the people making decisions) not just a logo without a face, they find an inner discord.

They decide to take things in their own hands and act on their own ethical credo as unofficial as a CEO might think, it’s still very real. Others simply change organisations to another employer in the hope of finding inner peace. This peace simply www.fidelisinstitute.org

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means that the work world shares their values and they happily work for a boss where this is the case.

Our ethics follow us home as well as at work.

How can employees emulate seniors when as a director one had an account on such sites as “Ashley Madison” (lately in the news for encouraging unethical behaviour) which has recently had their client list made public or drink heavily after work…. To quote an article “aside from disgracing an already disgraced…” speaks loudly in a world that tries to hush up such activity by allowing free trade for even the most disgraceful behaviours; the world still expects its leaders to have mores (morals, scruples and integrity) of excellent quality with no consideration to trends of lax mores.

The CEO of Gallup Jim Clifton, firmly believes that what the boss does equal the ethical values of the company now that is very fascinating. The leader of an organisation cannot divorce himself from his attitudes and company, and it makes perfect sense that he’s thus forced to take responsibility that he is a public person even in private.

His online profile must match his principles; his private life must be ready to be dissected on the boardroom discussion table. Sadly research by Gallup Research and Ethics Center shows that employees do not believe their boss is ethical and

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thus employees decrease their own ethical work standards, this does not augur well for the corporate and SME’s of our time; all sectors should set new heights of standards. Now you see how important it is that the Chief Officer has to have impeccable ethics, his directors too, the managers below must also be truly carefully chosen because that is the difference between profitability and client recruitment and set the tone for the daily operations. In a fairly recent survey The National Business Ethics Survey found that if employees reported misconduct they feared retaliation, so who are they to report to besides the people who can make change happen?

The employee has a right to expect high ethics from his senior management team, and to be treated respectfully therein. The management team has the obligation to create an environment that does justice to all stakeholders and thus ensure the many benefits of an ethical activity leading to profitability but also employee retention, and to ensure that employees feel engaged in your beliefs. Business is aware, now is the time to spread the word that it is required and desired to be ethical within your “four walls.”

I appreciate any comments or expansion on the topic: march@internet.lu

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Has the Time Come for Bankers to Take an Oath?

By David Fagleman, Research Associate, ResPublica

It has been well documented that in the lead up to the 2007 banking crisis the industry was not behaving as it should be. Not all bankers were responsible for miss-selling products or engaging in illegal activities but enough were to ensure the reputation of the profession remains tarnished.

As we pass the seventh year since the crisis, the debate over how the banking profession conducts itself remains topical and unresolved.

In the UK, where finance is a huge component of economic activity, the public has become numb

to news of fresh scandals involving behaviour that if conducted in their own workplace, would surely see them out of employment and perhaps behind bars.

From Libor to money laundering, fixing the foreign exchange rate to the miss-selling of Payment Protection Insurance to millions of customers, the large banks have been forced to pay billions of pounds in fines to the regulator and in compensation to those affected. Compounded with news from the United States of bankers being convicted of criminal activity and billions more in fines, the industry has a monumental challenge to repair its relationship with, and regain the trust of, the public.

It’s worth stating again that not all bankers are bad. Indeed, using ‘bankers’ as a term is somewhat misleading. A broad brush, in the eyes of the public it can include anyone from branch manager to investment banker. However, www.fidelisinstitute.org

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Last year, a PwC survey of over 2,000 people found that although almost one in two people (49%) believe regulation of the financial services sector has been strengthened in the wake of the crisis, a greater proportion (57%) do not believe the reforms that have been implemented are sufficient to ensure that history will not repeat itself. The survey also uncovered an endemic lack of trust across financial services: only 32% of customers said they trusted their retail bank; 15% investment banks; 28% financial advisers and 12% fund managers.

With General Practitioners polling 76% levels of trust, NHS nurses 79% and the police 53%, it is clear that the public holds the banking profession in disregard.

In an effort to repair reputational damage and reverse this trend, the UK has witnessed a plethora of activity but as the survey shows it has yet to make any noticeable impact. A crisis can offer fertile ground for new ideas and fresh approaches and should not be wasted.

New ideas are needed to ensure that the banking profession can rise from the ashes of 2007 and demonstrate that there will be no return to the ways of old. To do so, the culture of banking must be addressed head on, and a bankers’ oath may be part of the answer. following the worst financial crisis since the Great Depression and a mass-bail out of large banks, it’s not unfair to call upon the whole profession to root out bad behaviour, review standards of conduct and asses its relationship with society.

As Mark Carney, the Governor of the Bank of England, has stated, the succession of banking scandals means it is ‘simply untenable now to argue that the problem is one of a few bad apples.

The issue is with the barrels in which they are stored’. His comments followed those of Andrew Tyrie, the Member of Parliament who chaired the Parliamentary Commission on Banking Standards (2012-2013), that restoring customer confidence in the banking sector was ‘years away’. www.fidelisinstitute.org

The approach so far Any meaningful assessment of both the economy and society make it abundantly clear that our banking institutions are amongst the most valuable. They regularly perform a whole host of vital functions for us. They provide credit when we’re in need; facilitate our daily financial transactions; enable us to become homeowners; help us to save for retirement; and safeguard our wages.

From the cradle to the grave we depend on financial services. Whether we like it or not they are intertwined with our lives, and whether the banks like it or not they have a social purpose to work for the prosperity of customers. We need them to work well and behave responsibly.

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To tackle misconduct and restore public trust in banks, the UK Government has taken a largely regulatory and prudential approach: the Financial Services Act created a new regulatory regime and the Banking Reform Act made possible more stringent prudential and ring-fencing requirements. The Parliamentary Commission on Banking Standards (PCBS) was the only review to seriously move beyond regulatory issues and evaluate banker misconduct. Yet even this review’s recommendations focused too heavily on legislative and regulatory responses, as if this alone could save the sector from repeating past mistakes.

With restoring virtue to the banking sector, the presence of good character in bankers is absolutely vital. Character gives a person the strength to pursue purpose in the face of complexity and adversity. To be of good character is to have absorbed moral teaching into ones daily habits.

Most ethical systems are formal in nature and, because of this, assume that merely following the rules will ensure a good outcome. But virtue theory is concerned with content and the ability to understand the spirit not the letter of the law.

Advocating for more virtue in banking is not mere academic posturing: it is a call for the re-introduction of purpose into banking.

This approach, while essential to creating a more stable banking sector, at best provides only half of the solution. As the PCBS made clear in its Final Report in 2013, banking culture has too often been characterised by an absence of any sense of duty to the customer and an absence of any collective responsibility. Alongside current regulatory or prudential reforms, changes will also, therefore, need to be made to the underlying culture of the banks.

Ethos is the daily practice of inculcating this purpose.

Instilling ethos and promoting virtue in the banking industry is vital if we are to get the banker sector we deserve. This is not to say that a banking sector that is better regulated and inherently more secure is not to be supported. It is just that, by ignoring its cardinal cause, we are failing to fully understand the cause of the financial crash and, as a result, are not appropriately preparing for future crises of a similar nature. What we need to do is restore virtue to its rightful place at the heart of banking.

Virtue In 2014, ResPublica, an independent think in based in Westminster, published a report called Virtuous Banking: Placing ethos and purpose at the heart of finance. The report argued that the root causes of banker misconduct lies in the existence of a pervasive and inherent lack of virtue amongst our banking institutions, which we will need to restore if we are to ever truly reform the sector.

Instead of arguing for a uniform, rigid and unitary response from regulators or the Government, virtue theory recognises that the needs of customers are intrinsically different. As a result, it argues for the fulfilment of people’s needs in all of their distinctiveness. When applying virtue theory to the matter of banking reform, it insists that the ban king industry should, to the best of its ability, attempt to meet these diverse needs – it should not simply focus on self-enrichment or basic transactional services.

How can this be achieved?

Instilling virtue in the industry is dependent on promoting the right ethos. This can be achieved by improving internal governance structures to ensure good leadership is present in the banks and the appropriate levels of professionalism and ethics evident. This approach may be slow and somewhat tedious for politicians and the public alike, but it is the one needed to break from the past and ensure genuine change.

Leadership is, to a large extent, about having the right people with the right skills and mind-set in the right jobs – a person’s values will shape their leadership and their leadership will shape the culture of the bank. Embedding ethos in banks requires both ‘root-level’ involvement and strong leadership from the very top of the organisation. A strong chief executive can lead by example and ensure that values are filtered down through the appropriate channels to all employees. www.fidelisinstitute.org

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There are, of course, some outstanding examples of ethos-driven leadership in banks. Whilst the reputation of some of our banking brands is still seen as toxic by many, there are smaller teams in branches, in call centres and on trading floors who are trusted by colleagues and customers. They are led by people who believe in a purpose greater than their own narrow financial self-interest.

But how can we ensure that this type of leadership is the norm rather than the exception?

Historically, executive development in the banking sector has focused too much on training technical competencies and on command-and-control management skills. What is needed is a significant shift in the culture of leadership to one that promotes moral purpose, character, critical thinking and decision-making. In short, this new approach must focus on instilling a strong ethos rather than just adhering to empty regulation.

Every UK bank has already had professional standards, codes of conduct and ethics training in place for years but these did not prevent the misbehaviour that has occurred over the last decade or so. It could even be argued that these contributed to misbehaviour by creating an environment in which compliance with the letter, rather than the spirit of the rules reigned.

The existing approach to professional standards, codes of conduct and ethics training has failed because it is based on a compliance and obedience philosophy. In order to avoid a return to the situation described above, values must be firmly embedded within banks such that they lead to a shift in actual behaviour and are tangibly demonstrated by the employees in their daily work. As such, imposing another set of rules like those currently in place is clearly not the answer.

The ‘oath approach’ Perhaps another means of achieving this ‘rootlevel’ involvement from staff employees in the development of a responsible banking culture would be through implementing a ‘Hippocraticwww.fidelisinstitute.org

style’ oath whereby employees publicly voice their commitment to the stated values.

An interesting discussion of the various pros and cons of an oath took place at Harvard where, following four years of work by the faculty’s committee on academic integrity during which there was an investigation into the largest case of suspected examination misconduct, it was decided that new undergraduate arrivals in 2015 will be asked to ‘affirm’ the school ‘honor code’. Though they concerned an academic rather than commercial environment, it provides food for thought.

At Harvard, the faculty concluded that in institutions with such codes, violations of academic integrity were reduced. They also argued that, by making expectations about behaviour explicit, such codes would enhance integrity, encourage conversation about conduct, and promote confidence in the academic community as a whole. It was stressed that this code is not merely a system of new rules designed to prohibit or provide a mechanism for punishment of non-compliant behaviour, which is exactly what must be avoided in reform of the financial sector.

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able to me for living by this oath.’ The Harvard MBA oath speaks of ‘responsible value creation’.

It asks its pledgees to ‘act with utmost integrity’, to ‘manage [their] enterprise in good faith, guarding against decisions and behaviour that advance [their] own narrow ambitions but harm the enterprise and the societies it serves’ and to ‘strive to create sustainable economic, social, and environmental prosperity worldwide.’ All of these are values that should be welcomed in banking and, if properly observed, help to create a more ethosdriven sector.

How can this apply to banking?

If those in banks that are engaged in banking activities swore such an oath, this could have considerable benefits with regards to public trust and confidence in our banking institutions. In and of itself, such an oath is meaningless. But what it represents and symbolises is perhaps a turning point in the outlook of the banking sector.

Having an ‘honor code’ designed to simply provide additional means for rooting out misconduct would, as one Harvard professor said, be a ‘creepy, Orwellian reason for having such a code’.

It should, instead, play a role in helping students come to a joint and common understanding and endorsement of the value of collective enterprise.

Indeed, this idea of ‘collective enterprise’ is a powerful one. The psychology of ‘group mentality’ is complex but, in brief, it creates a sense of shared responsibility fostering a peer pressure environment to conform to agreed standards and not be the one that lets the rest of the group down for fear of destroying not just one’s own reputation but that of the group to which you voluntarily have subscribed. There is also an element of peer monitoring whereby pledgees of the oath seek to keep each other’s behaviour in check.

This is recognised in the Harvard Business School MBA oath which was voluntarily created by a group of students in 2009, and from which the new undergraduate oath, in part, draws inspiration; the oath ends with: ‘I will be accountable to my peers and they will be account-

There is a certain level of professionalism that separates bankers from doctors, lawyers and architects. In the latter professions, and unlike banking, the professional motive is not only to do the best for the client but also to adhere to the well-established principles of that profession.

These standards are often maintained by the industry itself and go above and beyond what is required by law. In medicine, the Hippocratic Oath provides or did provide the centre-piece for these overarching principles.

When ResPublica launched Virtuous Banking, the oath put forward in the report (see below) received widespread media attention in the UK and abroad.

The oath takes inspiration from the debate at Harvard and calls for bankers to prioritise the needs of customers, pursue the responsible creation of value, confront misconduct and remember the consequences of their actions on society.

Most commentators dismissed the idea at the time but it’s one that has already been adopted by other countries. In the Netherlands, the Dutch Banking Association is requiring all 90,000 bankers to take an oath pledging integrity. In Australia, The www.fidelisinstitute.org

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Banking Finance Oath, an industry-led initiative, is an effort to reassert the ethical foundations of the industry beyond regulation and compliance.

In the UK, CivilisedBank, a new business and retail challenger bank will require its staff to swear the Bankers’ Oath, as laid out in ResPublica’s report, when it officially launches next year. Their Chairman, Chris Jolly, not only sees the oath as an important building block to embed ethical behaviour in the DNA of bankers’ activities but also as a business advantage, as customers want to engage with an bank that places them at the heart of their strategy.

An oath alone will not change an institution’s culture and it certainly won’t happen overnight, but it must from part of the evolution in the manner in which the banking profession conducts itself and repairs the sector wide reputational damage.

Combined with current methods, publicly sworn and perhaps retaken annually, a bankers’ oath could signal the beginning of a new era of culture within the profession and ensure that an industry with such power holds a responsibility to society at the core of its activities.

This oath I make freely, and upon my honour.

The Bankers’ Oath “I swear to fulfil, to the best of my ability and judgement, this covenant: I will do my utmost to behave in a manner that prioritises the needs of customers. It my first duty to provide an exemplary quality of service to my customers and to exhibit a duty of care above and beyond what is required by law.

I will apply myself to ensuring that the work that I perform is in line with values that engender the responsible creation of value. It is my duty to conduct my business in an ethical manner and to ensure that my actions impact positively on the wellbeing of people both inside and outside my enterprise.

I will confront profligacy and impropriety wherever I encounter it, for the conduct of bankers can have dramatic consequence for society.

I will remember that I remain a member of society, with special obligations to the financial security and wellbeing of my customers, their families and the communities they reside in.

If I do not violate this oath, may I benefit from the prosperity that comes from serving customers well.

May I always act so as to preserve the finest traditions of my calling and may I long experience the joy that comes from supporting the needs of society.

This oath I make freely, and upon my honour”.

David is a Research Associate at ResPublica, an independent Westminster based think tank. You can download ‘Virtuous Banking’ by visiting respublica.org.uk and follow David on Twitter @DFagleman.

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