Fidelis Ethics Review - Spring 2012 by Vicente Arancon

Spring 2012

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

Character as the Foundation of Moral Understanding in Professional Life

11 12

Christopher Oleson Rafael García Pavón Michael Augros José Ángel Agejas

FIDELIS ETHICS REVIEW is a quarterly publication of Fidelis International Institute, distributed directly by this organization with the address: Ave. Lomas Anáhuac S/N 7º piso, Col. Lomas Anáhuac, Huixquilucan, Estado de Mexico, Mexico. Phone ++52 55 5950 0160, ext. 2061

Publisher: Vicente Arancón

A Thought on Social Business and Economic Growth by Patrick Bitature

13 14 15

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

For New Economic Action Fostered by Communion by Alberto Ferrucci

Research Staff:

Israel Camarillo César Garduño Rubén Sánchez

By Michael Ryan

23 Choosing Excellence:

Michael Ryan President

Junior Analysts

put the World Together.

by Violaine Ricard

Vicente Arancón Editor in Chief

Senior Analysts

18 Putting Man Together We

Executive Summit on Ethics for the Business World Summary, Part 2

Editorial Committee

Ricardo Sánchez Executive Director

27 Every Economic

Decision has a Moral Consequence by Eleanor de Rosmorduc

31 Fidelis Interviews

Lorenzo Bini Smaghi

Fine Arts Investments and Ethics? Fidelis invited to talk about Ethical Investments in Turin “Civilizing the Economy” through Social Enterprise –Converging Bottom Lines? by Denis Chang

by Christopher Oleson, Ph.D.

What is the Role of Business in Today’s Society? by Sergio Arzeni

36 Operating in

integrity with your vision and values by Ashley Munday

38 On Ethics and Integrity by Ebehard von Koerber

39 Coming soon, Ethics in the Oil & Gas Industry Forum

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 Grupo Infagon, Alcaiceria No 8, Col Zona Norte Central de Abastos, Iztapalapa, México D.F, C.P. 09040, Phone: (55) 56 40 92 65 Ext 115. 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.

www.fidelisinstitute.org

Spring 2012

Editorial Dear Reader of the Fidelis Ethics Review, The issue you have now in your hands contains the intellectual fruits of highlycommitted men and women who, like you, share the idea that ethics should play a fundamental role in the world of business and finance. In this edition of the Review, you will find the continuation of the speeches delivered at the Executive Summit on Business Ethics held at the Academy of Sciences, in Vatican City, last year. The articles you are about to read reflect the opinions and the beliefs of individuals who truly engaged in creating a better business world for us all. More importantly, the words you are about to read will transmit what these individuals’ hearts have to tell you. This edition of the Review also presents to you a summary of the Retreat for Executives on Ethics, Conscience and Silence that took place in Hong Kong last February. This event gathered a very fine group of executives from that exciting city. This was the first time Fidelis conducted an event in Asia, and we are extremely glad to share with you that the interest, level of participation and enthusiasm that we found in the people of Hong Kong have really captured our souls and minds. The more than 30 executives who came to the Retreat, as well as many others who attended a couple of conferences on ethics for business that Fidelis delivered in that fascinating capital of finance, showed an unmatched level of commitment and a willingness to embrace ethics and to let it resound in their daily lives at their corporations. This tremendous enthusiasm is motivating us to continue exploring ways in which Fidelis can contribute to the business community, globally in general, but in Hong Kong in particular. We have received invitations to go back to this thrilling financial center of Asia to realize other events. Not only have the people asked us to return and conduct a longer version of the Retreat, but also they are inviting us to consider organizing the next Summit on Ethics in their city. This is an invitation that honors us, but it is also an invitation that challenges us to excel and to try to find the best possible way in which Fidelis can serve the needs of business leaders in search of a more humane and meaningful way of doing business. We look forward to the great challenges and opportunities that this represents and in turn, we invite you to be part of this fascinating journey. Thank you very much for your interest in Fidelis, I hope you find this issue of the Review useful and enriching.

Ricardo Sánchez Serrano Executive Director www.fidelisinstitute.org

Executive Summit on Ethics for the Business World Summary, Part 2 by Violaine Ricard

Entrepreneurs, Ethics and the Bottom Line In the context of the global market, ethics is sometimes seen as the cherry on top of the cake, and ethical entrepreneurs, as quaint and naïve dreamers. Professor Spieker, from Osnabrück University, examined the meaning of the expression “Ethics and the bottom line” by scrutinizing the ethics of the pursuit of profits, bemoaning the fact that sometimes “economic ethics examine tangible

ethical issues only after having completed the economic inquiry, leaving the impression that ethics of economic actions amounts to a mere superstructure – which arises beyond the science of markets and profitability.” The quest for profit is of course not immoral, Spieker noted, as profitability is a prerequisite of the common good, but the means used to gain profits qualify the sustainability of this endeavor. That is why frameworks of entrepreneurial development put limits on the pursuit of profit, for example, with rules that prohibit a marginalization of those who are not efficient, or who cannot deliver any direct financial performance. These guardrails are at the service of an integrated definition of the firm. Deepening the understanding of what an enterprise can and should do, the question of the very definition of a firm has indeed been raised, enlightening its “ethical task,” as Spieker calls it. www.fidelisinstitute.org

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The truth about an enterprise is that it is rather a community of human beings than a for-profit-only economic entity, as it had been mentioned along the talks and speeches. That’s precisely where the task of the leader is so crucial: “he needs to add a vigorous communicative effort to his decision making activity,” getting the employees to participate and dignifying them by making them actors of the firm and the common good. The priority of the worker’s well-being in the firm’s hierarchy of values is first of all a demand of justice, reminded the participants. Then his or her participation in the decision-making process comes for the search for true development, because of the natural willingness of people to be part of decisions that influence their lives. Finally this emphasis comes from the demand of charity, because corporate involvement creates personal relations, increasing the positive social impact of a firm as well as its culture. “Cultural transformation begins with the personal transformation of the leaders. Organizations don’t transform. People do.”

of a firm, which is highly determined by the entrepreneur. The leader himself has to try to conduct his life virtuously, because he has “to make his talents available in an unselfish manner to both state and society […] as well as his ability to look for solutions that suitably set free personal initiative in lieu of governmental assistance programs.”

This expression from Phil Clothier, CEO of the Barrett Value Center, has been enriched by a practical example on the difference personal treatment makes in business. The Barrett Values Center believes that “Organizations that care about all their stakeholders create success by building strong, enduring relationships. When you show that you care about your employees, customers, investors, partners, the local community, and society at large, they care about you.” Indeed, a simple word transforms the picture, enlightens it, caring about “connecting soul values.” As head of a community of persons, the entrepreneur should indeed privilege attention above the bottom line, coupled with a strong positive culture which creates internal cohesion and enhances the organization’s capacity for collective action.

As the enterprise cannot be reduced to a money making machine, the entrepreneur cannot be identified as the sole motor “totally inx the grip of the proverbial bottom line,” concluded Spieker. In this light, the meaning of the bottom line itself includes a human perspective that goes far beyond the sole present of the enterprise, or even its future and goal. Indeed, the definition calls for a space, while managing, for receptivity, gift, relationships, according to Spieker. And the place where these values and virtuous are learnt is the family. In fact, he concluded, the only safeguard to keep the enterprise running humanly can be learnt first and foremost in the family, as the privileged place for the building up of human resources, developing a sense of existence and gift.

Collective action is meant for the financial sake for the enterprise, but not only. Indeed, a culture impacts on all kinds of performances. Profitability is indeed part of the responsibility of the firm for the common good, as well as the political engagement of the leader, the workers and the enterprise as a whole (cf Part 1). The entrepreneurial responsibility for the common good recalls the sociological impact www.fidelisinstitute.org

In a country like China, shared Albert Chan King Tat from Ping Assurance Company, the mission of a firm is extremely demanding, as the country is developing its own style of conducting business. Indeed, if in accounting terms bottom line equals profit, “the notion should extend to other stakeholders: shareholders, customers, suppliers, staff, society and environment,” as the responsibility of an enterprise is embodied in its political context, as well as in a market. Ethics then should flow from this integrated understanding of the concept of the bottom line, from the firm to the whole society. The firm can create incentives for an anti-découpé view on economic reality.

Human resources are the only long-lasting ones, re-affirmed Sergio Arzeni, head of the Local Economic and Employment Development (LEED) at the OECD. His view on the “bottom line” is coupled with crucial questions about the world recovery from the crisis, the sustainability of a firm, which goes through its profitability. The concept of “bottom line” seems to be a subtle mix of factors, and should sustain global growth.

Promoting structural economic growth, for an organization like the OECD, means to “go hand in hand with social development” and help in the settling of growth-friendly strategies based on principles as prosperity, integrity, transparency, “keystones of an economy which commands the support and confidence of the people and serves their needs and aspirations.” For Arzeni, the bottom line has to be considered in a broader economic framework “placing people at the center of economic undertakings, recognizing a responsibility towards society, and ultimately, by seeking to realize collective well-being,” in other words, in the search for the common good of the world. Social Business and its Contribution to Economic Growth Moreover, for Mr. Arzeni, “social entrepreneurship is a key tool through which to embed integrity and responsibility in our economies and society”. This is an idea shared by Denis Chang, Senior Lawyer Consultant in Hong Kong, who asked about the possibility of “Civilizing the Economy” through social entrepreneurship. The “globalizing civic movement,” as Chang calls it, can bring concrete proposals to actual challenges by renewing collaboration across states, markets and civil society. Involving intermediary bodies is furthermore something the

Catholic Church has been standing up for decades. The novelty of this new business wave, this “civic movement” is, according to Chang, the renewed care of the enterprise for the “double bottom line of social mission and financial sustainability.” These two imperatives can be understood and summarized in some new forms of business, as mentioned in Caritas in Veritate as “hybrid forms of business”. These incentives could offer a final solution by reflecting on the economic value of non-profit firms as well as on the social value achievable by for-profits. Learning from these two business styles, these two inspirations, could end finally a meaningless schism between non- and for-profits. It could help tackling the two facets of any enterprise –social mission and financial sustainability, - towards a more integral and integrated reality of the global market. This civic movement is precisely the way “social business” should be understood, according to Onno Ruding from the Center for European Policy Studies, “in a movement to civilize the economy”. He arrived indeed to the same conclusions of the necessary interconnection of social and for-profit firms. As an example of this marriage, an hybrid form of business, he referred to commercial entities based on mutualistic principles, which in the past played a large role in local development. www.fidelisinstitute.org

Spring 2012

“unless we [private entities] involve the other half.” Furthermore, social transformation will happen through job creation and industrialization. Microfinance can be a solution, but in the long run, it’s global-scale finance that is targeted in the continent with “the development of entrepreneurial skills and spirits in the marginalized economies of the less developed countries like Uganda, Kenya, Tanzania.” Development and prosperity, yes, but not at any price, he concluded. “People, profits and planet” is a motto Albert Chan made his own, targeting the convergence or at least the interaction of these “entities,” with the core principle that “people are not to be used as mere tools for profit, but profits are to be used for people.” Social business does not design only how a firm is organized, its internal structure, but also its goal and footprint in the business realm. Those kinds of traditional forms of enterprises but innovative at the same time - proved to last in the past, and spread ideals of reliability among their stakeholders. About the feasibility of such cooperatives in today’s world, Mr. Ruding showed nevertheless some doubts. There are indeed plenty of ways and creative initiatives to develop a sustainable and humane global economy; while learning from the past, the present offers bunch of new perspectives. Ruding sees in fact the third term in the equation “Social business and economic growth,” in Corporate Social Responsibility (CSR). According to him, taking into account all kind of a firms’ stakeholders, leads to transparent practices in social matters, remuneration policies, corruption, and community development. At the end, the whole society will profit from a more sustainable and responsible growth, and any attention to the social context (for example by implementing a code of conduct) will improve corporate actions’ quality. In Africa, the need for private entrepreneurship as a key for development needs to have ethics and human dignity at its heart. Patrick Bitature, from Uganda, CEO of Simba Group, explained the need for social business in Africa, which is at a crossroads: government initiatives will not achieve the Millennium Development Goals targeted by the United Nations www.fidelisinstitute.org

For Jorge Becerra, social business concerns all and every business through its social impact. Expressing the motto of the Boston Consulting Group where he is Senior Partner for Chile, he explained that Insight, impact and trust is the contribution of a firm to economic growth and to the whole of society. A firm’s spirit of action has to be a spirit of service, as he shared: “the real ‘changing the world’ experience is when you allow for the recipients’ inner self-transformation, and that the only force that could make that change, a truly lasting change, is based on an uncompromising attitude of service, an unconditional giving attitude, a loving approach to all.” In line with the principles of Caritas in Veritate, he developed this idea with two concepts: the concept of mindset, qualifying the search for knowledge and power, and the concept “of a giving heart-set,” key for long-term transformation in a holistic approach of the value creation equation. Social can qualify then all kinds of enterprise that adopt this attitude of serving society, with persons taking actively part in the enterprise’s life, trying to develop themselves by giving themselves. Gratuitousness, Caritas and Truth in the World of Business A firm, in other words, is morally valuable only in the context of shared values of service, according to Becerra. This affirmation, rooted in the lexical field of the gift, coincides with the apotheosis of the analysis the encyclical makes of the economic world: “in commercial relationships the principle of gratuitousness

and the logic of gift as an expression of fraternity can and must find their place within normal economic activity. This is a human demand at the present time, but it is also demanded by economic logic. It is a demand both of charity and of truth.” The meaning of the affirmation was especially developed by participants of the fourth panel, who reflected on ways to adopt “the logic of gift” in the framework of merchant logic, where at first sight nothing valuable is free. In spite of mainstream, there are proofs that gratuitousness exists, and it relies on human dignity. Actions guided by the only invaluable value, namely human life, encourage more actions that are not dictated by the logic of profit only. Ines Kolmsee, CEO of the German Steel firm SKW Metallurgie, gave two examples of her firm’s recent corporate actions to illustrate this principle. The first one took place in 2008, in the USA, on the edge of the financial turmoil when the firm’s orders emptied in the space of two weeks. Mrs. Kolmsee was obliged to lay off staff, but she chose to pay out bonuses and continued paying healthcare premiums; within six months all were successfully re-hired. Another remarkable action took place in a subsidiary of the firm in Bhutan were the company purchased a construction site with a mortality-rate of three to five persons annually. The executives decided to implement German safety standards there, which meant a sizable investment but met with a significant result: in the first year, only one minor incident occurred. These stories reflect real situations where leaders took decisions that in many cases resulted in short-term loss of profit, and in most cases gave no guarantee of future reward: by definition, the logic of gift. Some companies understand gratuitousness together with sharing: Wiet Pot, from IMC expressed the belief that economic entities should carry the responsibility of contributing towards a better society. In example, this financial group offers manhours to support organizations that share the same philosophy, creating a network spreading knowledge and values of gift. This philosophy, it is “creating the conditions where people can develop to their fullest potential”. This potential, again, is seen as the truth of the human person. “It is our

duty to work towards Christ presence being felt in the world of business and that our corporations are communities filled with hope, faith and love” he concluded. On this perspective, Ken Resnick from GE Oil & Gas emphasized on truth in business, relying on the application of justice to go beyond, “to the ethical interaction of consciences and minds that would give rise to truly human development.” Trust in relations can be possible only by making explicit the values leaders choose when making business decisions, he continued. The explicit expression of values can take place in the wording of a code of conduct, as the expression of the internal culture of an enterprise. “Such an internal culture [would] engage externally in the sort of dialogue.” And on this dialogue, upstream and downstream of firm’s life, depends the blooming of trust inside the enterprise. Resnick insisted on the feasibility of spreading such a culture, with a clear vision of the duty every business requires in order to “help minds and consciences to meet”: minds, with creative ideas to be turned towards profits while conducting business, should meet the requirements of conscience of all for everyone. Trust would be, in this ethical equation, the meeting point between minds and conscience, as the sign of a culture which summarizes the need for profits in a peoplefriendly way of conducting business. He concluded by reminding that an ethical way of conducting business have in fine positive consequences on creativity and profits. Indeed, the key to understanding the message of gratuitousness lies in “reciprocity,” which represents the ordinary life of firms and the whole economic system. Reciprocity “is the heart of what is to be a human being,” a sentence explained by Professor Daniel Finn. Acts of gratuitousness initiate relationships of reciprocity; a history of reciprocity builds up trust over time, and that stock of trust is social capital. This social capital, again, represents the best investment a firm makes, betting for the future and for the endurance of the corporate project. Insisting on the inherent presence of reciprocity and gratuitousness in every human action, Finn concluded: “Trust is the flow, social capital the stock, and it is reciprocity that generates the flow.” www.fidelisinstitute.org

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Besides, reciprocity is also, in a respectful relationship, the tacit recognition of the inalienable value of the person. The fundamental objective of commerce is to promote human well-being, reaffirmed Steve van Arsdell, CEO of Delloitte & Touch LLP, and the primary capital to be safeguarded and valued is the human being itself. “The recognition of the value in each step, the recognition that there is dignity in all labor, whether in the invention of a product or the production of it, is an important step toward recognizing the human being as our primary capital that must be safeguarded and valued,” he added. In the search for the common good, the ultimate safeguard against unethical behavior, he said, is special care for every single person as a brother in humanity, never reducible to a means or an instrument of labor. “The market needs ethics in order to function properly. And not any ethics: ethics with man at the centre.” As a consequence, all economic transactions should improve the situation of both sides – a thought that is also central to Islamic finance and other systems of thought. It is a way to remind us that Catholic social teaching is faithful to the truth of human nature, and that truth can be reached by “all men of good will.” As president of the Focolare Movement’s Economy of Communion in Freedom, Alberto Ferrucci gave a testimony on the way the movement tries to put into practice its belief that “economy and business should adopt, along with the principles of liberty and equality, the principle of fraternity.” This fraternity is www.fidelisinstitute.org

an economic communion, a choice of moderation and solidarity made by hundreds of businesses helping “brothers in need” to spread a culture of giving. The movement understands Caritas in its narrow meaning as the expression of the human essence and vocation to communion and love. This anthropological knowledge is thus transformed by this lively group into actions, promoting ethical behaviors around the world, with concrete political proposals such as Financial Transaction Tax. Founding their vision on the evangelical exhortation “that all may be one,” gift in economy must be expressed by personal relations as well as global solidarity. This radical understanding of social business is meant for the economy to “contribute to fulfilling the dignity of the human person and every person.” Coming back to the first role of the market as a forum where goods are exchanged, Ferrucci called for a simplification of life on the personal level as well as in economics, sticking to the notion of service and fraternity as keys for the advent of new generations of men of good. The importance of trust at the global level, as an expression of this fraternity, was also discussed. “Meaningfulness of life increases when we experience relations of trust daily,” and the same moral and economic advantages that accrue to the firm with a culture of trust built on reciprocity also apply to the economy as a whole, as well as to states, explained professor Zamagni. An expression of the lack of trust that characterizes the current markets is the increase of transaction costs (including massive legal documents), a major element in the cost of production. Finally, “the human person realizes the sense of its existence if he becomes a present” declared professor Spieker, joining the affirmation of Professor Zamagni: Gratuitousness can be found in the simple act of loving life, which is not disconnected from the economic life “because we have the need to know that our works, apart from a destination, have a meaning and a value here and now. This is one – and certainly not the least important – of the messages which Caritas in Veritate invites us to meditate on, with patience and resolution.” Gratuitousness is mostly needed in economics, as the absolute condition of fruitful human action, they concluded.

For New Economic Action Fostered by Communion by Alberto Ferrucci Alberto Ferrucci is the President of the International Association of Economy of Communion AIEC

In the last twenty years, the development of information technology, the availability of capital and the industriousness of the people previously marginalized from international trade, led a strong economic development that rescued many from poverty. This type of development relied nevertheless on the availability of capital at low cost and cheap labor and on a general increase in consumption. Such development would be unsustainable if applied on a global scale, based on the non-renewable resources that it requires and its environmental impact. It also does not satisfy the human person’s inner needs, because it imposes competition and personal consumption levels as signs of personal fulfillment. The fragility of the present consumerist society is made evident by financial crisis’ that follow the depletion of the planet’s resources and from the pressing request for a more dignified life by

the young nations that have been on the sidelines of this development and that press at the borders of rich nations. There is a sense that without a course change, basic rights linked to private property, to work and of a peaceful future could be jeopardized. It is therefore urgent to press ahead with measures at a national and international level that overcome selfish short-term thinking and that allow everyone, according to their capabilities, to contribute to the strengthening of the present economic system and move forward to a more humane economy. In the last few years, economic development fueled by very aggressive and often morally doubtful financial behaviors led to such levels of debt to put the entire economic system at risk. The governments of the most exposed economies had to intervene with their own resources to avoid their economy’s collapse and ended up with much higher levels of public debt. This lead to a reduction of resources destined to the recovery of the real economy and of employment levels. In despite of the measures taken by the governments and the international monetary authorities, the economic and financial system remains fragile and requires new rules capable of reorienting it to its core positive functions of collecting savings and investing them in productive activities. The financial system also needs to be strengthened in emerging nations in which the capitalization of the businesses is a limit to job creation. www.fidelisinstitute.org

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In this context, the business people and academics who gathered in the last May at Sao Paolo for the 20th anniversary of the Economy of Communion in Freedom (EoC) the project that is inspiring eight hundred businesses and six industrial poles in the world, feel the responsibility to share their proposals with all civic leaders that are tasked with the definition of legal, fiscal and financial policies destined to the leaders of nations and of international institutions. The proposals stem from the daily experience of businesses all over the world that successfully operate in a market economy while putting the person at the center, not the capital, that sup-

ports the business versus dominating it. These are businesses that are deeply involved in their communities, that respect the environment and that share the fruits of their labor also with those in need, following a “culture of communion”.

November 8, 2012, Florence, Italy

This culture expresses itself also in a sober and critical consumption style that is respectful of the planet’s resources and of the longing of human beings for a substantial equality. It does not only promote the creation of material riches but also the fulfillment of the human person. It also leads to a responsible use of wealth and orients economic actions towards the long term, as a good steward would do.

Fine Arts Investments and Ethics? Italy’s most important cultural event, the Biennale della Cultura “Florens 2012” will take place in the fascinating city of Dante next November. Fidelis has been invited by Florens 2012 Organizational Committee to coordinate a congress at the Biennale to reflect upon the connection between an investment in fine art and ethics.

A Thought on Social Business and Economic Growth by Patrick Bitature Patrick Bitature is the CEO of Simba Group

“I intend to speak about the need to develop the entrepreneurial skills and spirit in the marginalized economies of the less developed countries like Uganda, Kenya and Tanzania. social transformation www.fidelisinstitute.org

of these societies cannot be achieved by government initiatives on their own, nor will the millennium development goals be achieved unless we involve the other half. those that live at the bottom of the pyramid. The role of technology and in particular the mobile phone. The role of microfinance, its strengths and weaknesses. The need for electricity in job creation and industrialization, as critical infrastructure to the development of a country. With time does it become a matter of “adapt or die”? or “winner takes all”?

Since its inception, Fidelis has advised ethically responsible investors as to how can they invest their money while respecting their own moral and ethical principles. But, when it comes to making a big investment in art, does this have any particular ethical component? Is an investment in fine art ethically different from an investment in securities in the stock exchange? Why is this so? When investors pour millions of dollars in a painting or a sculpture, are they being moved by ethics as well? Can an investment in art be considered an ethical investment? Are there any ethical considerations that an investor takes into account when acquiring art? What’s the ethical role of an art patron or sponsor? When an investor acquires fine art, what other

stakeholders that get benefited by this investment? Does an investment in art make the investor a more noble person? Why? Do you believe investing millions of dollars in art contribute to the wellbeing of humankind? What is the essence of that contribution? What is the ultimate goal of the art investor? Does an investment in art make you transcend yourself? Why? If you are a serious fine art investor, make sure you don’t miss this interesting Fidelis conference. If you just love art and you think you know how ethics and art connect, do not hesitate to contact us. To learn more about this exciting event, please visit our site or contact us anytime. The Florens Foundation The Foundation was created to give continuity to the Florens 2010 International Week of Culture and Environment, and be a permanent laboratory of cultural and environmental efforts to demonstrate how important investment is in culture, and how it can contribute to the development of the economy and help reconfigure Italy’s manufacturing base. www.fidelisinstitute.org

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Fidelis invited to talk about Ethical Investments in Turin What is the relevance of ethics when it comes to financial investments? How can you guarantee that your money is being invested without compromising your ethical principles? Can investors make a difference by directing their investments to companies that are not only financially profitable investments but also socially responsible organizations? Fidelis has a long experience advising the conscious investor and the ethically responsible financial manager with these issues. Now, the Sisters of Saint Joseph, a Catholic female congregation that dates back to 1650, has invited Fidelis to guide some discussions around these important topics. The Sisters of Saint Joseph are present in many www.fidelisinstitute.org

countries, from France (its birth place) to Africa and Latin America, they have a vocation of service and simplicity that brings love to the weakest and those in the most urgent need. The Sisters of Saint Joseph are active in Cameroun, Congo, Madagascar, the Central-African Republic, Burkina Faso, Brazil, Argentina, among many other nations. Fidelis feels honored to have received this important invitation and we shall try to help the Sisters of Saint Joseph, as we try to assist any investor regardless of its size, complexity, or degree of sophistication with their desire to invest their financial assets in ethically responsible ways. To learn more about how Fidelis can help you in this important field, please visit our website or contact us at your convenience.

“Civilizing the Economy” through Social Enterprise – Converging Bottom Lines? by Denis Chang Denis Chang is Senior Counsel at Denis Chang’s Chambers

Social Enterprise (SE) is not new but social entrepreneurship, as a globalizing civic movement, is more recent. It seeks social innovation, scalable solutions and collaboration across the sectors of “state, market & civil society” in the hope of transforming the social ecosystem and help alleviate poverty in all its forms (including “relational poverty”) and other human needs. Social Enterprise 2 (SE2) - i.e. both SE & S Entrepreneurship with the “double bottom line” of social mission & financial sustainability – is attracting new ways of social financing and social investment, including venture philanthropy and social impact investing and creating new social capital/ stock markets and bold business initiatives. The “hybrid forms” mentioned in Caritas in Veritate (CV 38) exist within a broad social-business

spectrum that embraces nonprofit as well as forprofit enterprises, and partnerships between them e.g. “hybrid value chains” pioneered by Ashoka. Without detracting from what charity can uniquely achieve, hybrids seek to reflect the often overlooked economic value of nonprofits on one side, and on the other, the social value achievable by for-profits SE’s (some with dividend –capping, of say 35% as in the UK model of Community Investment Companies or CICs). They strongly suggest that sustainability plus financial return to investors can be achieved without necessarily shortchanging social mission. The bottom lines of socially responsible businesses, including traditional for-profits practizing Corporate Social Responsibility (“CSR”) that love to speak of a triple bottom line of “people, profits and planet”, can be seen to converge or at least intersect at critical points. The central principle is that people are not to be used as mere tools for profit but profits are to be used for people. The ways of “civilizing the economy” that Caritas in Veritate speaks of (CV 38) include practizing people-centered values. Although the movement SE 2 is still in its nascent stage in Hong Kong, HK has the potential of developing into a regional SE 2 hub and through these values to help “humanize” capitalism and thus serve to mediate between the capitalist and the Chinese Mainland system. www.fidelisinstitute.org

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What is the Role of Business in Today’s Society? by Sergio Arzeni Sergio Arzeni is the OECD Head of the LEED Programme

groups integrated into society, intergenerational solidarity pursued, etc. Re-embedding ethics into the economy and putting ethics at the heart of business is essential: prosperity, integrity and transparency are the keystones of an economy which commands the support and confidence of the people and serves their needs and aspirations.

What is the role of business in today’s society? How does Milton Friedman’s famous quote “the business of business is business” need to be re-interpreted in light of the recovery from the economic crisis in order to avoid a return to “business as usual”? How can business target profitability supported by a positive record in the social, environmental and employment areas? How can business prosper while helping society and communities to prosper?

The OECD has been working for decades to build sound, reliable and multilaterally-agreed principles and standards for business ethics, such as the Guidelines for Multinational Enterprises, the Corporate Governance Principles, the Guidelines for State-Owned Enterprises, and the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. It is currently working with key stakeholders to revisit some of these instruments, in particular the Guidelines for Multinational Enterprises, to make them more effective and relevant.

The OECD, a globalization hub and a “do-tank”, strongly believes that structural growth has to go hand in hand with social development and encourages policymakers to design policies and support strategies that promote economic growth while ensuring that the social dimensions are taken into account, that inequalities are tackled, the most vulnerable

In order to build stronger, fairer and greener economies the economic model that must be championed has to address the challenges we face: massive unemployment, widening inequalities, climate change, poverty, issues around food, water and energy security and gender inequalities. Among the economic agents and business models that the

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OECD has analyzed, special attention over the last decade has been paid to the social economy and to social entrepreneurship. OECD analysis has demonstrated that social entrepreneurship is a key tool through which to embed integrity and responsibility in our economies and societies. It does so by placing people at the centre of economic undertakings, recognizing a responsibility towards society, and ultimately by seeking to realize collective wellbeing as a pursued objective. This is one of the reasons why, exactly one year ago in Rome, the OECD organized, together with CNEL and the Vatican Council for Justice and Peace, a conference that provided an

unique opportunity to examine and reflect on how to understand the new trends in the relationship between the state, the market and society, together with new ideas on how to enhance the role of social entrepreneurship and corporate social responsibility. (www.oecd.org/document/17/0,374 6,en_2649_34417_46412049_1_1_1_1,00.html). Our Secretary General Mr Angel Gurría inaugurated that conference reminding the participants of what the Nobel Prize Amartya Sen had written in his book on “Ethics and Economics”; that the impoverishment of the economy is due to the removal of ethics. Our role today is to understand how to reconcile them. www.fidelisinstitute.org

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This need, of keeping ethics as a priority, worthy of investment of time and resources is something felt in the world of business. On the one hand there is the danger of paying it lip service only1; on the other hand we see many initiatives that underline its importance, as we can see in the campaign going on around the MBA oath. The promoters recognize the danger that, after the crisis, business will be back to business and that we will have paid only lip service to ethics but without any real progress (See: www.theoathproject.org). The Oath Project seeks to leverage its “network of networks” to encourage all business leaders to hold themselves -and each other- to the higher standard of integrity and service to society. The promoters are convinced that the way we choose to behave as professionals and as members of the business community has an incredibly important impact. The text of the oath expresses the seriousness of the ethical commitment in business. It is worth reading and meditating.

Putting Man Together We put the World Together. By Michael Ryan Michael Ryan is President of Fidelis International Institute

This is the introductory talk given by Fr. Michael Ryan in the Business Ethics Retreat for Executives held in Hong Kong in February 2012. 1. Taking ethics seriously Why do an “ethical” retreat? Because we are convinced that, if we take the concepts that usually form the ethical talking and we reflect on them in silence, then they will acquire (or re-acquire) their power and their creativity. The word “seriously” in the Dictionary gives us a wide array of meanings that show us how committed we www.fidelisinstitute.org

2. The weakening of ethics. must be if we are to take ethics seriously. Serious means, in effect, grave in quality or manner, carry out something in earnest, deeply interested or involved, not trifling or jesting, of such character or quality as to appeal to the expert, focused on important rather than trivial matters, complex to be easily answered or solved. Dedicating this day to the theme in question, our goal is to keep our commitment to ethics in work high up on our priorities, wanting to be creative about it, never losing the healthy tension between the ideal and everyday reality. We want to be better, knowing that we are never finished in this task. William Somerset Maugham said once « only a mediocre person is always at his best ». We second John Steward Mill’s conviction of the importance of each individual. Mill claimed that « the initiation of all wise or noble things, comes and must come from individuals; generally at first from some one individual. The honor and glory of the average man is that he is capable of following that initiative; that he can respond internally to wise and noble things, and be led to them with his eyes open » (On Liberty, c. 3).

In spite of our good will (inclusively talking an oath) we must be aware that, when we speak about ethics today, if we are not careful and reflective, we can use an ethics that is weak, having lost its capacity to generate real duty. Pope Benedict XVI, in his Encyclical Caritas in Veritate makes a passionate appeal that we assure the quality of the ethics we approve. The continual repetition of the word ethics has lead to its inflation and it’s weakening. It has become fashionable to talk about ethics; but this can be ephemeral and just window-dressing. Here are the words of the Pope: “These processes (meaning the many initiatives that have “ethical” as a label) are praiseworthy and deserve much support. It would be advisable, however, to develop a sound criterion of discernment, since the adjective “ethical” can be abused. When the word is used generically, it can lend itself to any number of interpretations, even to the point where it includes decisions and choices contrary to justice and authentic human welfare”. Business ethics, the Pope concludes, can even be manipulated when it prescinds from its deepest roots: « it inevitably risks losing its distinctive nature and it falls prey

to forms of exploitation; more specifically, it risks becoming subservient to existing economic and financial systems rather than correcting their dysfunctional aspects. Among other things, it risks being used to justify the financing of projects that are in reality unethical » (n 45). This weakening of ethics in general and of its effect on business ethics in particular is due to a series of philosophical and social developments that it is good to be aware of. In the first place we had the serious accusation that ethics represent a cover-up for interest groups and power lobbies. This trend was echoed by many others and ethics became suspect: “whenever someone claimed to be acting on the “ethical imperative” or “the moral law,” they were in fact rendering mystical and grand their own private interests or desires. Ethics thus became for many the proper name of power, hypocrisy, and unreality, a combination of mastery and delusion. The truth of ethics was announced by Nietzsche as ‘a mere fabrication for purposes of gulling. At its best, an artistic function; at its worst, an outrageous imposture’2 . In spite of this bashing, ethics made a comeback in the 80’s and in the area of business in a particular way. But this is where we notice a weakness. The ethics that we see being handled in relation to business in some ways lost its grip. E. Anscombe, since the 50’s, saw this coming. This English philosopher claimed that the concepts we use today in ethical discourse www.fidelisinstitute.org

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(obligation, duty, right, wrong), are survivals, or derivatives from survivals, from an earlier conception of ethics which no longer exists. They are now like plants standing in a field but which have their roots cut. This is why they can be moved around easily which means that they can mean different things in different minds. She was signaling the difficulty we feel today of finding common ground. As A. MacIntryre said (After Virtue, 1981) we are “moral strangers”. We can see expressions of this change in ethical theory in some of the business ethics literature of the last decades. To understand this we can examine the titles of some articles. To be just to the authors it is obvious that we should read the title in the context of the whole article. But for our purpose here of giving some evidence of the change in tone, a look at the titles can suffice. One such expression is that of Milton Friedman when he writes in 1971: The social responsibility of business is to increase its profits (The New York Times Sunday Magazine, September 13, 1970). Another title that calls our attention is that of A. Carr’s: Is Business Bluffing Ethical? (Harvard Business Review, 46, January-February, 1968). In this article the author claims that business ethics would have to be “different” from the ethics that regulate ordinary life. Business is presented in the analogy of a “game”, where each game has

its own specific set of rules that do not coincide with the rules of other games. If you play poker you must not complain if somebody bluffed you into a move that resulted in that you lost your fortune. Yet another title that invites reflection was that of L. Nash, Ethics without the sermon (Harvard Business Review, 59, November-December, 1981). In this article, ethics for Business must be that which corresponds to the nature of the reality that is to be judged. The authors use an analogy: that of a “good puppy”. To declare a puppy “good”, you demand things (very few!) that correspond to its nature. In a similar way you must not present Business with an ethics that sound like a sermon. These perspectives – to be read certainly in their full context - did however set a tone and which could maybe explain certain slogans and the leit-motifs heard in the background of the euphoric pre-crisis period of financial growth, where “greed was good”. Gilles Lipovetsky, a French sociologist, summarized this weakening of ethics for Business in his book Le crépuscule du devoir (The twilight of duty)3. As a sociologist he says that the “old” moral ideals are no longer held to be valid and, on the contrary, our society considers an ethics that pretend to be universal and pure as actually hindering the progress of society4 . This has affected business ethics as well. He sizes up the situation in the following way: “Rigor of principles on the one hand, pragmatic flexibility on the other, business ethics is approximate and rectifiable, a new figure within the process of secularization of morals. It relies less on the moral tradition and more on the democratic tradition, applied, in this case, to the corporation: it corresponds to each one to determine, with rational deliberation, the values and the finalities; the homo democraticus is one who has given his soul to the corporation”5. This is the new challenge for ethics. Einstein is quoted as saying that we cannot think the solutions for a problem in the same mindset that created the problem. We are now struggling to find an answer to an enormous economic crisis. Something new has to be proposed. We think that a renewal of ethics, among other factors, is called for.

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This was the motivation of the retreat. Of our hearts the spiritual energy that drives us towards our fellow human being with a love and truth that knows no compromise. When we remain in silence the better part of ourselves comes to the surface, we remember things that we forget in the hustle and bustle of daily business and this is vital for men and women in such an influential activity as business. We want to know what is really the issue at hand when we speak of “ethics”. We hear about ethics all the time; we speak about ethics all the time; we are reminded of ethics all the time. So we want to know what we are talking about and what is being said to us. In this sense we want ethical insight. An insight is a special sort and degree of knowledge. It is a knowledge that unites all the elements with a certain coherence of grasp and with something that makes what we “see” intimate, personal and creative. You can’t learn it by rote or by hearsay: it comes from personal experience and this is why we need silence from outside noise. Following B. Lonergan we can say that insight has a series of characteristics that

poses a real challenge when it comes to ethics in business. These characteristics can be a kind of conscience examination. Have I insight or is my ethics something that is just formal, hearsay? Here are the characteristics and some questions. The first characteristic is that insight comes as a release to the tension of inquiry, it satisfies an antecedent desire, it is the fruit of an antecedent effort. Can I describe myself as a searcher in questions of how to do good and do well in business activity? The second characteristic of insight is that it comes suddenly and unexpectedly. Can I remember insights that have marked my life? In the third place, insight is a function, not of outer circumstances, but of inner conditions. It is like hearing and listening. Unless one is deaf, one cannot avoid hearing. Unless one is blind, one has only to open one’s eyes to see. But to really listen and really see we need inner dispositions, a perpetual alertness. Am I open to the possible surprises that ethical insights can bring, even when they can put some of my comfort in question? Fourth, insight brings together the abstract and the concrete. This makes us see www.fidelisinstitute.org

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Choosing Excellence:

Character as the Foundation of Moral Understanding in Professional Life by Christopher Oleson, Ph.D. Christopher Oleson is the cordinator of the research and screening team for Fidelis International Institute

I. Two issues ago in the Fidelis Review we spoke about the inescapable necessity of qualitative judgments in professional decision-making. We came to see that business, like every other significant human activity, cannot be reduced simply to calculative, cost-benefit analyses. Rather, it is essentially committed, one way or another, to certain value judgments about human life, man’s good, and the nature of justice. Like it or not, professional decision-making inevitably involves us in moral judgment. In the last issue of the Review we deepened that discussion by exploring more fully what such morally prudential judgment looks like. We saw

the concrete questions in a wider light. Can I think of ethical questions in a creative way, “outside the box”? Finally insight passes into the habitual texture of one’s mind. One realizes that I have crossed a divide. What a moment ago was an insoluble problem now becomes simple and obvious6. Can I see how previous insights have helped me to live better, in a more balanced way? Am I willing to become committed to grow personally and collaborate in the spreading of a culture that betters this world? Putting man together we put the world together. This was part of the title of the retreat. It tells the story of a young child that was asked to assemble a map of the world cut up in many pieces and he did it in a very short time because he discovered that on the other side of the jigsaw there was the image of a man. So when his bewildered Dad asked him how he did it so fast his answer was: “When you tore the cover off the magazine, I noticed a picture of a little boy on the back of it. I just knew if I pasted that little boy back together, the world would come together too”. www.fidelisinstitute.org

that the virtue of prudence, when possessed, makes one an excellent decision-maker not in this or that particular respect, but in relation to human life as a whole. In other words, one cannot be said to have sound judgment about what constitutes good human business if one cannot be said to have sound judgment about what constitutes good human life. There is ultimately no coherent and justified compartmentalization between the principles of good business activity and the principles of good human activity. They are the same principles, the former simply being one context in which the latter are applied. Accordingly, as I concluded in the last article: If our business is truly to become a “good business” and we are to become “good at what we do,” then we cannot ignore the task of cultivating the virtue of

Cfr. Paying More Than Lip Service to Business Ethics by Doug

Guthrie, Dean of the George Washington University School of Business 2

(F. Lentricchia – T. McLaughlin, Critical Terms for Literary Study,

University of Chicago Press, Chicago 1990, p 338). 3

Gallimard, Paris.

So we prefer to have self-interested people that are capable of

bettering the world rather than incompetent “good-willers”. According to this sociologist, we must not try to eradicate self-interested motivations, but only moderate them. We must not try to demand the heroism of disinterested action but look for reasonable trade-offs. We must play the card of science, of pragmatic and experimental reason. This new morality will be less demanding and dogmatic on people, but more demanding on organizations; less sublime, but better able to make people responsible, less pure but more capable of correcting the excesses and indignities of democracies. As for business ethics, the author “admires” how business has been able to vest itself with moral values: a perfect expression of our times. 5

G. Lipovetsky, op. cit., p. 249.

Cfr. http://www.lonerganresource.com/pdf/courses/1/Insight_Notes.pdf

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complete prudence in the professional part of our life. To do so will not only make us people of integrity but will open up for us the decision making resources that will make our professional judgment the best that it can be. The truth of this claim, of course, inevitably raises the question of how that task is to be pursued. How does one grow in one’s moral understanding and thus be able to make good decisions in light of sound moral principles? Does one simply read books? If so, how would one know that those books are making accurate claims? Indeed, should one even think of this task as merely conceptual in nature? In other words, does cultivating prudence require only learning what the right ethical concepts are? II. If we once again turn our attention to Aristotle’s insights, we will see that growth in moral understanding is more than simply learning new facts or ideas about what is ethical. One of the foundational points Aristotle makes in his work on ethics is that he virtue of prudence cannot be acquired without first acquiring a good character, which is to say, a set of habits that consistently incline us to act in the right way. Contrary to the idea that an understanding of ethics can be acquired as a kind of technical expertise directed toward the formulation of ethical rules, Aristotle understands that progress in moral understanding is primarily grounded in the formation of good habits without which sound moral judgment is not possible. To better understand this claim, let us look at Aristotle’s reasoning in greater depth. Aristotle’s insights about the centrality of habit and character for acquiring moral understanding are rooted in his observation that man’s decisions cannot be dissociated from his passions, emotions, and appetites. In other words, man’s practical judgments and actions always have reference to desires, aversions, pleasures, and pains that are engendered by our appetites and emotions. In other words, if we examine our own lives, we will see that the ways we experience anger, fear, desire for sensual pleasure, aversion to pain, and other such passions, are expressions of deep-seated tendencies which consistently dispose us to act in certain ways. www.fidelisinstitute.org

Now the crucial point for our discussion is the following: the choices that we make throughout our lives shape how we tend to experience our passions and thus how we will habitually tend to act. Over time, our choices will form stable dispositions by which we become inclined to experience our desires and emotions in a certain way and according to which we will be prone to act. We all call these stable dispositions “habits.” When these habits are good they are called virtues. When they are bad, they are called vices. Thus, depending upon the habits we form, what pleases, pains, angers, and scares us will vary. The point is of some importance. Not everyone, for example, experiences the emotion of fear in the same way, at the same time, towards the same things, or for the same reasons. Some people tend feel a great deal of fear, some not as much. Some people are frightened by the idea of being alone in an isolated place, some by being in the middle of a large and noisy crowd. Some fear what is obviously not fearful, and some are apparently insensible to what they should fear.

III. Thus, the primacy of good habits in the moral life cannot be overemphasized. For only to the degree that one has acquired virtuous habits will one be able to judge rightly what is right and wrong to do in any given situation. In other words, without virtue, one cannot be prudent. Let us explore this in more detail.

Similarly, not everyone derives bodily pleasure from the same things, in the same way, or with the same intensity. Some take intense pleasure in certain objects, while others are either repulsed by, indifferent to, or only mildly interested in the same thing. What would be a “good time” to a loose womanizer would be an abhorrent betrayal in the eyes of a constant husband. As Aristotle says, pleasure…is regarded differently by different persons, and varies according to the habit of individuals.

On the other hand, because the virtuous man habitually experiences his emotions and appetites in the right way, toward the right things, and for the right reasons, he is able make sound moral judgments without his passions and appetites distorting his understanding. As Aristotle explains: A virtuous man judges correctly, and in each case what is truly good will appear to him to be so. Thus, what is good and pleasant differs with different dispositions, and perhaps the chief distinction of a virtuous man is his ability to see the truth in each particular moral question, since he is, as it were, the standard and measure for such questions.

Thus, it is of some importance what kind of habits we develop, for, as Aristotle explains, “it is pleasure that makes us do base actions and pain that prevents us from doing noble actions. For this reason… men must be brought up from childhood to feel pleasure and pain at the proper things”. If they do not, which is to say, if they do not form habits that dispose them to experience pleasure and pain in the right way, toward the right things, and for the right reasons, then their appetitive life will be disordered and hence, their moral life crippled. Why? Because their bad habits will incline them to act badly. When this is the case, the memorization of rules or the clarification of one’s values will be of little help.

Because people’s habits dispose them to experience their emotions and appetites in different ways, they correspondingly interpret and evaluate their experience differently. A man who has the habit of experiencing too much fear, which is to say, a coward, will be inclined to judge a fearful situation differently than a courageous man who has mastered his fear. In the grip of inordinate fear, the coward will regard the courageous man’s actions as totally reckless, and thus wrong headed. Similarly, the intemperate playboy who habitually indulges in serial fornication will judge the chaste, selfcontrolled man as a prudish kill-joy who doesn’t know what life’s all about.

He is “the standard and measure” because his emotional and appetitive habits are neither distorting nor enslaving, whereas wickedness, Aristotle explains, distorts and causes us to be completely mistaken about the fundamental principles of action. This is an incredibly important point that is virtually lost among modern ethicists. How we judge what the right thing to do is will depend upon our habits. This is why a life characterized by virtuous habits is absolutely crucial for sound prudential judgment.

It would be hard to think of a perspective more at odds with our contemporary sensibilities, but the truth of the matter is that there is simply no democracy of moral insight. Aristotle is quite blunt: “a man cannot have prudence unless he is good.” Thus there is simply no egalitarian democracy of moral insight. The virtuous man or woman is the measure of moral understanding, not simply the holder of just another opinion. Our otherwise politically sound democratic idea of “one person, one vote” makes absolutely no sense when it comes to ascertaining right and wrong. For example, the fact that the vicious habits of an organized crime boss have so dulled his conscience that he thinks murder and extortion are just “good business” does not make his opinion equally valuable or worthy of respect. Rather, such a man has profoundly eclipsed his rational capacity for correctly experiencing and judging the proper ends of human enterprise. His “opinions” and “values” regarding business ethics are practically worthless. Why? Because his habits have thoroughly corrupted his judgment. IV. With Aristotle’s insight into the relationship between habituated character and moral understanding, let us turn our attention back to the contemporary world of business and the dominant ethical assumptions that underlie it. What do Aristotle’s reflections teach us about the attempt to do ethics in an environment predominantly characterized by compartmentalization” and quantitative, cost-benefit analyses? I see three points that are important for our discussion. First, there is a general and alarming lack of awareness in the corporate world that neither the mere conceptual presentation of ethical procedures www.fidelisinstitute.org

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nor any efforts simply to formulate rules will make people ethical or prudent. By themselves, codes of conduct, lists of values, and workshops on their meaning are powerless to instill correct moral understanding, and thus good decision making. As Aristotle says, “In ethical matters, reasoning does not teach us the principles; it is virtue, whether natural or habitual, that inculcates right opinion about the principle [of moral action]”.

at the front door come 9am Monday morning. They will inevitably accompany the employee and act as constant inclinations and dispositons in all of their actions. Corporate codes of ethics, statements of values, company seminars, or memos on managing diversity will not, taken by themselves and conceived as “what ethics in the workplace is,” ameliorate the ethical problems encountered in corporate life.

Thus, only the long term performance of concrete acts which contribute to the formation of good habits count for much in the moral life. This is a non-technical acquisition and cannot be instilled by listening to “experts.” Good moral decision making, which is to say, the development of sound prudential judgment, grows out of these habits, not out of professional training or the acquisition of technique.

Without the cultivation of virtuous habits, having understood and even memorized one’s company’s code of conduct will matter little when one finds oneself in either an extremely tempting or extremely frightening situation. For example, when faced with a safe and lucrative, but immoral, opportunity for gain, or a pleasurably tempting, but inappropriate office relationship, the man or woman of bad or mediocre habits will often give into the unethical opportunity. Not because he or she does not “know better” but because his or her habitually malformed appetites will overwhelm their better judgment.

Aristotle says of those who think that ethics can be done in this way: By taking refuge in argument they think that they are engaged in philosophy and that they will become good in this way. In so doing, they act like sick men who listen attentively to what the doctor says, but fail to do any of the things he prescribes. This is not to say that intelligent moral theorists do not play an important role in the overall education of a community. It is, however, to say that listening to moral philosophers or professional business ethicists will never make one ethical or one’s company ethically sound, nor will it, of itself, instill in one morally mature prudential judgment. The second point follows from the first. It is that the compartmentalization of modern life into a rigidly separated “professional sphere” and “personal sphere” render ethics structurally incapable of addressing the root problems of moral action that then manifest themselves in the workplace. The choices that employees and executives make in every aspect of their life all contribute to the kinds of habits, whether good or bad, that they have and which dispose them to act in certain ways. If the decisions someone is making and the habits he or she is developing outside the workplace tend toward the selfish, the greedy, the licentious, or the cowardly, he or she will not be able to leave these habits www.fidelisinstitute.org

Similarly, faced with fearful consequences in terms of company share price going down or exposure of a career damaging mistake, a man whose habits incline toward the selfish or cowardly will be prone to ignore the company values he sincerely affirmed during the ethics training seminar and lie to keep up appearances. All of this is to say that rules and skills are in themselves inadequate for crisis moments, when one’s ethics are really being tested. In these difficult or tempting situations, a company’s procedures for better “values management” will fly out the window. The only reliable way to succeed under such ethical duress is to have formed stable, virtuous habits. Thus, in concluding this discussion of the sources of good moral decision-making in the workplace, we find ourselves, perhaps paradoxically, in need of committing ourselves to forming good moral habits and choices, not only at work, but in every other aspect of our life. For it is only in making this kind of general commitment, that we can legitimately hope to achieve the fullest and truest sense of excellence in our professional decision-making.

Every Economic Decision has a Moral Consequence by Eleanor de Rosmorduc Eleanor de Rosmorduc is the head of Communication and Public Relations of Luxembourg for Finance

“There is no such thing as an ethically neutral business leader.” These were the words of Cardinal Tarcisio Bertone, Secretary of State, as he welcomed 100 global business leaders and academics to the Vatican for an Executive Summit on Ethics for the Business World. The delegates, who represented a range of Christian denominations and the Jewish faith, shared a desire to find new ways to ground the ethical dimension of economic and business activity. The reference document of the Summit was Pope Benedict XVI’s encyclical on the social teaching of the Catholic Church, Caritas in Veritate (charity enlightened by truth), an intensely practical document that has gained a wide following as the springboard for ethical debate in business.

As one academic noted, “All the great world religions demand an integrated response” to moral questions raised by the crisis facing humanity. The Summit, which was held at the Papal Science Academy in the Vatican gardens, was hosted by the Pontifical Council for Justice and Peace, in collaboration with Fidelis International Institute and the Pontifical Athenaeum Regina Apostolorum. “Reason, by itself, is capable of grasping the equality between men … but it cannot establish fraternity” Pope Benedict XVI Commercial activity is essential to the common good, generating social benefits. It follows that the profit motive is legitimate. However, if profit becomes the exclusive goal, it risks destroying wealth and creating poverty. Prof. Andy Zelleke (Kennedy School / Harvard University) described how, over the past 150 years, business leaders were deflected away from their role as stewards. As shareholder ownership dispersed, with shareholders exerting no control, management felt little accountability. The relentless pursuit of self-interest was sanctioned by public opinion because it drove financial performance. www.fidelisinstitute.org

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The ideology that stock markets accurately reflect corporate value (rather than other value factors) was known as Agency Theory, and this became the norm.

Both the church and the universities therefore have a major responsibility. Professor Zelleke read out the Harvard Graduates’ Oath, an optional graduation vow, while Cardinal Turkson, responding to a question from a delegate representing the World Bank, confirmed that the Catholic church was ready to become a partner in financial educational programms.

Prof. Daniel K Finn of Minnesota attacked another long held assumption. “The theory of rational self interested action does not explain the market place”, he said. “It is reciprocity that is at the heart of what it is to be a human being.” A history of reciprocity between two parties breeds trust and trust drives the market.

Company codes of conduct must be concrete and systematically applied, continued Mr Ruding, and since ethical decisions may affect the bottom line “where there is tension between profit and right”, it is essential that the culture run from top to bottom of an organization.

Today, lack of trust has led to a situation where transaction costs (including massive legal documents) are a major element in the cost of production. Profits are for people, not people for profits1 Stephen C. van Ardsell of Deloitte agreed, quoting the encyclical: “The market needs ethics in order to function properly. And not any old ethics: ethics with man at the centre.” As a consequence, “all economic transactions should improve the situation of both sides” – a thought that is central to Islamic finance. There was a similar echo from Islamic finance when Paolo Ciocca (OECD) underlined two other principles: that a transaction must be fair and that it must be of benefit to the real economy. A consequence of this view is that the individual cannot be forgotten in favor of the community. Prof. Stefano Zamagni (Bologna) gave his opinion that “to aim at the common good alone is not enough. Maximizing GDP is not enough. The human is an individual. He must not be used.” This has implications in the corporate banking sphere. “If a company is a commodity that can be bought and sold at whim, then the employees are also a commodity,” he warned. Of course, ethical drivers vary from continent to continent. Albert Chan of Ping An Insurance described Hong Kong as driven by the rule of law, the British educational system and anti-corruption. In the UK, institutional investors frequently collaborate on corporate governance issues whereas those in the US typically do not. www.fidelisinstitute.org

Speaking for the western economic markets, Lord Griffiths of Goldman Sachs identified three fundamental causes of the financial crisis - technical errors, ethical errors and cultural errors – the last two of which are tackled head on by the encyclical under discussion. Both he and Charles Lo, Chairman of of JaneClare Group (PRC/HK) see the search for common ethical standards not as a constraint but as a challenge: “Business has an opportunity to become a leader in this ethical vacuum,” said Mr. Lo. However, if “every economic decision has a moral consequence”, then it is ultimately the individual who is responsible for creating a new moral paradigm.

Responsible stewardship of nature Environmental responsibility was not central to the debate at the Summit but underlay many of the case studies. The view of the Christian church is consistent with its view of man as a whole. “Our duties towards the environment are linked to our duties towards the human person” states the encyclical. “Nature is prior to us and has been given to us by God as the setting for our life”. This demands responsible stewardship. Clearly, a sustainable sharing of goods and resources has not been guaranteed by technical progress. In

this area the Christian church brings an important ethical angle to the debate: the unity of the human race. We have a duty to share our wealth by creating jobs and sharing resources. Walking the talk: ethics as a tool Both Kenneth Resnick of GE and Gilles Denoyel of HSBC France, representing two global companies, stressed the importance of company-wide staff training in ethics and decision making and the necessity for zero tolerance towards bribery. By refusing to collaborate in corruption, companies are promoting the rule of law in the countries where they are engaged, pointed out Mr Resnick. One of the most heart-warming and illuminating aspects of the Summit was the examples given by CEOs of actual situations of moral conflict and how they had dealt with them. The examples cited below are just a handful of them. Ines Kolmsee,

CEO of SKW (steel sector, production in 16 countries)

•

USA: In 2008 her order book emptied in the space of 2 weeks. Ms Kolmsee was obliged to lay off staff but chose to pay out full bo nuses and continued paying healthcare pay ments. Within 6 months all were successfully re-hired.

Morality demands more than the law requires1 The Catholic church holds that each person, whatever the influences affecting him, remains the principal agent of his own success or failure. Only integrity offers protection from doing the wrong thing and this involves the use of conscience. But how do people develop a conscience? Onno Ruding (chairman, Centre for European Policy Studies) pointed out that moral values are absorbed firstly within the family, then through religion, education and the surrounding culture and only lastly from the workplace. www.fidelisinstitute.org

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•

India: The Company purchased a construction site with a mortality-rate of 3-5 p.a. Having im plemented German safety standards (barriers included costs, languages and the heat), in the first year there was only 1 minor accident.

Eberhard von Koerber,

Club of Rome, formerly of BMW

•

South Africa, 1981: Angry reaction in Germany and the USA to BMW’s decision to build a plant in apartheid South Africa. But BMW was able to negotiate unprecedented conditions: equality of pay, black foremen and non segregation of facilities. 2000 staff were employed, of whom 100 high potential staff were trained in Bavaria.

Ofra Strauss,

itself by engaging weakly, without intellectual vigor.” Society must aim at “a higher goal” he concluded, by adopting new principles: “Good ideas are contagious.” Since Humanity has a common goal, the principles must be universal. • The dignity of the human person. • The common good. • Solidarity. • Subsidiarity. How can such a shift in culture be achieved? Incorporated into Best Practice, these principles will yield habits such as trust and reciprocity, appropriate incentive schemes and ethics applied creatively as a tool (not a constraint).

CEO of Strauss (Israel, active in 20 countries)

Role models, publicized by a supportive media, will influence the academic world, driving research and educational programmes. This is the critical phase, where examples of early adoption lead to widespread attraction and finally to an “inflection point” of broad acceptance and a change of culture.

Xavier Autrey

The role models are business leaders who must accept the often lonely road of conscience: • Taking responsibility for all stakeholders. • Avoiding speculative and unfair use of resources. • Creating jobs. • Recognizing that morality sometimes demands more than the law. • Recognizing that profit is for people, not people for profit.

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Her policy of full transparency, for instance by publishing the carbon footprint of the company, and efforts to promote gender/religious diversity at Board level led to both applause and personal criticism.

(Mexico, mining. 20,000 employees)

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During the financial crisis the company had to shut down 40% of capacity. However, staff were diverted to maintenance work at other plants.

These stories, and others, reflected real situations where the CEO took a decision that in many cases resulted in short term loss of profit and in most cases gave no guarantee of future reward. They underline the truth of Pope John Paul II’s comment about globalization: “Globalization, a priori, is neither good nor bad. It will be what people make of it”. The status quo is not an option Fidelis International Institute and the Pontificial Athenaeum Regina Apostolorum shared the difficult task of summing up the debate and reaching conclusions. Father Michael Ryan LC noted that delegates were “positive and enthusiastic about the coexistence of money and ethics”. However, “ethics has weakened www.fidelisinstitute.org

Closing the Summit, Cardinal Peter Turkson, President of the Pontifical Council for Justice and Piece, concluded that the use of conscience was not limited to executives, but extended to owners and shareholders, workers and their families. He warned delegates against leaving the summit not just with a “bag full of inspiring ideas and good suggestions” but with a real To Do agenda.

1 Quotes not otherwise attributed are from Caritas in Veritate by Pope Benedict XVI.

Fidelis Interviews Lorenzo Bini Smaghi Former Member of the Executive Board of the European Central Bank

What do you think is the most important message of the Encyclical Letter Caritas in Veritate, in particular seen from the banking perspective? There are several important messages, but certainly one of the most important is the search for truth which involves a social dimension in a sense that each individual has to take into account the impact of his actions on the broader economic context. The search for truth in the social context obliges individuals to be accountable and responsible for their actions. This is particularly important in the context of the global economic crisis since actions of a few can have an impact on the global economy.

Are there points of convergence between the teaching of Caritas in Veritate and the works of the European Central Bank? In our daily work we need to look at the impact of our actions on 330million people. And also we need to point out to the Governments of the 17 countries of the euro zone that their actions have an impact on other countries. On a daily basis the ECB has to dialogue with national Governments to push them to adopt a global perspective regarding euro. The Encyclical Letter encourages the creation of a hybrid business form which is profit- oriented and pursue social ends at the same time (CV,38). How do you see this happening? There are certainly areas in which hybrid business can play a very important role, in particular in the management of natural resources. There definitely is a room for hybrid businesses. As much as there is a room for the action of institutions whose role is to make sure that business rules and business ethics are respected. Regulating institutions brings ethics from the individual level to the business level, which is very important. www.fidelisinstitute.org

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According to the Encyclical Letter, which focuses on development, poverty alleviation and the improvement of living conditions are principal concerns for business. (CV, 47). In what novel ways can companies respond to these global challenges? The main way in which companies can respond to these challenges is to create jobs, help people gain access to professional occupation and increase knowledge and human capital. We are living in a world where companies have a shared responsibility for the improvement of professional skills of their employees. Companies and employees have to develop a long-term relationship to better address changes in the world economy. What is the most important challenge for the banking sector today? The banking sector in advanced economies has to strengthen its capacity to withstand shocks such as the one we experienced during the crisis, primarily by improving its capital basis. This will allow it to be able to continue financing the real economy in a sustainable manner. There is also a need to improve the ability to assess and manage various risks in a better way. This will require a revision of the business model in many banks, which might lead to lower but more stable remuneration for shareholders. What is your vision of ethics in banking and finance? Ethics is a fundamental requirement for banking and finance, which are based on trust. Unethical behavior leads to a loss of trust, which is damaging not only for the individual institution but for the system as a whole. This requires action both at the individual and system level, embracing also public action, in particular by supervisors. Can banks successfully combine the logic of profitability with ethical integrity, especially in investments? Some banks can do that if they have a long-term horizon. However, most market participants have www.fidelisinstitute.org

a short-term horizon. If you want to avoid short- termism you need to create rules and incentives which will encourage banks to look more at the medium term. To change the time frame you need new norms on how to measure success and results. This will divert the attention from short-term results to more long-term stability and ethical criteria. What is the ECB doing to incentive the adoption of a medium to long term investment horizon? The objective of ECB concerns actions in the medium term. So we ask banks and financial markets to reason in the medium term. This affects our operations, as for instance the way in which we assess the collateral that very stringent when economy is in a downturn or to be very lenient when economy is very positive. The Encyclical Letter states that “finance needs to go back to being an instrument directed towards improved wealth creation and development” and that “financiers must rediscover the genuinely ethical foundation of their activity” (CV 65). What can be done to achieve these two goals? It is very difficult to achieve these goals by pure self-discipline because financial actors are always tempted to find new instruments in the context of the financial world which is characterized by lack of transparency and extreme complexity. So there are elements in the finance world that encourage border line behavior. The underlying risk is that if one actor is more ethical than others and has a long-term vision he may get lower results than his competitors in the short-term and lose market share. This is why self-regulation is not sufficient. You need institutions that prohibit or discipline certain instruments in terms of transparency, the disclosure of risks and the creation of right incentives for remuneration. It is very important to create mechanisms which allow all financial actors to adopt such ethical behavior. You cannot achieve these goals just on an expectation that everyone should be nice.

Do you think that the role of ECB regarding the promotion of ethics and sustainability in finance is mainly in the domain of regulation? We are not the main regulator. But we ask others who adopt regulations in Europe- the European Commission, the European Banking Authority, the European Securities and Markets Authority to work on the basis of a long-term horizon, instead of short- term which is typical of financial markets. The role of these institutions is to counteract short-termism and lack of transparency so that those actors who behave ethically do not feel crowded out by others. Should ethical screening become an integral part of investment analysis and management in the aftermath of the 2007-2009 crisis? Ethical screening is particularly important in regards to reputational risk. When a financial player behaves

unethically, his reputation is badly hit, which implies lots of costs for the company. Ethical screens help banks not only to avoid investing in bad activities, but also protect their brand reputation. How do the values of responsibility and solidarity apply to the problem of sovereign debt and bailouts for Greece, Ireland, and Portugal? Well, this is exactly what the EU has been built on, the values of solidarity and responsibility. In the EU context, responsibility means that all countries follow the rules and thus have to put their national finances in order. This requires sound supervision over finance. In the middle of the financial crisis, we can have some problems in certain countries either because of mistakes that have been made or because of systemic shocks.

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Then, the principle of solidarity requires that if a country is implementing policies to get back on track, other countries should make sure that it succeeds and support it, also to avoid contagion. Since we are all part of one system if one country is in trouble, it can easily affect others. The 3 countries under stress right now represent only 6% of the gross national product, but the whole EU area is affected. What do you think are the necessary steps to improve the sustainability and stability of the euro zone in the context of the sovereign debt crisis? Countries must put their house in order, without waiting the pressure of the markets. Restoring sound public finances and competitiveness is a priority in order to promote growth, which is the best way to resolve the crisis. We also need also a strengthened governance of the euro area which enables to take decisions more promptly and more effectively, in particular to defend the integrity of the euro and avoid contagion. Do you think the new banking regulations such as Basel 3, the Dodd-Frank Act or the Volker Rule suffice to guarantee the stability of the global financial system or rather there should be a more decisive ethical response to the financial crisis apart from the new regulations? Well, incentives are very important, of course. One of the key incentives is remuneration. To set remuneration on the basis of medium-term performance instead of short-term is essential. Capital requirements regulations are also important. We should not forget bank supervision either. The financial crisis also calls for a reflection about the growing social inequalities which is one of the consequences of the crisis. The development of new technologies is changing the balance in the world economy provoking a concentration of wealth in fewer hands. And this is a problem because after a crisis like the one we have had people do not want to pay higher taxes to save banks. You just said that people do not want to pay more to save the financial system. How do you see the problem of so-called “socialization” www.fidelisinstitute.org

of the costs of bailouts where citizens are constrained to finance through taxation the preservation of the financial system? The point is that when you are in the middle of a crisis like this one, which is supposedly the biggest one since 1929, it is very difficult to change incentives in the middle of the process. Instead you need to concentrate on preventing future crisis. The way to prevent the next crisis is to change the rules of the game and induce banks to adopt a long term view. This is the role of the regulation authorities. Don’t you think there is a risk of overregulation in response to the crisis, which may stifle the recovery? I think that this kind of risk is over and now we are facing an opposite risk. Financial institutions have been adjusting after the crisis, as they have been deleveraging. They are profitable again and they use a part of the profits to lobby to avoid overregulation. And we see this everywhere. Now the risk is that we may go back to a situation which is not different from the one prior to the crisis, which, again, is not just the fault of financial institutions, or banks. Bankers are only a part of the game. When people continue to borrow, the economy improves and tax revenues rise everyone is happy, but a system based on excessive borrowing is not sustainable. And we still are in a situation where there is lots of borrowing. The public borrowing is replacing private borrowing. So there is a problem of avoiding excessive borrowing which puts a burden on the future generations. How do you think we can change the prevailing mentality in regards to borrowing? We need to do it on the globe level. We have to involve first of all the advanced economies, but also the emerging markets. The experience shows that finance is an important part of economic growth, but it should not crowd out other elements. So we need to rebalance the rules for finance so that it can support the real economy. In a global world, you need global rules. Otherwise you are

crowded out. Of course it is not easy, especially knowing that emerging economies want to grow and improve their standards of living, which is legitimate. This is fine and we need to allow it to happen, but at the same time we need to make sure that it is sustainable. If you were asked to give a speech on business ethics and responsible investment in a high -level EU meeting, what would be your message? Any reform starts from the individual level but has to spread to society as a whole. We need to go

back to what Europe experienced after the Second World War which is creating an economic union in the spirit of solidarity and responsibility for the future generations. All entrepreneurs need to keep it in mind. We need to make sure that those who follow ethical rules are not penalized. It is a cooperative effort which also requires institutional changes.

Thank you very much. www.fidelisinstitute.org

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Operating in integrity with your vision and values by Ashley Munday Ashley Munday is a leader in collaborative estrategies at Barrett Values Centre

I have sat with a brick carrier in Maharashtra, India, a woman whose toddler had recently drowned in an open clay pool. I’ve held a Vietnamese boy with a deformed and oversized skull due to the intergenerational effects of Agent Orange. It is in those moments in particular, looking into the suffering eyes of another, that I feel a weight of sadness and responsibility. And it causes me to wonder – what would it feel like to be them, looking back at me? We’ve all seen the images and heard the stories of these innocent victims at the mercy of inequitable

systems of power. We are faced with the complexity of interdependent forces of economy, politics, climate, and health. Many of us wrestle with how to intervene in meaningful and systemic ways. At the same time, I recognize that this is no time for idealized notions or sympathy alone. At a symposium in Vancouver a couple of weeks ago, Dr. James Orbinski, former President of Doctors without Borders who accepted the Nobel Prize on their behalf, said “Hope is not found in dreams. It’s found in the reality of what we can create.” These problems are global, but our governing systems to deal with them are primarily national. Businesses and business leaders share a larger responsibility than previous generations to contribute to the stability and well-being of society. Concurrently, and often conversely, business leaders are charged with the performance of their organizations. They are responsible for producing results while balancing the demands of their boards, and the needs of their executive teams. Andy Zelleke, of Harvard, so aptly wrote, The health of the enterprise and at least its reasonable competitive success are prerequisites to the firm’s vitality and survival, and its capacity to do anybody any good. 1 The demands on leaders today are infused with gravity and paradox. There is a call to think bigger and become more conscious of their organization’s impact. This is not the poetic new age sentiment of consciousness, which somehow implies that some people are conscious and others are unconscious. Becoming more conscious is about expanding one’s awareness and purpose. It is about investigating more fully, deliberating more carefully and executing in confidence that you are doing good, not harm. Leaders are being held to higher levels of awareness and responsibility.

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The concept Creating Shared Value recognizes that the competitiveness of a company and the health of communities around it are mutually dependent. Leaders are responsible not only for their companies’ direct impact on society and the environment, but they are also responsible for the indirect impact of their distributors, suppliers and partners. At Barrett Values Centre, our data indicates that in order to create an ethical organizational culture, a leader must operate in integrity with his vision and values. These values must be explicit and the leader should invite feedback to ensure his behaviors are perceived to be in alignment with these values. When a leader “walks the talk,” it creates trust and coherence in the organizational culture. Richard Barrett writes: Learning to lead your self is a lifetime journey. It is not an event. It is a process that requires your continuing commitment. There are always layers and layers of subconscious fears that have to be managed, mastered or released if you are to become an authentic individual; there are always new depths of understanding to be discovered around your purpose in life; and there is much learning to be done about how to bring that purpose to fruition to achieve the personal fulfillment you are looking for. To be successful, a leader must develop the skills of leading self, leading a team, leading an organisation and leading in society. It is not enough to focus solely on higher level aspirations. A strong leader will also be a competent financial steward and will ensure a respectful working environment, good systems, continual innovation, shared vision, strategic partnerships, and will also focus on their impact to humanity, the planet and future generations. At Barrett Values Centre, we’ve defined Seven Styles of Leadership. While most leaders will occasionally change their style to respond to external circumstances, most will operate predominantly from one level. For a more detailed description of the levels click here. Additionally, click here to take a Leadership Self-Assessment to determine your style of leadership.

These closing words are from Richard Barrett’s book, The New Leadership Paradigm: The leaders of our organisations need to recognize that business is a wholly owned subsidiary of society, and society is a wholly owned subsidiary of the environment. Business can only thrive and prosper in a world where people live at peace with each other, and where we all live in harmony with the planet. If the life support systems of our planet are not preserved, not only will our human society perish, but our economy will disintegrate too. Building a sustainable future for everyone is not just societal imperative it is also a business imperative. 1

A Zelleke (Fall 2011), If highly ethical business leadership is more

rare than we’d like, what made it so?, Fidelis Ethics Review, Fall 2011

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Coming soon, Ethics in the Oil & Gas Industry Forum

On Ethics and Integrity by Ebehard von Koerber Ebehard von Koerber is the Co-president of the Club of Rome

The latest developments in globalisation, the erosion of natural and social capital, the free movement of financial capital across the globe, also to and from emerging markets and last but not least the recent international financial crisis and the growing economic imbalances between countries as well as inside societies have now set a new global agenda. An agenda covering the viability of our economic system, the need for global governance and regulation and the challenges to address institutional and individual ethics and responsibilities of leaders in politics and business. As a former top executive of large multi-nationals companies like ABB and BMW, Mr. von Koerber addressed the issue of ethics and integrity in business leadership in the global context. He shared with the participants very personal experiences as business leader in Europe and Africa. His conclusion was that business leaders as investors, employers and tax payers personally and institutionally have more leverage on politics and the common good (CV 7) than they think and that they, because of their power, have a responsibility www.fidelisinstitute.org

to intervene in the public interest and the interests of all stakeholders (CV 40). If done properly, this does not sacrifice competitiveness of the corporation or its bottom line. The opposite: an active and public corporate social responsibility adds credibility and trust in the company as critical off-balance sheet ingredients for future success. Competition therefore is no excuse for unethical behavior. Credibility, trust and a commitment to ethics, charity and justice (CV 37) do not come by itself. They have to be individually developed through education and practice. In today’s world of materialism, individualism, hedonism and high-speed internet communication, the family, the church and the school have lost influence in developing values for young people and an interest in integrity and responsibility. This generates a new agenda for value based leadership training. Eberhard von Koerber outlined the details using the Wittenberg Centre for Global Ethics, The Club of Rome and the World Scouting as practical examples.”

Fidelis International Institute is organizing the “Ethics in the Oil & Gas Industry Forum”, where top executives of this industry will be reflecting upon the importance of ethics and the challenges and opportunities this sector is facing. This is an exciting moment for oil and gas companies, and for the executives who lead them. A time to show the world how this critical industry is reshaping itself, breaking paradigms and thinking out of the box to demonstrate how they are making business ethics the cornerstone of their strategic agenda. Oil and gas companies are redefining themselves and are becoming more humane, more dignifying, and more responsible organizations. While doing so, their bottom lines and their shareholders’ return are increasing. Business leaders are invited to be creative and make even more positive changes in their industry as new times call for new solutions. Fidelis is inviting the key players in this sector to become part of this utmost important reflection. The new leaders of this industry and, in general of the business world will be sharing their points of view on how they conceive, how they understand, and most importantly, how they apply business ethics in their day-to-day lives. We share with these leaders the idea that an ethical company is also a more profitable one, the pre-requisite for our

reflection. We invite you to be part of this great opportunity to ask yourself why ethics is important and what you are doing specifically in your field of influence to place ethics at the top of your Agenda. The event will include discussions set in context with some elements of the encyclical letters Caritas in Veritate, issued by Pope Benedict XVI in June 2009 and Centesimus Annus issued by Pope John Paul II in 1991, with the underlying idea of simply making the human being the ultimate focal point of the discussion. Three good reasons to attend the Ethics in the Oil & Gas Industry Forum: A great chance to share with other world leaders what your organization is doing to ensure that business and ethics are compatible. A unique forum to share your own personal experiences about why being ethical makes sense, and how it coexists with profitability, while networking with over 100 of the world’s most influential leaders of the oil and gas industry. A perfect setting for exchanging ideas on how to create a better sector and to redefine the way we conduct business in the oil and gas industry worldwide, taking part in a long-term project towards the creation of a better world for mankind. www.fidelisinstitute.org

Stay tuned for the next... Executive Summit on Business Ethics

An opportunity to reflect upon the importance of ethics for the business world.