It is not all about being nice and doing the right thing, but it is having a solid idea and sticking to that idea.
Many have the notion that an ethical company is one that does not cause problems or damages to the society. Specifically though, an ethical company is one that sets moral standards, manages the business accordingly, and ensures the well-being of internal and external stakeholders, such as regulators, employees, suppliers, and customers. In the past few decades, companies have incorporated ethics in their businesses to better serve their stakeholders.
L’Oréal, the world’s leading beauty company with 32 brands and 78,600 employees, takes pride in their ethics program – voluntary, proactive, and evolves as the company grows. The program includes three strategic levers – steering and monitoring system for regular audits, awareness-raising and engagement for employees’ involvement, and “Open Talk” policy for transparency. Currently, its “Sharing Beauty With All” sustainability program commits to innovating, producing, living, and developing sustainably by reducing gas emissions and water consumption, creating action plans with environmental and social impact, and providing health care for permanent employees. Moreover, it supports United Nations Global Compact, where integration of social, environmental and governance principles in business activities is encouraged. L’Oréal’s efforts are consistently recognized as they have already been awarded six-times as one of the World’s Most Ethical Companies by Ethisphere Institute.
Specifically, to consider the company as ethical, eight elements should be present- respect, honor, integrity, customer-focused, results-oriented, risk-taking, passion and persistence. These elements serve as a framework for the value creation in the company. It is important in order to determine the strategy the company will use with regards to the product quality and the cost of production depending on the kind of situation that the company faces.
An example of an ethical company, which utilizes the value-creation strategy is Gandang Kalikasan Inc., otherwise known as Human Nature. The company centers on three core values, which are Pro-Philippines, Pro-Poor, and Pro-Environment. Human Nature promises affordable and natural products, without using harmful chemicals, which has an impact on the consumers as well as the environment. More importantly, the company’s promise in non-usage of chemicals is in line with their business, thus making it long-term and sustainable. In fact, the company now has 29 branches nationwide in a span of 10 years.
As observed through the examples, L’Oréal and Human Nature are successful stories of ethical corporations. In fact, the business prospers as the company incorporates ethics in their business.