Ethics Industry's Ethical Dilemma

The ethics industry has a serious ethical dilemma.  While it seeks to impose the highest standards of transparency and probity on businesses and governments, it is silent about its own standards.  Indeed the ethics industry tolerates behaviour within its own ranks that neither it nor the community would tolerate elsewhere.

For evidence one need only examine The Good Reputation Index published by The Age and The Sydney Morning in each of the last three years.  The Index assesses the ethical, social, environmental, labour and financial performance of Australia's top 100 corporations through the perception of the "community stakeholders".

In the first Index in 2000, Leighton Holdings was rated the most ethical big corporation in the land.  This was despite Leighton suffering an adverse finding in a Royal Commission.  Moreover it was deemed by the NSW Casino Control Board as late as 1999 as unfit to have ownership control over a casino.

Recognising the need to improve its reputation, Leighton approached the St James Ethic Centre in the late 1990s for guidance on ethics in exchange for a six figure "contribution".  This was a sensible move by both parties.  The problem lies with the Centre's decision also to judge Leighton's ethical performance in the 2000 Index.  The Centre not only failed to disclose its financial relationship with Leighton but rated the firm tops on ethics.  As was later revealed the Centre had financial relationships with 37 of the 100 corporations in the Index and disclosed none of them.

After the Centre's ethical errors were exposed, it became a "Clayton's judge" in the second Index.  That is it gave a rating that was publicized but not included in the Index thereby avoiding the need to disclose financial relationships.

The Australia Conservation Foundation (ACF), one of the Index's judges of environmental standards has also failed to adequately disclose its funding relationships.  In the 2000 Index it made no disclosures.  In the 2001 and 2002 Indexes it stated that it received financial assistance from a number of firms, including Southcorp, "in pursuit of its (the ACF's) conservation objectives".

This was not accurate in respect of the ACF's relationship with Southcorp.  The agreement was for the ACF to, amongst other things, assist Southcorp in developing its environmental policies and programs.  Southcorp has stated their "intention was to get a good PR profile".  For these services Southcorp gave the ACF a six figure donation.

Southcorp appears to have been successful as the ACF has consistently rated Southcorp much higher than other judges.  For example, in the 2002 Index, Southcorp was ranked 82nd by the EPA of Victoria and 4th by the ACF.

World Vision, a judge of social performance in the 2002 Index, also failed to adequately disclose its corporate links.  It did state it has financial relationships with many of the companies covered by the Index;  however it failed to name them or describe the nature of the relationships.  When we asked World Vision to disclose its corporate sponsors, it declined, claiming commercial confidentiality.  In its pitch to corporations, World Vision claims a relationship which is "good for your brand".  How, if the relationship remains a secret?

I could go on.  Undisclosed commercial relations abound in the industry's dealings with corporations and governments.  The problem is not working with firms but rather in acting simultaneously as judge, jury, advocate and paid adviser without disclosure.