Ethos is the ancient Greek word for character. We think an important part of business involves developing character. This means more than just allowing individuals to be good. It also entails fostering a shared ethos through changing the way that organizations, industries and broader governance structures work. We think three important characteristics of a shared ethos are responsibility, sustainability and good governance.
There has been a widespread and systematic failure among our major institutions worldwide.
The financial crisis laid bare failures within the banking sector, with the LIBOR and foreign exchange manipulation exacerbating the legitimacy crisis and eroding our once trusted banking system.
Social, political, and economic inequalities are dramatically rising not only in developing, but also in developed countries.
Poor labour conditions in factories have led to thousands of deaths of workers that reflect wider failings in the global consumer goods industry.
Many of our foundational institutions are failing to address the severe threats posed by climate change. Fiscal evasion and tax havens create increasingly global problems related to tax income but also to outsourcing. Health care costs are out of hand and access to basic health care services are under threat. As citizens, our personal privacy is at risk given recent revelations about the sharing of private information. And the list goes on.
These issues are not just due to mistakes on the part of a few unethical individuals or companies but reflect a broader systemic crisis in our society. Short-termism, the increasing financialization of society, lack of accountability and transparency in our institutions and poor governance are some reasons why we seem to lurch from crisis to crisis.
At ETHOS we seek to address these pressing issues through our research, teaching and engagement. Our research suggests that three main problems - spanning across nations, markets, institutions, and organisations - underlie the endemic failure of current institutions:
- The problem of responsibility - how might organisations be made responsible for their social and environmental impacts, to whom are they accountable, and how can we ensure they play a more responsible role in society?
- The problem of sustainability - how can we ensure that organisations and their operations remain sustainable and take into account long-term environmental and social impacts?
- The problem of governance - how can we ensure that our organisations and institutions serve the public interest? How can we deal with prioritization and marginalization of interests in our systems of governance?
As key engines of economic growth business firms have a significant responsibility to ensure that wealth creation occurs in environmentally and socially sustainable ways. However, the global influence and power of corporations have the potential to erode institutional structures and processes designed to ensure environmental and social welfare.
This influence of corporations blurs the boundaries between the private sector, state, and civil society, and renders markets and society more permeable to each other. This penetration of corporations into state and civil society sectors require thinking about and designing novel solutions that span sectors and national borders involving a diversity of actors if we want to create a more inclusive and just society.
At ETHOS, we think that the quest for such solutions starts by exploring three fundamental questions, across multiple levels of analysis:
Why and what?
Why do organisations - and especially the corporation - exist and what purpose do they serve? For the last three decades, we have assumed that the primary responsibility of business is to maximise shareholder value, which often leads to short-termism and marginalization of other interests.
At ETHOS, we believe that organisations have multiple purposes including efficient economic utilization of societal resources but also to address the broader social, cultural, environmental and political impacts on internal and external stakeholders.
We seek to generate knowledge about how different needs and aspirations of stakeholders can be balanced or integrated, and how to address potential conflicts. We do this by advocating stakeholder ownership, responsible investing, sustainability and effective governance.
Who should be involved in the governance process of regulating and overseeing the fair allocation of resources in the public interest, as well as devising appropriate sanctions?
At ETHOS, we attempt to answer this question by investigating the role of organizations as well as other actors and institutions from state and civil society sectors. We believe that corporate social responsibility (CSR) should go beyond glossy annual reports but needs to be incorporated in core functional processes of the corporation as strategy, marketing, operations, human relations, accounting and finance.
For CSR to be effective, key actors outside the organization need to be involved in organizational decision making processes rather than being mere recipients of CSR initiatives. We therefore explore what actors, from the public, civil, and private sectors, should be included, represented, and given voice in the governance process and how their different interests can be taken into account, both within firms and in broader systems of global governance.
How would the implementation of responsibility and involvement of affected actors be undertaken? What measures and assessment tools can we develop to ensure that key issues of responsibility, sustainability and governance have been addressed?
While the notion of public-private partnerships is appealing there is a need to understand the range of outcomes such partnerships actually deliver. For instance, the United Nations Global Compact, a multi-stakeholder initiative involving governmental bodies, non-governmental organizations and business firms aims to develop global standards on human rights and sustainability. At ETHOS we want to critically evaluate the effectiveness of such partnerships and identify what learning mechanisms enable organizations to implement sustainability principles.
Thus, research, teaching and engagement at ETHOS will centre around themes such as the role of business in society, the purpose of the corporation, private regulation of business activities, CSR and sustainability, labour issues in global business networks, sustainable corporate governance and shareholder activism, and the role of state and civil society actors.
At ETHOS we believe there is an urgent need to address such questions if we are to develop a more democratic, just and equitable political economy.