Commentary: Good ethics is good business
Apple Inc made history last month. Now the richest listed company based on market valuation Apple hit a stunning US$710 billion, something no other corporation has ever achieved.
A very simple definition of market valuation is the amount of money investors such as individuals, investment houses and pension funds are willing to invest in a company's stocks. Some persons will invest more, based on anticipated future earnings, or less, based on anticipated future losses.
Undoubtedly, however, Apple is now poised to become even more valuable with the pending launch of its Apple Watch next month.
Is it the genius of founder, the late Steve Jobs that has placed Apple here? Outside of very experienced market analysts, techies, and academics, few know that Apple's incredible success is defined by another attribute.
Simply stated, Apple Inc is among the world's most ethical companies.
Consider this, for example. Each year, Fortune magazine ranks the world's most admired corporations. The magazine presents this as the definitive list on corporate reputations. The list is compiled from the 1,000 largest US corporations, based on revenues, and the 500 largest non-US companies with revenues greater than US$10 billion or more. In arriving at the 2014 list, 4,104 executives, directors and securities analysts were surveyed to select the 10 companies that they admired most.
All companies are ranked on nine key attributes: innovation; people management; use of corporate assets; social responsibility; quality of management; financial soundness; long-term investment value; quality of products/services; and global competitiveness.
Apple topped Fortune's World's Most Admired list this year as well that of the past eight years in a row. And there are some real heavy hitters in the Top 10 rankings such as Google, Berkshire Hathaway, Amazon.com, Starbucks, Walt Disney, Southwest Airlines, American Express, General Electric and Coca-Cola.
Apple's eight consecutive years atop Fortune's list also happens to mark the eighth issue of its Supplier Responsibility Progress Report. The report sets out its mandate in the first paragraph and reads in part:
"At Apple, we believe in making complex things simple. We strive to design products that are intuitive and enrich people's lives. Behind that simplicity lies one of the biggest supply chains on the planet. Products like iPhone, iPad, and Mac all depend on the contributions of more than one million people across the globe, employed by both Apple and our hundreds of manufacturing partners. Each of these workers has the right to safe and ethical working conditions. So we audit deeply into our supply chain and hold our suppliers accountable to some of the industry's strictest standards."
more than implementation
Managing ethics is more than just putting in place a code of ethics for Apple. In 2014, approximately 451 audits were implemented in multiple levels of the supply chain and, in the process, 1.5 million workers were trained on their rights. The processes target workers' education and empowerment, labour and human rights, health and safety, the environment and management systems.
Apple's story finds congruence with recent conversations taking place locally on the place of ethics in business. Commendations are due to Wycliffe Caribbean, which last month sponsored South African businessman Dr Graham Power on a visit to Jamaica, and in the process, he launched the 'Unashamedly Ethical' campaign. The campaign commits to 10 'unashamedly ethical' behaviours that speak to truthfu lness, faithfulness, unselfishness, integrity, diligence, peace, hard-work, respect for just governance, conscientiousness and collaboration.
In addition, social entrepreneur Dr Henley Morgan has written an excellent piece. In his comments that were pertinent to the launch of the Social Enterprise Boost Initiative summit, sponsored by Jamaica National Building Society and USAID, he endorsed the premise that institutions can make profits while solving social problems and serving the social underclass. Morgan identified the public sector, private sector, and non-governmental not-for-profit community-based institutions and spoke to a fourth sector of non-governmental organisations building sustainable businesses while remaining loyal to their core mandate, as well as for profits engaging in more social functions as social enterprises.
What Henley calls social enterprises, however, simply represents a new name for the practice of corporate social responsibility, whether this emanates from Government, the private sector or the NGO community.
It appears that the message is finally getting through that good ethics is good business. After all, Apple Inc is today the world's largest listed company. It is a profitability driven in part by incredible innovation and highly robust ethical practices.
n Hopeton Morrison is an author and trainer.