Businesses can't escape ethical questions, which veteran company director Rob Campbell sees as one of the core values of the next generation coming of age.
In a speech to the Parnell Rotary Club yesterday, the former trade unionist and professional company director Campbell said even social agencies adopt commercial models used by business, and the way business is conducted has far-reaching consequences.
"If our model is extractive or exploitative we will all bear the downsides of that. Equally, if our model is value-creative, transparent and inclusive the benefits will flow," Campbell said.
"Businesses are comprised of people, and it is people who make the decisions about what to do and not to do - not the mechanical demands of capital or that other abstraction the 'market'," he said. "This means that ethical questions and business are inseparable."
Campbell said personal guidelines and values are the most important part of ethics policies adopted by leading firms, but they have to be tested and revisited by boards and management often: "We should be prepared to be challenged on them by stakeholders and increasingly we are - just this week by Simplicity founder Sam Stubbs on diversity issues for example."
Stubbs said Simplicity may use its position as a shareholder to pressure companies to improve the diversity of their boards and senior management.
Campbell dubbed the dominant theme of his generation - which came of age in the 1960s and 1970s - as "the quest for identity", where expressions of gender diversity, social orientation, Maori identity and New Zealand's anti-nuclear stance were "at one with the removal of economic restrictions and regulations", whereas for younger generations the dominant theme was "the quest for authenticity which has strong social values and ethics at its core".
That shift has seen a growing tide of investors demanding a greater commitment to social responsibility from listed companies, while some entrepreneurs have embraced the concept of social enterprise where the public good is intertwined with generating profit.
Campbell told Rotarians that businesses are a public good in and of themselves, in that people apply their skills, work with others, and meet people's desires in doing so.
"We may abstract to units of production like FTEs, but the reality of any business is that far more is happening than is captured in the profit and loss and balance sheet," he said. "Whether it be employee engagement, health and safety procedure, diversity in practice or other holistic aspects of how a business works, this approach to business is not inconsistent with profitability.
"Quite the opposite, the research on business performance strongly underpins the view that everyone gains from having this approach," he said.
Regulators have got better at reining in the harmful excesses of some businesses, but that "politicians are still a danger of imposing knee-jerk regulations which have negative consequences" and that a "consistent and transparent process" to assess new regulation and an automatic review would improve things, Campbell said.
However, regulation was needed when businesses were lax, such as in health and safety, where "only repeated tragedy and eventually regulation has made us behave better," he said. Likewise, environmental sustainability saw business "dragged to a much better position by a few leaders of foresight and a wider strong community sentiment on such issues," which has led to better practices and reporting.
While those sorts of regulations have accompanying costs, something noted by Milford Asset Management principal Brian Gaynor in a recent Herald column, Campbell said "running a business in New Zealand is not disproportionately difficult to other comparable economies" and the imposition of costs outweighing the benefits are "a side issue for most".