Ethics versus Compliance – Paris Debate

This September, GoodCorporation held its first debate on business ethics in Paris. It was attended by senior figures in the fields of ethics and compliance from some of France’s most prestigious companies including Total, EdF, France-Telecom/Orange, EADS, L’Oreal. Lafarge, Thales and Airbus.

The debate centered on the role of ethics and compliance within an organisation. Led by GoodCorporation client Bernard Claude, Chair of the Ethics Committee at Total, the debate examined the difference between the two functions and asked if they should work together or be kept separate.

It was clear from the discussion that compliance was seen as an essential part of the regulatory framework that governs businesses today. However, it was also felt that compliance alone was not enough to ensure an ethical code of conduct in all areas of business practice. Indeed, there are plenty of examples of heavily regulated industries with dominant compliance functions that have failed to prevent corruption or malpractice.

While compliance takes care of rules and regulation, ethics, it was felt, has a direct influence on behaviour. As business has become more global and both the media and indeed social media have become more far reaching, there has been a corresponding rise in both the importance and the prevalence of codes of conduct and codes of ethics.  Allowing poor ethical conduct is a high-risk strategy with potentially disastrous implications for corporate reputation.

But while few would argue against the need for both a compliance and an ethics function, there was a difference of opinion as to how they should operate within an organisation.  Many felt that they should be kept separate to avoid the possibility of the two functions converging. It was suggested that by keeping the two in distinct departments, it would ensure an equal emphasis on ethical behaviour as well as regulatory compliance and so avoid the establishment of a box-ticking culture.

However, others felt that by keeping the two functions in different departments, there was a risk of Chinese walls, of the left hand not knowing what the right hand was doing and of these two vitally important functions effectively in competition.

Ethics and compliance, it was argued, are two complimentary functions that must operate side by side. This was broadly agreed. Both, it was felt, have equal importance within the corporate structure and whether or not they are in the same or different departments, they must operate together to ensure the same goal.

GoodCorporation Business Ethics Debate September 2011