By Elias Munshya, LL.M., MBA, M.Div.
A business corporation on the Copperbelt is alleged to have polluted the Kafue River system in Chingola causing death and untold suffering among the local residents. While these remain allegations at the moment, ethical questions are being asked about what should be appropriate relationship between companies, profits and their ethical obligations to the various stakeholders. In Zambia, just like anywhere else, business corporations have a legal relationship with different stakeholders such as government regulators, customers, and shareholders. Additionally, every business corporation has an ethical relationship, which is not necessarily legal, with many more stakeholders in the contexts in which these businesses operate. As such, every business must balance business law and business ethics if it is to survive in the modern world. The idea that businesses only needed to adhere to legal requirements is now passed. A new era now places a demand upon corporations to incorporate ethical practices into their business.
The goal of business cannot be limited to making money only. There is an expectation and a demand being placed on corporations to endeavor to do business and make money in a way that is sustainable to the environment as well as ethical to other stakeholders in the setting that the businesses find themselves. As such, ethics are becoming that fundamental relationship “between business and the society at large” (Weiss, 2003). There are so many stakeholders that are holding companies both great and small to stringent ethical standards.
In its widest sense, business ethics “refers to the application of our understanding of what is good and right to that assortment of institutions, technologies, transactions, activities, and pursuits that we call business” (Velasquez, 2002). Nelson’s 2006 definition of business ethics is even more appropriate: Business ethics are expectations – other than business laws – regarding acceptable business conduct. With regard to the relationship between ethics and the law, Halbert & Ingulli (2003) put it very well: “law is what we must do; ethics is what we should do”. It is now not enough that corporations should adhere to laws and regulations, but rather they should adhere to non-legal ethics as well. In fact, the idea that the greatest goal of business is to make money is receiving serious challenge in the modern world.
The conflict or apparent contradiction between ethics and law is an obvious one. Most companies are not sure about how they can satisfy both the law and the ethics in their business operations. Some companies have gone on to satisfy only legal requirements while neglecting ethics. This ethical negligence has had adverse impacts on many companies.
Some alleged events about companies, such as NIKE or KCM, not observing safety or fair practices, while running businesses, has brought the matter of ethics and morality to the forefront. There has arisen an expectation upon companies to be more ethical in the way they do business. For example, NIKE faced criticism in the 1990s when its CEO was getting about 1500 times more in salary and allowances than its workers in factories in the developing world. This disparity in pay between the NIKE CEO and its factory workers in China came to light when a “number of nongovernmental organizations demonstrated during the opening of NIKE’s shop in San Francisco” (Holmes, 2002). The action of these demonstrators shows the ever-expanding number of stakeholders in any given business environment.
NIKE faced more criticism when it relocated production to factories in the developing world. NIKE and many other companies are criticized further because they move production to cheap labour and often to countries whose labour records and ethical behaviour is laxer. As stated by Sadgrove (2005) “companies that relocate production to third world countries are often viewed suspiciously by pressure groups, trade unions and the public”. In 1997, an audit of NIKE suppliers found that Vietnamese workers were working in unsafe conditions. In 1998, the CEO of NIKE assured the stakeholders that he would do all he can to make the company more ethical. By this year 2015, NIKE has done a lot to redeem its image. It has implemented a “series of new policies designed to improve working conditions through the elimination of hazardous chemicals in the production process, researching into international manufacturing processes, and starting a program that independently checked the working conditions of the manufacturing plants” (Holmes, 2002). But the challenge for enhanced ethics still remain.
The question really of how companies, such as NIKE, KCM or Mopani, should be more ethical has hinged on several factors. The first has been the call for companies to self-regulate themselves. This is what has led to many companies making corporate social responsibility as a part of their main activities. The second way has been to push for legislation that compels companies to adhere to certain ethical requirements. The third way has been to find a middle ground between self-regulation and legislation. This third way brings a mix of both ethics and law. The future of corporations in Zambia pivots on the balance between self-regulation and regulatory frameworks in encouraging ethics within the business environment.
Suggested citation: Munshya, E. (2015). The Intersection of Ethics and Law in Zambia’s Corporate Sector. Elias Munshya Blog (www.eliasmunshya.org) (2 October 2015)
****** This article is adapted from an assignment I submitted in partial fulfillment of the requirements for a Master of Business Administration degree at the University of Wales – E. Munshya.