Sometimes, it’s pretty challenging to know whether a company is morally good or they are just making it seem that way. In essence, morally good companies exist. These are companies that treat people well.
As you may know, the primary objective of most businesses is to make profits. However, an ethical company strives to ensure that its activities do not negatively impact people’s lives. Read this article to the end to discover 3 tips for finding morally good companies.
How Do You Define Ethical?
When the word ethical comes to mind, most people interpret it differently. However, a concept in philosophy is commonly known as the Golden Rule. This rule states that you should treat others the same way you want to be treated.
Simply put, avoid hurting your fellow human beings. It is always appropriate to be kind and considerate toward others and refrain from engaging in activities that may harm them or the environment.
How Can A Company Be Ethical?
In truth, companies have both ethical and unethical impacts on society. Examples of virtuous actions that a company can undertake include paying their employees on time, creating high-quality products, generating money for their investors, and donating to charity.
On the flip side, a company can undertake unethical activities such as defrauding its investors, refusing to pay its employees due to discrimination, polluting the environment, and selling toxic products. Overall, whether or not a company is ethical, everything boils down to how it treats and interacts with stakeholders, including investors, customers, employees, and society.
1. Quantifying A Company’s Ethical Value To Humanity
Measuring and quantifying a company’s impact on the people around it is the most challenging part of determining whether a company is ethical. For instance, would it matter if an agricultural company pollutes the environment, but people benefit from its food supply? What is the positive impact of the food it produces vs. the negative implications of polluting the environment?
Both positive and negative issues must be placed on a similar scale and measured according to equal terms to answer these questions. One way to do this is by using the US dollar. All the positive and negative impacts can be measured using the US dollar by comparing how much benefit or damage an impact is causing.
If the relative value of goods produced outweighs the negatives, such as pollution and greenhouse emissions, a business can be considered ethical.
2. Benefit Corporations vs. Traditional Corporations
In essence, the primary purpose of traditional corporations is to make profits for their investors. Such an objective can be challenging when a company strives to be ethical. These businesses may be forced to try and generate more profits, for instance, $2, while destroying $3 of economic value for society.
Undoubtedly, this is a shady trade because their actions are purely based on generating profits, regardless of whether they harm humanity. However, recent research shows that for a business to succeed, it should treat everyone with respect, from investors, employees, and customers, to society. The study bases its hypothesis on the law of karma- what goes around comes around.
But if a company treats others well, people will most likely wish well for the company in terms of success. Other studies indicate that 64% of consumers today are believe-driven.
Due to the climate change conditions in the world, most of them do not promote brands based on just products but more on societal issues.
This is to ensure that they contribute to the common good. If traditional businesses adhere to this theory, they are more likely to change their unethical behavior. On the other hand, benefit corporations have a broader ethical mission compared to their traditional counterparts.
They strive to positively impact their employers, customers, and society, allowing them more freedom to behave ethically. If there were a move to earn investors $2 but destroy $3 for humanity due to the project, for instance, this would be a good enough reason to reject moving forward with the project. So this tells you that organizations with such a stand are morally good companies.
3. Ethical Investing
The term ethical investing involves finding morally good companies. As a rule, ethical investors may select companies they believe to be morally good or enlist the help of a responsible social investment professional to research how certain companies’ activities impact humanity. Doing so can have a tremendous positive impact as companies may be obliged to behave ethically to avoid losing capital from ethical investors to run their operations.
Generally, if CEOs believe that there are plenty of ethical investors, they may try changing their companies’ behavior for the better good of their respective businesses. The power of stock ownership can spearhead a company’s direction in ethical investing. Nevertheless, ethical investors can influence companies’ direction or allow their investment managers to take on such responsibilities on their behalf.
Doing so is a sure way to impact the behaviors of companies because companies must keep investment dollars from investors. Ethical investors can vote for their shares to push for moral changes in a company, influencing how it operates.
Other Ways To Determine That A Company Is Ethical
A company’s transparency can go a long way in determining whether it is morally sound. To help you answer whether or not a company is ethical, look for the following:
- Do you need help determining their source of materials?
- Do the company’s officials showcase a sense of pride while running it?
- Are customers and employees allowed to raise concerns?
- Is the company pretentious or vague in its way of doing things?
Try These Tips To Find A Good Moral Company
In a nutshell, even though it may be daunting to find morally good companies, it’s not impossible. If you are an investor looking for ethical companies, look at how a company treats people. Does it follow the golden rule?
Is the business thoughtful in its operations and kind to others? As soon as you answer these questions, you will be better placed to know whether you are dealing with or investing in an ethical or unethical business.
