Executive Summary

Let Ethics Guide Business Decision-Making

Alfredo Ambrosetti
Chairman of the Ambrosetti Group

Ryuzaburo Kaku
Chairman of Canon, Inc.

Winston Wallin
Chairman of Medtronic, Inc.

June 1995

In an unprecedented action, business leaders from three continents have endorsed a set of international principles for the ethical practice of business. This decision shows that despite differences in culture, business leaders from around the world can agree on how international business should be conducted. Self-regulation can work; international government is not needed. We ask CEOs of other corporations to join in putting these Principles into practice.

The Principles of Business were endorsed by the Caux Round Table at its annual meeting in Caux sur Montreux, Switzerland, The Round Table is composed of senior business leaders from Europe, Japan, and the United States who meet periodically to discuss contentious business issues.

The Principles of Business aim to set a world standard against which business behavior can be measured - an international benchmark for ethical conduct. Such an international standard has never been more timely. The Principles seek to establish a level playing field so that companies that wish to do right will not be put at a competitive disadvantage.

As the Principles become descriptions of business behavior rather than simply prescriptions of how business ought to behave, a firm will not need to worry about losing a sale because it will not bribe. Competition will be based solely on quality and price, as befits free and open markets and all firms will be expected to respect the environment, not just the enlightened ones as is the case now.

The Principles are rooted in two great ethical ideas - the Japanese ideal of kyosei and the Western ideal of respect for individual human dignity. "Respect for human dignity" plays a central role in the culture of America and Europe.

Kyosei is the ideal that in all human activity we should strive to live and work together in harmony for the common good. The concept is similar to our notion of enlightened corporate responsibility. Business should have balanced, harmonious relations with its stakeholders. The economic system must support and be supported by other institutions in the culture. In a well-functioning society the economic, political, familial, and other social institutions are cooperative rather than adversarial.

In the international arena, kyosei means that the world’s economic systems must be in symbiotic relationship with one another. To compete is not to be at war. As Adam Smith recognized, competition within the rules creates prosperity. Kyosei supplements Smith’s invisible hand with the visible hand of cultural values and conscious cooperation.

Kyosei sees the role of business as one of stewardship that strives for harmony and material well-being among all living creatures. Thus, there are obligations to the environment, to social integration and to raising the standards of health, education, workplace safety and economic well-being. The Principles also draw on principles drawn up by the Minnesota Center for Corporate Responsibility and practiced by many Minnesota corporations. The addition of kyosei and input from the Europeans have transformed a reflection of Midwest business values into a truly international, multicultural document.

The Principles, although rooted in abstract concepts, are spelled out in seven general principles for business conduct and applied concretely to the major stakeholders with which firms interact. The Principles support multilateral trade, respect for the environment and a commitment to world social and economic development.

Even the least humanistic, most bottom-line-focused executives know that global standards are necessary. They know that corruption and irresponsible behavior are inefficient and wasteful. And enlightened executives know that corrupt practices undermine public confidence in capitalist economic institutions. We affirm the need for moral values in business decision-making. Without them, stable business relationships and a sustainable world community are impossible.

We recognize that business is the dominant social institution in capitalist societies and with that dominance comes special responsibilities. Business leaders have the flexibility, adaptability, and willingness to take risks to enable business to contribute to the improvement of society. In conclusion, the Principles for Business seek to begin a process that identifies shared values, reconciles differing values, and thereby develops a shared perspective on business behavior acceptable to and honored by all.

Center for Ethical Business Cultures

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Phone: 651 962 4120 or 800 328 6819 Ext. 2-4120 ▪ Facsimile: 651 962 4042

Email: mail@cebcglobal.org

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