Until recently, such questions received practically no air-time in the course of commercial dialogue. Business is about making money, and any deviation from that core purpose is the realm of the naive.
Last week, Lloyds Banking Group added £1.8 billion to the pot of money it has set aside to compensate customers wrongly sold Payment Protection Insurance (PPI). It now expects to stump up nearly £10bn to set right its wrongs of the past.
In total, the UK’s major banks will pay about £20bn as a result of the PPI scandal. Small businesses wrongly sold complex interest rate hedging products are currently due to recoup a further £3bn, though experts say that figure could double.
Unnecessary credit card insurance will likely pile a further £1.3bn on to the compensation tally, but it’s the manipulation of borrowing rates that could ultimately cost most.
To date, the European Commission has fined eight major financial institutions a total of £1.4bn for the rigging of Libor and other key interest rates. Authorities in the UK and US have also levied penalties running into billions.
The potential rigging of foreign exchange markets is also under scrutiny, all of which could lead to further multi-billion pound fines in years to come. That’s a lot of money covering a wide array of questionable to downright illegal behaviour, and a good starting point for putting a price on dodgy business ethics.
With so many transgressions to take aim at, bank-bashing is now de rigueur. But there is growing awareness beyond the financial sector that the pursuit of profit at any cost ultimately undermines the entire commercial framework.
Sportswear manufacturer Puma is now in the fourth year of publishing its ground-breaking environmental profit & loss account, which measures the natural resources “currently being taken for granted, but without which companies could not sustain themselves”.
Major firms such as Dow Chemicals and PepsiCo are similarly looking at how to take stock as looming shortages of water and other resources threaten various segments of their businesses. Efforts to unify this new form of accounting are being consolidated at events such as the World Forum on Natural Capital held in Edinburgh at the end of last year.
Social innovation is also on the rise. Though it encompasses a broad church of thinking, at its heart is a drive for companies to reconnect with people and their communities.
Apprentices in this year’s Young Innovators Challenge will tackle healthcare, green energy and community infrastructure issues as part of the new emphasis on social innovation by the Scottish Institute for Enterprise. It should prove a welcome step in the renaissance of business as a force for good.