4.2.1 The dilemma of ethics in finance, investment and accounting
Ethical investment is represented as investment in activities that do not harm the environment, the investors or the clients of the business. However, it is an unhappy fact that some business activity does violate individuals' rights, is unjust in its actions and sometimes damages communities, architecture, cultures and the environment.
As an example, cigarettes are now accepted as a product that will seriously injure (if not kill) the consumer, yet companies are still making them (and, presumably meeting their business objectives!). If such an activity is considered unethical, but is still legal, many parties are supporting it. These include the shareholders, the financiers, the distributors, the freighters, and any supplier of goods and services to these firms (and the government that collects excise duties).
In the same way, a firm may operate in a country that places little or no value upon human rights (itself an ethical concept) for all citizens, or some members of a racial or minority group, and as a result is profitable. For example, a country may allow low cost child labour.
These unpleasant facts of business present a dilemma for shareholders, finance providers, suppliers and clients. Should they refuse to deal with firms whose activities are deemed unethical, even though the firms are maximising profit through their activities? Should accountants whose professional organizations expouse the ideas mentioned previously, continue to act for such organizations?
To sum up, every individual involved in business, whether an owner, investor, financier, client or employee, must decide for themselves whether their own ethical standards will allow them to maintain a relationship with the firm.
Text reading
Atrill, Mclaney, Harvey & Jenner, pages 7-8
- Note the idea of 'saticficing'.
- Would you now add to or change any of the five goals that you originally listed? Do so below.
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