ethical fade

Shareholders Feel The Pain When Companies Take An Ethical Hit

21 April, 2020

Ethical fading is a legitimate business risk. It occurs when the ethical aspects disappear from the decision-making process and happens when people focus heavily on some other aspect of a decision, such as profit. CEOs and executive teams may focus on compliance, but other competing priorities within the company might influence the final decision.  That can lead to court, and penalties. Fines can convert ethical issues into business problems by attaching a price tag to them.

In this piece Ann Skeet considers the lessons to be learned from the example of Carnival Corp. and its subsidiary Princess Cruise Lines.

Two years ago the companies were fined $40 million for dumping oil-contaminated waste into the ocean and then attempting to cover it up. It was the largest penalty of its kind at the time. 

In early 2019 the companies were fined another $20 million by the U.S. Department of Justice for violating the terms of probation, and dumping plastic and other waste overboard. As Ann says, “The case points out, pardon the pun, how hard it is to “turn the ship around” when the ship is a large, multinational company. The story also synthesizes some key trends executives and boards should be aware of as they go about the business of managing and governing corporations in today’s business climate.”

Read the full article here.

via Markkula Centre for Applied Ethics, Santa Clara University, 24 June 2019

Photo by Alexander Andrews on Unsplash