Ethics in a pandemic
As we start looking to the end of 2020 and dare to imagine the possibility of life without Covid-19 thanks to the best efforts of global science on a vaccine, one thing is clear: the role of ethics in corporate governance and in forging resilient, sustainable businesses could not have been made more clearly.
Across industry sectors, businesses continue to struggle for economic survival, as do their employees. The importance of paying attention to ethics, to understanding and engaging with employees and their values particularly when physically distant with remote working has spawned an army of consultants willing to offer advice. If corporate governance is the essence of a business, then ethics must be the glue that holds it together and makes it productive. Ethical issues, and issues which are fundamentally about ethical choice whether or not they are branded as such need to keep rising on the agenda of corporate concern.
This is a year that might have done more for future careers in STEM than any amount of campaigning could have achieved. Working in pharmaceutical companies, being involved in biotech and research aimed at saving, prolonging and helping to repair human life has given science its pedestal again. For a general public watching its digital information screens in desperation for the latest Covid-19 news, this is easily relatable common human ground which commands attention like nothing else can.
How businesses behave in a pandemic will be remembered, and those who build on existing efforts at stakeholder engagement will be thinking long-term. Novartis, the Swiss pharmaceutical company, has been busy for over a year on a new ethics code designed to meet the expectations of stakeholders – patients, associates, shareholders, healthcare partners and society.
As Reuters reports here, the revamp of its code “shows a deepening reliance on behavioural science, a tool financial institutions have also turned to as they try to root out cultural and behavioural lapses that can fuel misconduct and imperil companies.”
Klaus Moosmayer, chief ethics, risk and compliance officer at Novartis is quoted as saying: “It was a good code of conduct, but when we asked associates in a survey how do you relate to the code of conduct and is it helpful to you, the feedback was ‘it’s a legal document for me.’ That’s not what we wanted in Novartis.”
For those who look beyond the loud sharing of good news stories for the journey that led there, the history is worth noting. Novartis paid out hundreds of millions in settlements and fines as a result of kickback allegations in South Korea, the United States and China between 2015 and 2018. Investor pressure calling for executives to exert greater “moral influence” after the expense of legal problems played its part. In April 2018, the company combined its risk management and compliance functions into a single organisation called Ethics, Risk and Compliance (ERC), and announced the new role of Chief Ethics, Risk and Compliance Officer, which was further elevated to an Executive Committee role.
The interesting point now is the company’s creation of an “ethical framework” that is interactive with employees, rather than merely a code that is featured on its website. It does also have a new Code of Ethics, created on September 1, 2020. It remains to be seen how this will pan out in terms of employee behaviour, legal fines, and productivity and profits. But the interactivity that has gone into its creation with jargon-free communication in everyday language is likely to reap corporate benefits. Are there lessons to be learnt for the UK Corporate Governance ‘Code’?
In the financial services sector, JP Morgan Chase has been seen to act on ‘ethical behaviour’ around Covid-19 by dismissing several employees in September who allegedly pocketed bailout funds that were supposed to help businesses dealing with the Covid-19 crisis, according to media reports. Bloomberg reported that America’s largest bank had discovered that some employees improperly applied for and received money under the Economic Injury Disaster Loan programme, and the FT also followed up on the story. It reported that the bank’s executive committee had sent a company-wide memo warning that it had discovered “conduct that does not live up to our business and ethical principles — and may even be illegal.”
Pharmaceutical companies have inevitably been under closer scrutiny around ethical behaviour in the anticipation and close watch for a vaccine. CureVac AG, a biopharmaceutical company developing a new class of transformative medicines based on messenger ribonucleic acid (mRNA), has just announced (eds – Tuesday November 17) that it is accelerating the expansion of its manufacturing network to deliver pandemic-scale volumes of its COVID-19 vaccine candidate, CVnCoV.
It hit the headlines in the Financial Times in August 2020 when the pharmaceutical group vowed an “ethical margin” for shareholders in its pricing of a Covid-19 vaccine. At the time no mRNA vaccine had been approved by regulators, though as the FT explained “rivals Moderna and Pfizer, along with the latter’s German partner BioNTech, are betting on it.” Those are the vaccines we are most excited about at time of writing.
CureVac said its jab could require lower doses. “That would allow us to give a competitive price while still preserving some ethical margin,” said Pierre Kemula, the company’s chief financial officer, said in the interview with the Financial Times. “We can’t do it at cost. We have investors putting money for 10 years into the company so there should be a little return for [them],” he said.
There’s food for thought here on “ethical margins”, investors and shareholders that goes beyond Covid-19.
Ethical concerns are also increasingly around the E and the S in environmental, societal and governance (ESG) issues, as reflected in the last Governance Watch. They are also a way of bringing together divisions in society via a common goal affecting us all and offer an opportunity to reset strategic direction for a resilient and sustainable economic recovery after the havoc wreaked by the pandemic.
The UK government is well aware of this, as I mention in my independent blog Board Talk . Across the globe, the pandemic is causing public and private sectors to collide around the same concerns, be they climate change, public health, cybersecurity or diversity and inclusion. The potential for economic opportunity – the light at the end of the Covid-19 tunnel – is considerable.
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