Business ethics

Ethical decision making in times of crisis

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It can be easy to do the right thing when life is predictable, but when a crisis hits, people may cut corners. The same applies for companies and their employees. We talked to Anna Romberg, co-founder of the Nordic Business Ethics initiative and a renowned compliance expert, and Pontus Selderman, SVP Ethics and Compliance at Stora Enso, to explore why it’s important that companies have strong business ethics.

What is business ethics?

Romberg: Business ethics means that every single decision is made considering multiple viewpoints and a long-term horizon. To be able to do this, companies must train their executives, managers, and employees so that they can identify unethical situations. It’s also important to understand the potential long-term implications of decisions: something that may seem minor or irrelevant today may develop into a full-blown crisis within a few years.

Selderman: Following laws and rules is only the beginning – it is our values that drive our behaviour. It is much like not having a precise map and needing to use your “moral compass” to navigate. Employees with a strong moral compass, based on company values, is a very effective defence against compliance risks. 

How can a company build a strong ethical culture?

Romberg: Companies that have strong business ethics typically host an open conversational culture where people are not afraid to speak up and intervene when they face unethical behavior or ethical dilemmas. 

It’s important that people feel that their concerns matter and will be investigated – otherwise, they might not report them at all. In the Nordic Business Ethics Survey 2020, for which we surveyed over 4 000 respondents from four Nordic countries, we found that 62% of respondents did not intervene when they witnessed unethical or illegal behaviour. The main reason for not intervening or reporting the situation was that the respondent didn’t think it would make a difference.

Selderman: To build a strong ethical culture, everyone should share the same values when making decisions. At the same time, leaders should act as role models and present a strong commitment to ethical business. We have all seen examples around the world of how poor leadership can undermine the foundations of an entire society. 

Business decisions can also impact a company’s strategy and performance. For example, for Stora Enso to grow its business as the renewable materials company, we need to run our operations so that all our stakeholders can trust us: in a compliant and ethical way, based on our values . 

How has the Covid-19 pandemic affected companies when it comes to business ethics? 

Romberg: The pandemic is an opportunity for companies to see how strong their ethical culture truly is and how well they are prepared to maintain that culture when people work remotely. Who do I tell about this when I don’t meet anyone on my coffee break? Casual encounters with colleagues are gone – or at least they need to be specifically organised.

There are also signals of what the pressure of a crisis can do to us as decision makers. If employees are not trained and prepared for these situations, they are more likely to panic and cut corners. My guess is that in five years’ time, we will witness scandals that are the direct result of bad decisions made during the pandemic.

Selderman: I’ve called the pandemic a “stress test” – for society, companies, and individuals. The stress could be caused by uncertainty, a tougher business environment, or fear of losing ones job. People can act irrationally or unexpectedly when they are stressed out or afraid. When things are stable, doing the right thing is easy. When everything is upside down and the world is in a crisis mode, that’s when good leadership stands out. 

So far, I think Stora Enso has been successful at dealing with this stress test: we’ve been able to conduct a lot of important work remotely, such as training and auditing, with good results. This is something we didn’t really think was possible before but can now see is efficient and saves cost. 

How can a company impact the behaviour of its employees? 

Romberg: Through top-level commitment and setting the example. When managers talk about ethical dilemmas they have encountered and how those situations were resolved, it helps employees to identify and discuss such dilemmas. It’s about creating role models and a safe space for speaking up – one that also works in these times of remote working. Managers should be an easy phone call away, so that employees know that the door is always open. Speaking up should be easy, safe, and not a big deal.

Selderman: “Mid-level commitment” is also important in impacting employee behaviour. Most employees never meet top-level management, but they talk to their immediate supervisor almost every day. Line managers have an extremely important role in cascading the message of top management to their teams and even more important – walking the talk. 

At Stora Enso, our employees can also turn to our Ethics Ambassadors  for an informal discussion if they have questions or concerns. It’s important to have low-threshold channels so that employees can reflect on ethical dilemmas and make the best possible decision.

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Anna Romberg

Anna Romberg

Co-founder of Nordic Business Ethics

Pontus Selderman

Pontus Selderman

SVP Ethics and Compliance