Moral Liability is Hidden Threat to Corporations: Fortune

Companies will pay a price if they fail to meet society's expectation that they act ethically. Merely obeying the law, or following compliance guidelines to the letter is not enough, writes Marc Gunther in Fortune. Companies need to meet their "moral liability" or face bigger threats from customers than from government or courts.

Sometimes the price will be damage to a brand or reputation. Other times, the cost will be more concrete, in the form of lawsuits, damage awards or lost sale," Gunther says. The good news is that "...all these social issues present opportunities as well as threats... the best way for business to avoid "moral liability" - become part of the solution instead of part of the problem."

He cites the examples of Nike and The Gap, who didn't break the law, but came under attack for allowing sub-standard working conditions in overseas factories; and Microsoft, Yahoo and Google who came under attack for helping the Chinese government censor the Internet.

Timberland tells customers that its shoes and boots are made in factories where workers' rights are protected. The same goes, now, for Nike and Gap. Toyota sells lots of hybrid cars, mostly because of rising oil prices but also because of the concerns over climate change. General Electric's "ecomagination" initiative aims to profit by selling products that save energy and reduce emissions.

29-Jun-2006 By BL Ochman