Business Ethics and RC Church

This extract from the Roman Catholic Church encyclical Caritas in Veritate explains their approach to business ethics.

Caritas in Veritate

45. Striving to meet the deepest moral needs of the person also has important and beneficial repercussions at the level of economics. The economy needs ethics in order to function correctly – not any ethics whatsoever, but an ethics which is people-centred. Today we hear much talk of ethics in the world of economy, finance and business. Research centres and seminars in business ethics are on the rise; the system of ethical certification is spreading throughout the developed world as part of the movement of ideas associated with the responsibilities of business towards society. Banks are proposing “ethical” accounts and investment funds. “Ethical financing” is being developed, especially through micro-credit and, more generally, micro-finance. These processes are praiseworthy and deserve much support. Their positive effects are also being felt in the less developed areas of the world. It would be advisable, however, to develop a sound criterion of discernment, since the adjective “ethical” can be abused. When the word is used generically, it can lend itself to any number of interpretations, even to the point where it includes decisions and choices contrary to justice and authentic human welfare. Much in fact depends on the underlying system of morality.On this subject the Church’s social doctrine can make a specific contribution, since it is based on man’s creation “in the image of God” (Gen 1:27), a datum which gives rise to the inviolable dignity of the human person and the transcendent value of natural moral norms. When business ethics prescinds from these two pillars, it inevitably risks losing its distinctive nature and it falls prey to forms of exploitation; more specifically, it risks becoming subservient to existing economic and financial systems rather than correcting their dysfunctional aspects. Among other things, it risks being used to justify the financing of projects that are in reality unethical. The word “ethical”, then, should not be used to make ideological distinctions, as if to suggest that initiatives not formally so designated would not be ethical. Efforts are needed – and it is essential to say this – not only to create “ethical” sectors or segments of the economy or the world of finance, but to ensure that the whole economy – the whole of finance – is ethical, not merely by virtue of an external label, but by its respect for requirements intrinsic to its very nature. The Church’s social teaching is quite clear on the subject, recalling that the economy, in all its branches, constitutes a sector of human activity [113].

46. When we consider the issues involved in the relationship between business and ethics, as well as the evolution currently taking place in methods of production, it would appear that the traditionally valid distinction between profit-based companies and non-profit organisations can no longer do full justice to reality, or offer practical direction for the future. In recent decades a broad intermediate area has emerged between the two types of enterprise. It is made up of traditional companies which nonetheless subscribe to social aid agreements in support of underdeveloped countries, charitable foundations associated with individual companies, groups of companies oriented towards social welfare, and the diversified world of the so-called “civil economy” and the “economy of communion”.
This is not merely a matter of a “third sector”, but of a broad new composite reality embracing the private and public spheres, one which does not exclude profit, but instead considers it a means for achieving human and social ends. Whether such companies distribute dividends or not, whether their juridical structure corresponds to one or other of the established forms, becomes secondary in relation to their willingness to view profit as a means of achieving the goal of a more humane market and society. It is to be hoped that these new kinds of enterprise will succeed in finding a suitable juridical and fiscal structure in every country. Without prejudice to the importance and the economic and social benefits of the more traditional forms of business, they steer the system towards a clearer and more complete assumption of duties on the part of economic subjects. And not only that. The very plurality of institutional forms of business gives rise to a market which is not only more civilised but also more competitive.

47. The strengthening of different types of businesses, especially those capable of viewing profit as a means for achieving the goal of a more humane market and society, must also be pursued in those countries that are excluded or marginalised from the influential circles of the global economy. In these countries it is very important to move ahead with projects based on subsidiarity, suitably planned and managed, aimed at affirming rights yet also providing for the assumption of corresponding responsibilities. In development programmes, the principle of the centrality of the human person, as the subject primarily responsible for development, must be preserved. The principal concern must be to improve the actual living conditions of the people in a given region, thus enabling them to carry out those duties which their poverty does not presently allow them to fulfil. Social concern must never be an abstract attitude. Development programmes, if they are to be adapted to individual situations, need to be flexible; and the people who benefit from them ought to be directly involved in their planning and implementation. The criteria to be applied should aspire towards incremental development in a context of solidarity – with careful monitoring of results – inasmuch as there are no universally valid solutions. Much depends on the way programmes are managed in practice. “The peoples themselves have the prime responsibility to work for their own development. But they will not bring this about in isolation” [114].
These words of Paul VI are all the more timely nowadays, as our world becomes progressively more integrated. The dynamics of inclusion are hardly automatic. Solutions need to be carefully designed to correspond to people’s concrete lives, based on a prudential evaluation of each situation. Alongside macro-projects, there is a place for micro-projects, and above all there is need for the active mobilisation of all the subjects of civil society, both juridical and physical persons. International cooperation requires people who can be part of the process of economic and human development through the solidarity of their presence, supervision, training and respect. From this standpoint, international organisations might question the actual effectiveness of their bureaucratic and administrative machinery, which is often excessively costly. At times it happens that those who receive aid become subordinate to the aid-givers, and the poor serve to perpetuate expensive bureaucracies which consume an excessively high percentage of funds intended for development. Hence it is to be hoped that all international agencies and non-governmental organisations will commit themselves to complete transparency, informing donors and the public of the percentage of their income allocated to programmes of cooperation, the actual content of those programmes and, finally, the detailed expenditure of the institution itself.

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