Moralising at companies: what's the point?

The government and politicians have been lecturing companies on how to behave a lot recently – there’s tax, training and ISPs for a start. But does it work?

The issue of taxes not being paid has received the most attention. That led to Starbucks volunteering an extra £20m over two years. But that may be it. So pointing out that a company could give more money to the state, or that it could choose to train more local people or could limit access to nasty pornography sites will probably have limited success. Does that make it pointless?

The natural response to such efforts at moralising is that it is indeed a waste of time: the law has to change. On this view, the law and the business case are the only things companies recognise. Yet capitalism also has a moral foundation, as Adam Smith recognised. Companies don’t always do anything they can get away with.

Maybe in the long term moralising can help to change the climate of opinion within which companies operate, creating reputational hazards if nothing else. But it is only in the long term. For tax, training and ISPs it would probably be far more effective to regulate for the solution – but that is more work for the government. And interestingly that work would mainly be in persuading other parties that changing their behaviour would be the right thing to do.

Maybe there’s no escape from moralising after all.

1 reply on “Moralising at companies: what's the point?”

The attention on taxes, both by NGOs, the media and the public resulted in much more than Starbucks’ lame gesture. It ended up being the main agenda item at Enniskelen when the G8 met there in June (after Syria). As a result major new legislation is being drafted, which although isn’t perfect, is a step in the right direction.

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