Ethical Sourcing – The Business Imperative (and Advantage)

It used to be that business ethics was a subject for professional philosophers or activist groups. The conventional wisdom in the boardroom was that executives had a fiduciary duty to legally maximize shareholder profits, without much regard for the supply chain and the people behind the scenes producing and moving the product.

This belief was reinforced by a focus on quarterly or annual profits, which is often how executives’ performance is evaluated. But in the past few decades, corporate mindsets have started to change, and now corporate social responsibility is widely recognized as an imperative rather than an optional program.

The top business schools have now made ethics and corporate accountability a core component of management programs that will shape leadership in the coming decades. Much of the focus of these programs is on downstream activities such as predatory pricing, executive compensation, and fraud. But the impact of ethics on upstream activities, such as sourcing, is just as important.