company that took place in East Asia, a story that narrates the connection of business ethics with legal compliance. On the night of December 2, 1984, the deadly methyl isocyanate gas, a highly toxic chemical (500 times more poisonous than cyanide), stored in a tank, started boiling furiously when some chemical elements accidentally entered the tank.
Emergency valves on the tank exploded and
the white toxic gas began shooting out of some big pipes. The lethal cloud settled silently over the neighboring shantytowns of Jaipraksh and Chola where hundreds were killed instantly in their bed, choking helplessly in violent spasms. Meanwhile the eyes of thousands were burned and blinded and still many thousands more suffered lesions in their throats, nasal and bronchial passages.
When it was over, municipal workers gathered
at least 15,000 cold human bodies, and 200,000 more seriously injured. The poisonous leak of methyl isocyanate gas happened in a Union Carbide pesticide plant located in Bhopal, India, considered by many to be the worst industrial accident in human history. For business to be ethical it is not enough to follow the law. Why not?
The industrial accident immediately calls for
an analysis of what happened -- from the perspective of both ethics and law. Sure enough, the most important areas the Union Carbide officials were forced to address were matters concerning the ethical and the legal. It is ethical because someone or some group of leaders were morally responsible for what occurred. It is legal because it has got to do with the observance of the law.
Did the company officials adhere to the
environmental and safety laws of India? If yes, were the same company officials aware that these laws.were of fairly low standard in comparison with, let say, the environmental and safety laws of the United States or Japan? Did the management of Union Carbide have any responsibility to do more than the requirements of the local laws to ensure safety? Were there more ethical requirements for these business officials than simply to follow the law? Or was it adequate for them, or for any business for that matter, simply to follow the existing law? The answers to these nagging questions can supply the difference between business ethics and legal compliance (Maximiano, 2001).
What is law?
Business Law: Legal Environment, Online
Commerce, Business Ethics, and International Issues. Philosophers and lawyers have traditionally defined law as the ordinance of reason promulgated by someone in authority for the common good (Aquinas, 1947). More than a counsel, a recommendation or a suggestion, a law is an ordinance, a rule, a command. Because of these intrinsic features, the law is obligatory.
Since it is an ordinance of reason imposed by a
competent authority, say an Executive Order of the President of the Philippines, a court order or a mandate of the Labor Code, it must be both reasonable and binding.
The law by nature is both persuasive and
coercive. Because it is reasonable, it is persuasive. Thus the ignorance of the law is not an excuse. And because it is imposed, it is coercive. One can get arrested, be fined or perhaps imprisoned in violation of an ordinance. For the law to be effective and compelling, it has to be promulgated, broadcasted, disseminated or published for everyone to know.
And finally, the law is for the common good and
not for the good of any individual or of a few. For our purpose, when I talk about the law I mean the civil-criminal law of a particular state and not the natural law in general or the ecclesiastical law of any sectarian religion or the Ten Commandments.
What are the important features of the law?
An ordinance has to have certain features or
characteristics in order to qualify as a law.
1. IT MUST BE MORALLY ACCEPTABLE. A law
cannot impose a crime or what is criminal in nature. It cannot urge you to do anything illegal or immoral. Common sense says that an ordinance which demands you to cheat on clients, evade correct taxes, discriminate on women, practice child labor or unfair competition are morally unacceptable and therefore could not and should not become a law.
What the law should impose are universal
values that are morally acceptable to all. This is in fact another indirect argument in favor of the universal character of human values, and therefore of the existence of a global business ethics.
2. IT MUST BE JUST. Unjust law does not
oblige. For this reason, one may disobey a law that encourages apartheid, sexual or religious discrimination, business dictatorship or monopoly, priority of foreign investment over human rights or any other forms of injustice.
The justified act of directly disobeying an
unjust law, according to some authors, is civil disobedience.
Civil disobedience is a rare exception to the
rule. The rule is that we are morally obligated to obey all laws (when these laws are just and fair).
3. THE PRECEPTS OF A LAW MUST BE
PHYSICALLY AND MORALLY POSSIBLE. Obviously, Congress or the city council cannot impose something that is impossible to do or accomplish, like the suspension of the law of gravity or the stoppage of the economic law of supply and demand. In the State of California, smoking was completely banned in all restaurants, bars and clubs effective January 1, 1998. But after a while, the lawmakers themselves admitted that the law seemed impossible to physically enforce.
4. IT MUST BE ORDAINED FOR THE COMMON
GOOD. Always for the sake of public order and common interest, the state has the juridical right to impose specific laws. But a law cunningly crafted for the welfare of a chosen few or the privileged one is not binding. That kind of law loses its moral authority.
Is it correct to consider ethics and law as
identical?
In our study of different cases, it is important
to identify what are the requirements of the law and what are those of ethics. It may happen though that certain issues are both legal and ethical at the same time. It means there is a need to identify where the law ends and where ethics begins in each specific case. From the outset it must be said that it is not correct to presume that ethics and law are identical. No, they are not the same. Definitely, there are some civil laws that demand action, human behavior or conduct comparable to the action, human behavior or conduct demanded by ethics. But the law, specifically civil law, and ethics are neither equivalent nor the same.
It is important therefore to know how to
distinguish the law from ethics, to determine what is legal and what is ethical. Law and ethics do not always jibe. The company's code of ethics is not conceived and formulated by the legal department. The code of ethics usually springs from the company's vision and mission of service to clients and customers, employees, shareholders and to society as a whole. The code of ethics is more than the strict execution of the company policies or any of the government regulations.
Business ethics cannot be reduced to the
simple obedience of the law. It is not adequate for business entrepreneurs and managers simply to obey the law, as we have learned from the example of Union Carbide in Bhopal, India. Whatever is legal is not necessarily ethical and whatever is illegal is not necessarily unethical. What is lawful is not always moral.
In summary, it is important to know that the
ethical duties do not always coincide with legal obligations because mainly of two reasons: one, because not everything ethical is covered in the civil laws since the scope of ethics is broader than the scope of the law; and two, because a few number of civil laws may be unethical and unjust (Maximiano, 2001).
Should the companys code of conduct be
formulated by the legal department?
The company's code of conduct is not
conceived and formulated by the legal department. The code of conduct usually springs from the company's vision and mission of service to clients and customers, employees, shareholders, to the environment and to society as a whole. The code of ethics is more than the strict execution of the company policies or any of the government regulations. Business ethics and corporate social responsibility cannot be reduced to the simple obedience of the law. It is not adequate for business simply to obey the law, as we have learned from the example of Union Carbide in Bhopal, India. Whatever is legal is not necessarily socially responsible and whatever is illegal is not necessarily unethical. Philip Morris might have complied with all legal requirements but it might fail in its social responsibility when we consider the health hazards it brings to both smokers and non- smokers. Posted 17th September 2010 by Jose Mario Bautista Maximiano