AYESHA SHAIKH: Why have ethics become a fundamental part of today’s business environment?
EMMANUEL LULIN: When a decision is made, there are two questions to ask. First, do you have the right to do it? This is compliance. Second, is it the right thing to do? This is ethics – and it is not a new phenomenon. What we are seeing is more of a resurgence. Traditionally, whenever there was a new discovery, especially in tech, it was followed by new laws and a regulatory framework to govern usage and identify the rights and liabilities of the stakeholders involved. Today, the rate at which new technologies are coming to market has become exponential and the legal framework has lagged behind. As a result, enterprises, governments and people are making consequential decisions based on their own values and ethics. Simply put, when the speed of technical and scientific innovations outpaces new laws, the relative importance of the laws decreases and that of ethics increases. This is the new paradigm businesses are operating under, which is why, an increasing number of public and private associations are emerging, dedicated to establishing an ethical framework for businesses.
AS: What led L’Oréal to invest substantial resources in their global ethics programme?
EL: L’Oréal believe it is essential to not only promote superficial beauty but the importance of inner strength, character and personality as well. We did not adopt this approach because regulators, trade unions or NGOs forced us to be more inclusive; we did it because we believe that only when a brand is ethical, is it possible to become a transformative and visionary industry leader. There are four values at the core of our programme; integrity, respect, courage and transparency. Integrity is the sincerity with which organisations follow their values. It is not enough to have an official code of ethics; the difference lies in the sincerity with which the code is implemented. Integrity engenders respect and trust. A mass-market company like L’Oréal needs to have the trust of consumers, suppliers and shareholders in order to make and deliver quality products. If we lose this respect, we will not last very long. I also believe that to be ethical, transparency is essential; without that, you will not have the trust of your stakeholders. Courage is what drives the other three values. Only brave companies speak the truth and do the right thing without legal compulsion.
AS: Does being ethical add real value to a business?
EL: The case for ‘Return on Ethics’ is easy to make. I have always maintained that corporations which do not believe in the ‘value’ of ethics should simply try being unethical and see where that leads them. There have been numerous cases where discrimination, conflict of interest, dishonesty and cover-ups have resulted in businesses paying millions of dollars in damages while undermining their goodwill which is now valued as an asset on the balance sheet.
AS: Is it more challenging to operate ethically in emerging markets where regulations and compliance are not enforced the way they are in developed markets?
EL: We have a billion consumers and we want to double this number very soon. All global businesses understand that new consumers will come mainly from untapped, emerging countries. Running an ethical business in those countries is challenging from two standpoints; human rights and business practices (where corruption is inherent). So, if you are a business which wants to achieve a financial goal, you will have to enter these markets and then tackle these issues in your area of influence.
AS: Compared to other global corporations, how would you rate L’Oréal on the ethics scale?
EL: I am not going to pretend that we are a more ethical company than our competitors, but our ethics programme is a competitive advantage which has contributed to our share value. L’Oréal has been recognised numerous times as the most ethical company – nine times by the US-based Ethisphere Institute. Moreover, the company’s new programme has been recognised for its innovative spirit and creativity. This recognition is important because it engenders a sense of pride among employees.
"It isn’t that young people are more ethical than previous generations but their level of consciousness is higher; they are more expressive and unwilling to compromise. Millennials are born with the idea that there is no choice but to contribute to improving the world in every way possible."
AS: How important is it that employees are on board with L’Oréal’s ethics vision?
EL: There are a number of internal communication tools, trainings and risk-mapping initiatives that ensure employee involvement. Our Speak Up programme encourages employees at every level to whistle blow. If you want to evaluate the integrity of any organisation, the most important question is whether employees feel free to speak up without fear. When the answer is yes, it is likely that the company prioritises ethics. To encourage more people to come forward with complaints, we conduct anonymous surveys to assess where we are. There are also a number of events where employees can express their views and ask questions of the management. We have an annual Ethics Day and employees from all over the world can ask questions directly from L’Oréal’s CEO. The question/answer session is online and therefore, it is completely transparent. To further increase employee engagement, in every country we operate in, there is an ethics correspondent whom employees can contact to discuss their issues. I visit all these countries and meet with the top management and employees; there are round table meetings and town halls.
AS: How did L’Oréal become involved with the UN LEAD Compact?
EL: The UN Global Compact chooses LEAD companies. In 2018, they selected 33 companies which they believed to be sustainability leaders with innovative ethics programmes. Recently, we signed a commitment in Paris to fight sexism in the organisation. L’Oréal is one of three companies to have taken this initiative. The idea is not only to train employees at every level, but to measure equality in terms of salaries and access to managerial positions. We then publish the results of our findings. When there is inappropriate behaviour, we discipline the individual and highlight the incident. If any employee has the temptation to engage in sexual harassment, bullying or corruption, he or she knows that the company have zero tolerance for this.
AS: Has the pace of technological developments made it more difficult to be ethical?
EL: In emerging fields such as biotechnology, artificial intelligence, robotics, trans-humanism and big data, the ethical component is critical. Businesses cannot only focus on how the technologies can benefit, they must apply an ethical framework to set boundaries and assign responsibility. It is important to ask if the algorithms used are neutral and maintain data confidentiality or not. There is no stopping progress but we must prepare for the future and given the pace of change, continuous learning is the only answer.
AS: Have young people (in the workforce and the consumer base) been an important factor in driving ethics to the forefront?
EL: It isn’t that young people are more ethical than previous generations but their level of consciousness is higher; they are more expressive and unwilling to compromise. Millennials are born with the idea that there is no choice but to contribute to improving the world in every way possible. Young people have a sense of urgency to find solutions to make the world a better place and that is making organisations work more ethically and sustainably.
AS: What is the ethical vision that L’Oréal want to pursue?
EL: Transparency is a fast rising value and it will be a challenge for L’Oréal to achieve it. In the future, I expect more emerging countries to be involved in the ethics debate and L’Oréal will be listening closely. We already have a head-start, but I believe keeping ethics at the heart of all business decisions will become the financially sustainable thing to do.
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