No Ethics, No Sustainable Business: A Q&A with Professor Stefan Heinemann

Very often, ethics and business are seen as each other’s natural enemies. Ethics would be a barrier to true profitability. A politically correct dictate of the woke culture. A “tick the box” and then get on with “real” business. According to Stefan Heinemann — philosopher, theologian, and professor of business ethics — that framing is completely outdated: ethics and doing business are two sides of the same coin. Without business ethics, sustainable, and therefore profitable, business is simply no longer possible. As a solution partner of many other industries, the electronics industry has an almost moral obligation to play a pioneering role in the major paradigm shifts of this century: digitalization and sustainability. And, yes, Heinemann is positive about binding the forces of good: “There is always hope. We can still shape the future. But remember: business ethics in electronics starts with … you!”

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Stefan Heinemann: Ethics might be a no-brainer in a way, but it is hard to do. Ethics is the theory of morality. It concerns our actions and statements about what's right and wrong. Sometimes the difference between the two seems rather obvious. No one doubts that killing your children is wrong. But that red ethical line can become a lot thinner in practice, especially when it comes to doing business. You could say that the economy as a whole has some unethical foundations — call it the dark side in Luke Skywalker terms. But luckily, there is also a — in my opinion a much larger — light side. I am convinced that the electronics industry could, or even should, consider itself as a central element for digital solutions. Keep in mind, however, that digitalization is not an end in itself (apart from the fact that analog solutions will still play a role in this context): it ultimately serves sustainable companies, customers, and our society as a whole. Investing in ethics is the best thing you can do, very close to the company’s own value creation.

This also requires moral leadership and role models. That is a challenge in a very diverse sector in the entire range from sole proprietorships, small family businesses to large corporates. You will have to put yourself in a leadership position to engage with ethics in a more systematic way. Not from herd behavior (everyone does it), but from self-awareness: we have a pioneering role. We see the importance, for our customers and customers of our customers. Benjamin Parker, or Uncle Ben, the paternal uncle of Spiderman said it right: “With great power comes great responsibility!”

I’m deeply convinced we have only two options. Either we see ethics as a part of business success, or as a form of “moral washing” and/or passively waiting for top down regulations to change our way of doing business.

Venema: Top-down regulations are often conceived as inevitable “compliance” …

Heinemann: Compliance is the more formal, legal kind of rules forced upon you “from above.” Ethics is about the freedom to do something “from within.” It’s about internal motivation. Look at the Volkswagen emission scandal: it could have spared them billions of dollars if the internal structure and culture had been more supportive of morally acceptable behavior. Compliance is enforced morality and less effective than personal integrity. That’s why the tone and behavior of business leaders is so important. We need role models.

Venema: Can you name some specific role models?

Heinemann: That is very difficult, because what do you actually say when a person or a company is “ethical”? Are the people, the numbers, and the products “ethical”? No person or company on this earth is 100% so. You can give examples of small or large companies that reduce their CO₂ footprint more than is required by law. That does not mean that these companies act 100% ethically. But good examples from the supply chain that try to make a difference without going bankrupt are and will remain important. A nice task for the WEEF index, I would say. However, always remember: we are only human; we sin and we make mistakes.

Venema: When ethics starts with personal integrity, it becomes more complex in companies, especially at even higher levels: your personal responsibility dilutes in the dynamics of organizations, and of political reality.

Heinemann: Responsibility can be diffused in companies, sectors, and societies, that’s right. Who is responsible for what precisely? What can I do as an individual? I cannot actively place my responsibility directly on the shoulders of others. “Let George do it,” the Americans say. Let someone else do that eco-friendly stuff! See no evil, hear no evil. For the development of personal responsibility, you need an environment and a society that stimulates and monitors this. In this context, WEEF can play a facilitating role. Invite (young) people to have a say in this; give them a voice. But don’t think that’s sufficient, because in the end, it’s about a systemic change. Everyone alive today, whether you’re five or 50, belongs to the last generation to be able to affect this systemic twist.

Venema: That sounds rather doomy and gloomy.

Heinemann: There is hope! The world is what it is. In this world, we can do what we’re supposed to do. As a Christian, I call that “creation,” but whatever you want to call it, it is possible for us to turn this planet for the better. I'm not a fatalist that says “game over.”

Venema: Even with the widespread fear of artificial intelligence applications that eventually will end the human race?

Heinemann: In an earlier interview with Elektor, I said: “The optimist thinks the world is the best of all possible worlds; the pessimist fears that the optimist may be right. I would describe myself as an AI realist. AI is shaping the world, for sure. But who will shape AI?”

Look, if we do not ethically secure the future and also of course already the present of the further development and the use of artificial intelligence, we might have an artificial general intelligence in our lifetime — which will possibly reproach us for having created it. Only humans can be moral actors, love, suffer, think, be creative, confused and dangerous, fascinating and boring. It would be wrong to fundamentally reject AI out of fear that the world could become a different, worse one, but to limit it with the will to make the world a different but better one. For companies, AI is a great opportunity to combine digitalization and sustainability to succeed with legitimate business models. This also includes taking a critical look at data security and data protection, doing more than what you absolutely have to legally, but taking social responsibility. 

Venema: What is, apart from our role as individuals, the role of other stakeholders?

Heinemann: Ethics concerns everyone. On a micro level, there are the individual employees and employers we just mentioned. On a mezzo level, we have the companies. And on a macro level, sector platforms and governments. On these higher levels, it’s more about ethical framework conditions. We are heading for a much more diversified and dynamic new world order, where system competition is always centrally a competition about ethical convictions, on how the societies should develop. Autocracies are ethically always more problematic than democracies. But it’s more complex than you might think. A sensible environmental policy by a “wrong” regime is not in itself wrong policy; conversely, free choice does not automatically generate wise decisions or leaders: the 2016 elections in the US made that painfully clear. 

Venema: Consumers seem to play a crucial role when it comes to ethical business.

Heinemann: Consumers are able to bring about significant change — for example, towards a less materialistic world. The EU with its guidelines has already accelerated this process towards more personal responsibility and dematerialization. At the same time, the democratic and digital literacy seem to be going backward, probably accelerated by the pandemic. You might have a lot of freedom in western societies, but you can't do anything with it if you’re illiterate. Many people do nothing — voting for instance — with their legitimate freedoms. That’s a real problem, because we obviously don’t want a digitized autocracy, like in China.

Consumption has many structural similarities with democracy. You vote by buying something. Not everyone buys products that they really need, but that are presented to them as such by “smart” marketing. The electronic industry has to accept though that a world of eternal growth is a completely outdated concept. That’s yesterday’s business. Growth is sustainable development, growth is growth in innovation, growth in earnings, but no longer necessarily growth in revenue numbers. Therefore companies need different people, different competences, and different leadership.

Venema: Might a Code of Ethics, or even better, a Code of Conduct, be of help for electronics-focused businesses?

Heinemann: Codes may or may not work. As within all voluntary commitments, it depends on the seriousness of the companies. And the way these codes are introduced, preferably not with a raised finger, and intelligently integrated and communicated internally and anchored in day-to-day business. In the end, it has to become clear to an electronics company that ethics is not a contribution to global philanthropy, but essential to successful and good business. As I said, it’s important not only to talk, but to do. Making it applicable. We all talk a lot about a free and peaceful world, but how do we get there?

Venema: Some SDGs (especially SDG 5, 9 and 12) are primary candidates to be explicitly and expressly included in codes of ethics. This matches up with the often-repeated proposition that codes of ethics should reflect the sustainability with SDGs and be the foundation for a future world which will fairly and sustainably balance economic, environmental, and social factors in the context of a highly competitive knowledge economy. Your thoughts?

Heinemann: The SDGs are useful to take a closer look at it when we talk about ethics. To see where there are connection points for the electronic business, apart from the existing rules and regulations from the government. It remains to be seen though whether it is of any use to you as an electronic company. Arguably, these SDGs inspire governments more than they do individual businesses and their embracement and measurement at the business level faces a myriad of shortcomings. The projection of SDGs in codes of ethics, and ultimately in the strategy and daily operations of involved businesses, seems challenging to me, but not undoable. WEEF could start by looking at existing frameworks like the SGDs, but also at other millennium goals from EU sustainability groups for instance. And read them, as nobody seems to read those things … to translate them into practical steps for implementation. It can make the industry more visible on ethics as a connecting theme, while most think that electronics is too fragmented to actually do anything.