Newspaper article The Christian Science Monitor

Firms Raise Their Own Codes of Ethics

Newspaper article The Christian Science Monitor

Firms Raise Their Own Codes of Ethics

Article excerpt

As the socially responsible investing movement presses corporate America to clean up its act, many firms are acting from within to ensure that new ethical standards will be upheld - even after the storm of corporate scandals blows over.

Consider the agenda at last month's meeting in Boston of the Ethics Officer Association (EOA), a group with 19 charter members at its founding in 1992 and more than 850 members today.

While some time was spent seriously mulling over what went wrong at Enron and other troubled firms, a more pressing concern was how to ensure swift compliance with initiatives like the Sarbanes-Oxley Act.

This sweeping corporate-reform law, enacted this summer, created a federal oversight board for auditing businesses and toughened penalties for firms that mislead shareholders.

"In a broad historical sense, corporate ethics has waxed and waned" for at least 150 years in the US, says Joe Badaracco, professor of business ethics at Harvard Business School. "But every time there's a bunch of scandals, there are institutional responses."

The need to respond is clearly less of an issue for some companies than others, says Ed Petry, executive director of the EOA. He notes that ever since federal sentencing guidelines were handed down for white-collar crimes in 1991, a vast majority of companies have drawn up their own ethics and compliance policies.

But while some companies have actively implemented programs, he says, many others kept them on paper.

Baxter Healthcare Corp. has worked to make itself an example of the former. This multinational company, with headquarters in Deerfield, Ill., has had "a strong set of programs, processes, and commitments in place for just about a decade," says Gretchen Winter, Baxter's vice president of business practices. "We're not doing anything fundamentally different [since Enron]." The company is reviewing the content of its business practice standards and "tweaking" them where appropriate, she says.

Firms that have been less diligent must now change their approach, experts say.

"The events of the past year have been a wake-up call to companies that had merely the paper programs," says Mr. …

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