I was delighted to hear Klaus Schwab open the World Economic Forum with strong references to ethics in his commentary on bank regulation. I equally applauded when he signaled the failing trust of political leaders. Professor Schwab has put ethics on the WEF agenda for the first time. He is right that trust has suffered and that ethics is critical...with a few nuances.
• I do not see regulation as a replacement for values or the solution for trust as Professor Schwab suggests. Regulation may well need refining or extension in certain areas. But regulation will (and should) always lag behind today's complex reality. Regulators cannot create an ethical culture or make the myriad decisions that lead to ethical profit. The law will always be the lowest common denominator not the arbiter of values or the highest standard of ethical behavior in business, government, or the non-profit sector.
• We should give today's leaders credit. Ethical decision-making is on the mind of every leader at Davos as it undergirds every issue from inequality to oil prices to the Swiss franc. Ethics is not more a banking issue than an issue for a NGO or a health ministry.
• Ethics is not geographically confineable. Nor is it a western matter. We need to globalize the ethics discussion and invite China, India, Africa and others into the reflection instead of just the criticism. We need public/private engagement as much as for any other global issue. Davos seems the perfect place.
• Respectfully, I don't think it is as easy as Professor Schwab suggests in his Bloomberg interview when he says ethical behavior is "not so difficult." Whether gaining control over Ebola or stabilizing the global financial systems, ethical decisions are plunged into greater technological and risk complexity than ever before. Most importantly, leaders are asked to make ethical decisions with incomplete and rapidly obsolete information. I agree that it is essential, but it is far from easy.
• It is not about perfection. Incidents of intentional unethical or illegal behavior, or well-intentioned ethics or compliance misjudgments, will occur in any organization that mobilizes groups of human beings. Society and regulators must stop reacting to the exception with global organizational or sectorial condemnation. On the other hand, a pattern is a pattern not an exception. Beyond patterns, inequality demonstrates that left unchecked, an ethics failure defines a society.