Ethical corporations? James Hardie and the social contract.

Fin Hamilton
Eastern Institute of Technology
New Zealand

Lin Tozer
Massey University
New Zealand

Abstract:
Corporations, inherently, have no ethical values. The values embedded in their corporate identity and governance regimes are those of their governors – either by deliberate choice or by default – founded on personal and professional codes and acceptable to their immediate community. Amid conflicting pressures and advice, from shareholders, lenders, capital market analysts, regulators and legal and financial advisers, directors and officers can lose sight of the underlying expectations of society, including moral obligations, embodied in the social contract underlying company law.
Are these social and ethical dimensions sufficiently prominent in corporate policy and strategic decision making? The Hardie case provides insight into this issue and shows just how far removed the directors, executives and advisors of large corporates can become from the expectations of contemporary society. It also indicates how directors may leave their personal values at the boardroom door when surrounded by executive agendas, perceived legal constraints and technical advice.
Such issues, the authors argue deserve much more recognition in corporate boardrooms, in corporations law and in the education of future business leaders.