Ethics & Teaching
Excerpt from Introduction to Applied Ethics in Exploration and Mining:
Sound decision-making is essential for success in business and a sound grasp of ethics is vital to sound business decision-making.
- The commonly held public view is that mining is an industry that generates short-term profits and leaves behind a long-term legacy of environmental devastation and social upheaval.
- Mining is the industry that communities least want in their area, ranking dead last out of 24 industries in a survey of public opinion.
- A survey conducted in Vancouver by the University of British Columbia mining engineering students found that 66% of respondents do not believe that the mining industry is ethically well grounded.
(Veiga & Roberts (2006))
At a basic level, making ethically sound decisions means playing by the rules. Do the struggles of the mineral exploration and mining industry to gain public acceptance for projects reflect the fact that it is an industry that does not play by the rules? Clearly this cannot be the case for the vast majority of projects; the industry is highly regulated in most countries, which by definition means that established rules have to be followed for any project to be successful. However, when it comes to public perception, success clearly requires something more than simply following the basic rules. It could be that the ends (mine operation) may not justify the means (how you got there) if too many social, health and environmental costs have been marginalized or even completely externalized in the process. A short-term positive result may actually hurt the long-term viability of a larger project, the company itself, or even the industry if it has been arrived at in an unethical manner.
Unethical behaviour has a ripple effect throughout an organization. If the top behaves unethically, it is almost certain that the bottom and everywhere in between will follow the flawed example. Conversely, a lower-level employee behaving unethically can cause serious damage to even the best-run, most ethical of companies. Infractions that may seem minor can easily escalate into unlawful actions that will cost an organization much more down the line in dollars and cents and in a sullied reputation. Moreover, the unethical actions of one or two bad apple companies—anywhere in the world—are no longer necessarily just localized problems. Word spreads quickly in the Internet age and these kinds of stories can easily spread, tarnishing the image of an entire industry. Fortunately, the reverse can also hold true; however, once damage is done, it is undeniably much harder to undo it.
While this course is designed with the mineral exploration and mining industries in mind, case histories are not limited solely to a study of the actions of exploration and mining companies in the course of their fundamental operational activities. The cases are selected to illustrate principles.
The collective primary objective of the industry may be to extract economically viable minerals and get them to market in a profitable manner. However, there is infinitely more to mineral exploration and mining than simply digging a hole in the ground. In the course of regular business activity, a multitude of deals will be negotiated and consummated. Many players will be involved. The integrity of your organization will not be judged by actions done solely within the company, but will extend to whom you choose to do business with and how they operate, as well as to everyday corporate decisions impacting myriad indirect and direct stakeholders.
Nobel prize winning economist Milton Friedman and others tell us the primary concern of a company is and should be to make money. That it is and should be ultimately responsible primarily to its shareholders, and “in (a free) economy, there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud.” (Friedman (1962)).
But is everything and anything fair game in the quest for profitability merely because it results from open and free competition, and has been done without deception or fraud? You will undoubtedly surmise that the answer might be “no”—at least in some circumstances—otherwise why would you be taking this course? The aim of this course, however, is not to contradict Friedman, but to expand on his insight.
Friedman also wrote that staying within the law was not enough as a means to justify the ends (i.e. corporate profitability); he added that in our business dealings we must stay within the bounds of ethical norms embodied in custom (Hall (1993)).
Ethical philosophers would say, however, that even that might not be enough. Customary behaviour refers to the things one does, which are expected by others according to established custom. What if that which is considered customary within a business or industry, or in a particular locale, is ethically challenged or even flawed? Bohme (2001) writes that “in the absence of deeper insight, or a commitment to something more far reaching, it is always best to abide by what is customary.” However, he adds that the higher aim of ethical analysis and application is to go beyond the realm of customary behavior, which, while relevant because it regulates our day-to-day conduct “is not of central interest to a philosophy of ethics” (Bohme (2001)). There is clearly something more out there than the status quo that we should be aspiring to.[Figure 2] Every business action you take before, during and after ore extraction and processing says something about how you do business. In this course we will describe ethical issues that are macro-level because they concern an organization and/or the industry as a whole, whereas others we will explore might be described as micro-level because they concern dealings involving perhaps only a few players. One level of behavior cannot be said to be more important than the other, however. It does not matter how an apple rots, or in what part of the apple the rotting began, at the end of the day we are stuck with a rotten apple that we have to deal with. If ethically and economically sound options had been available to us along the way, would it not have made sense to have explored, considered and then chosen one of them to have prevented the apple from rotting in the first place?
While corporate decision-makers are often professionals and are, in theory, required to follow a professional code of ethics, the same may not necessarily be so for others within an organization, or within outside companies that you deal with. Typically, ethical dilemmas arise and must be dealt with at all levels of business activity. An ethical dilemma does not recognize nor respect whether one is a professional or not, it simply is. Regardless of who is involved and what is at issue, at law all employees, professional or not, act as agents for your organization; therefore, a healthy organization needs to be vigilant in watching what its managerial staff and employees say and do on its behalf.
Each action a staff member takes in pursuit of a business endeavor says something telling about the ethical nature of your company and how it operates. An employee operating under a sound ethical code and/or with ethical training may be better suited to effectively tackle a thorny ethical challenge than one who is not.
One recent example of questionable corporate behavior that was clearly unethical—and possibly even illegal—concerned at least three industrial-level biodiesel production companies and the rail carrier that shipped their product. While not a mining-related case, it is relevant because it illustrates the kind of questionable activity that one encounters all too often in business.
Example: the case of the un-shipped shipped goods
Over two weeks in 2010, 68 to 89 rail cars at a time were transported multiple times back and forth across the Canada/US border. A total of 1,984 rail cars full of biodiesel were shipped. Not a single shipment was ever actually delivered. The same cars merely flip-flopped between Ontario and Michigan over and over again. The rail company played an integral role in the ruse by willfully turning a blind eye to the dubious behavior. A June 14, 2010 email from a rail company manager handling the transaction contained the following: “It will be the same cars flipping back and forth and the product will stay on the car […]. Target is to get at least 25 flips across the border and back by June 30th.” A follow up email from the same manager two weeks later to thank her staff contained the following: “Records show that we moved 1,984 cars total […]. This equates to approximately 2.6 million dollars of revenue for these flips across the border at Sarnia.” (Nicol & Seglins (2012))
It turns out that one of the biodiesel producers very likely authored the deception to create and profit from false credits set up by the US Environmental Protection Agency (USEPA). The USEPA is investigating this company and three others for similar violations (Nicol & Seglins (2012)).
With time, a more complete version of the “truth” behind this story will come out. A great deal of time, emotional energy and money will be exhausted in that fact-finding process. Meanwhile, the reputational damage to all the companies involved (including the rail company, which appears to have been clearly in on the ruse), and to the integrity of the pure as green biodiesel industry itself, is undeniable. You can only scratch your head and ask “Was it really worth it?”
What kind of a corporate culture leads to this and other kinds of unethical behavior? What can be done to limit it, or even better, stop it altogether? These are only some of the issues we will explore in this course.