Business ethics: from façade to infrastructure

• This text has been initially published in the EDHEC Vox Mag n°17 (p10-14)

"We had two options: paying up, or closing down.” These are the alternatives Christian Herrault says he had as former deputy CEO of Lafarge when he was accused, with other top executives, of financing terrorism in Syria (1). For decades, Geert Demuijnck and Wim Vandekerckhove have focused their work in business ethics on understanding what leads top managers and entire organisations to look away from serious ethical questions and instead prioritise operations. When it comes to the Lafarge case, Geert Demuijnck — who holds a PhD in philosophy and has been teaching at EDHEC Business School since 2008 — is appalled: “The irony in this case is that Lafarge was one of the very first companies with an ethics officer, long before it was suspected of having contracted with terrorist groups.”

To him, this case proves that building an ethical company takes much more than hiring an ethics officer. It takes power — which the ethics officer in Lafarge obviously lacked, the professor observes. But convincing companies to empower ethics officers is not easy when there is no short-term financial interest in doing so.

Paying attention to ethical incidents on a daily basis takes a lot of effort, energy and resources, explains Wim Vandekerckhove, who is Professor of Business Ethics and joined EDHEC in 2022. “It can be hard for a company to see what the return on investment is.” Often, ethics and compliance officers therefore remain lone voices in the wilderness: “They understand the necessity to pay attention, but they can’t convince the board or top management to devote the resources.” Ironically, the return on investment only becomes obvious when a scandal breaks out; by then, public apologies and promises of structural reforms are heard too late, and the damage is done. Lafarge, which paid a $778 million fine after pleading guilty in the United States in 2022, now finds itself in the largest judicial and reputational crisis in its history and knows this all too well (2).

In his conversations with ethics and compliance officers, Geert Demuijnck observes that companies only come alive to the urgency of building an ethics infrastructure when a scandal is imminent. He remembers a discussion he had with an ethics officer at Alstom in the early 2000s, after Siemens got entangled in a serious corruption scandal which revealed that corruption had pervaded the entire company, to the extent that “paying a bribe was customary in practically all business units,” according to an employee (3). Geert Demuijnck recalls that “Alstom’s ethics officer told me that the corporate culture at that time in his company also tolerated some ethical breaches; he was relieved that the scandal broke out at Siemens because he could now convince his own company to allocate resources to training in ethics and compliance.” Without an imminent threat, it is safe to assume not much would have been done to change Alstom’s corporate culture.

Independence from financial incentives

Building an ethical infrastructure that prevents and gets ahead of ethical crises rather than improvising under pressure requires power and independence, argue Geert Demuijnck and Wim Vandekerckhove. “Compliance officers’ role is to be impartial spectators, but they are paid by the company,” Wim Vandekerckhove points out. “So the question is, how can people inside an organisation have a strong enough mandate to be comfortable with pointing out problems?”

To answer this question, Geert Demuijnck interviewed 24 ethics and compliance officers from CAC 40 companies (4). “My goal was to see if there were any taboos or structural difficulties to bring up ethical issues,” the researcher explains. The interviews allowed him to identify a rule of thumb: “If a company wants a governance system that takes ethics seriously, it needs to give the people in charge of ethics maximum independence so that they don’t depend on financial incentives determined by the CEO.”

One strategy, he explains, is to “bring in an ethics committee or a board of ethics with independent observers who do not belong to the company.” This lets top management transfer responsibility and “protect themselves as individuals by invoking an independent body,” the same way that companies sometimes pay consultants “to publicly acknowledge information that is known in the company but that no one dares to say.”

According to Geert Demuijnck ethics officers should also report directly to the board, not just to the CEO. “If they don’t report to the CEO, they are less likely to experience retaliation such as being fired, which makes it easier to speak up,” Geert Demuijnck explains. But the mechanisms of power are subtle, and reporting to the board does not equate to being heard by it. This is why companies should also have board members specifically in charge of ethics.

Building a capacity for trustworthiness

“Beyond the formal structure, informal power” must also be addressed, Geert Demuijnck says. Wim Vandekerckhove nods: “It all boils down to the capacity of the company to hear bad news.” To him, building an ethical corporate culture in which attention is paid to early signs of wrongdoing takes “not just individual capacity, but also collective dynamics fostered by the top management team and the board.”

Wim Vandekerckhove likes to rely on a concept developed by Robert Hurley, a professor at Fordham University who specialises in managing trust: the “organisational capacity for trustworthiness,” (5) understood as an organisation’s collective capability to produce positive signals of trustworthiness for stakeholders. This capacity doesn’t just emerge from a consistent tone at the top, Wim Vandekerckhove explains, but also from “a bundle of routines across different levels of the organisation” that show the company is paying attention to both financial and relational goals. These routines let the company address even small ethical incidents, since they are aware that “if they pile up, they risk eating away the organisation’s trustworthiness.”

“Looking for the crack”

Maintaining a corporate culture of responsibility takes more effort than maintaining a mere façade of ethical awareness, which is what many companies have adoptedas a strategy to meet customers’ growing expectations. The “virtue signaling” (6) Wim Vandekerckhove sees at play in the corporate world often backfires for “businesses which make promises they cannot follow through on,” eventually making them less credible. This discrepancy between a company’s branding and its ethical reality is precisely what Wim Vandekerckhove trains his students to identify and delve into. “We always look for the crack,” the professor summarises, “because it is the source of all greenwashing and social washing.”

American companies provide many examples of this discrepancy as their Diversity, Equity and Inclusion (DEI) policies are challenged by the government. After years of advocating for racial inclusivity, Target decided in early 2025 to drop its pledge to increase its Black workforce by 20% over three years as well as other DEI policies (7). “The backlash was massive,” Wim Vandekerckhove recalls, “because it was just not credible for the company to say that inclusion mattered while doing away with the policies that fostered it.” 

Apple faced the same pushback on affirmative action, but the group’s strategy was radically different: it put its shareholders to a vote, and a large majority of them voted to keep the DEI policies (8). “That way, the company remained credible and trustworthy,” says Wim Vandekerckhove. These insights, he argues, help students “understand how they can in turn build trustworthiness in convincing ways in their future companies.”

Teaching moral agency

In their teaching, Geert Demuijnck and Wim Vandekerckhove strive to combat the denial and taboos that often surround ethical issues in companies. “Whatever decision a manager makes, there is an ethical dimension to it that should not be downplayed,” Geert Demuijnck asserts. 

The mistake that companies most often make, and one he is adamant his students should not make, is looking away: “once the problem is on the table, even if your solution is not optimal, at least you’re dealing with it.” The recommendation is clear: “avoid moral disengagement at all costs.” 

“Leaders should ensure their employees can practice moral agency,” Wim Vandekerckhove says, “because ethically speaking, companies are always on a slippery slope.” If they don’t adopt structures that let people exercise agency and report incidents even when they seem small and insignificant, “they won’t be able to jump off the slippery slope in time.”

References

(1) « Procès de Lafarge en Syrie : “Que serait devenue l’usine si nous étions partis ?” », Lextenso, novembre 2025 - https://www.actu-juridique.fr/droit-penal/terrorisme/proces-de-lafarge-en-syrie-que-serait-devenue-lusine-si-nous-etions-partis/

(2) « Tout comprendre au procès Lafarge pour “financement du terrorisme” », Le Club des Juristes, décembre 2025 - https://www.leclubdesjuristes.com/justice/tout-comprendre-au-proces-lafarge-pour-financement-du-terrorisme-13246/

(3) « Lessons from the massive Siemens corruption scandal one decade later », Bertrand Venard, The Conversation, décembre 2018 - https://theconversation.com/lessons-from-the-massive-siemens-corruption-scandal-one-decade-later-108694

(4) « What are Ethicists Doing in Corporations? » (2020) - https://www.ceeol.com/search/chapter-detail?id=884356

(5) « An Organizational Capacity for Trustworthiness: A Dynamic Routines Perspective » (2023) Journal of Business Ethics - https://link.springer.com/article/10.1007/s10551-022-05318-4

(6) Ou « vertu ostentatoire », comportement qui consiste à afficher une position considérée comme moralement bonne ou à manifester son soutien à telle
ou telle cause, sans que cette prise de position ne soit suivie pour autant d’un quelconque acte qui aurait pour but de défendre cette morale ou cette cause. Source : www.laculturegenerale.com

(7) « Target was one of the most outspoken supporters of DEI. It’s changed its tune », Nathaniel Meyersohn et Eva McKend, CNN, février 2025 - https://edition.cnn.com/2025/02/03/business/target-dei-walmart-amazon

(8) « Apple shareholders vote to keep its diversity policies », Stephen Nellis, Reuters, février 2025 - https://www.reuters.com/technology/apple-investors-reject-proposal-against-dei-policies-2025-02-25/

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