An ill-advised CEO interview with the BBC shows just how much ethics matters.
Every day, I advise senior leadership of Fortune 500 companies on issues of ethical risk. Sometimes, my colleagues and I have to spend a lot of time persuading potential clients that ethics really do matter—not just to their reputation, business, and bottom line, but to the world around them. Doing good is important for its own sake.
Admittedly, that case can be hard to make when firms are only focused on business momentum. But sometimes, executives make the case for ethics—for all the world to see.
That’s what’s happening right now at the global snowboarding giant Burton. The CEO of their China subsidiary, Craig Smith, gave an ill-advised interview to the BBC this week. Reporter Robin Brant asked Smith to explain how Burton can justify expanding its operations in Xinjiang, a region where the Chinese government is credibly accused of indoctrination, incarceration, forced labor and even genocide against the ethnic Uyghurs who live there.
Smith initially refused to admit the atrocities even exist: “Factually, I don’t know,” he offered. Later, he relented, but claimed that he must “divorce” himself from the realities. “I can’t change that,” he said. What Burton can do, he said with a smile, is enjoy “high-fiving each other after a fun powder run.”
Smith must know full well what China’s government is doing to its minority population. Indeed, in recent weeks, the United States, Australia and other countries announced diplomatic boycotts of the forthcoming Winter Olympics in Beijing, and many people are calling for full boycotts. Last year, the U. S. State Department issued an advisory to businesses on human rights violations in Xinjiang.
Yet Smith implied that he’s not given much thought to the ethical challenges of being a CEO in China. He could not even bring himself to admit that the atrocities actually matter—to him, or to Burton.
Smith was clearly unprepared for the interview. But why? Apparently, Burton had not provided media training—which is astonishing given that the Olympics start in two weeks. But that’s not the kind of preparation I’m talking about.
Smith’s problem is not that he was unready to talk about ethics. The problem, instead, is that he and Burton’s leaders seem not to have considered that ethics is actually part of their basic responsibility as a business. Smith doesn’t seem to consider that it’s an essential part of functioning as a business leader.
To be sure, many business leaders understand their sole social responsibility, as the economist Milton Friedman put it, to lie in maximizing profits. This seems to be the idea that Smith is trying to articulate when he says that he divorces himself from human rights issues. He just doesn’t see it as in his lane and so is confounded when asked about the topic. For business leaders who think this way, asking hard questions about ethics is like criticizing a journalist because her article doesn’t rhyme.
But today, many consumers and investors realize that their economic activity affects other people, animals, and the environment. Many demand that the companies they patronize do no harm. As Burton’s riders might say, potential complicity with genocide is a big buzzkill.
China’s winter sports economy is expected to be the biggest in the world by 2025, and the BBC reported that Burton will be tripling its presence there in the next few years. Burton’s China expansion has been years in the making and its leadership has undoubtedly considered the political and economic realities present in the regions where it plans to operate.
But there is a disconnect, to put it kindly, between this business decision and Burton’s stated purpose: “Minimize harm to the environment, positively impact the lives we touch, and have as much fun as possible.” The company promotes its fair labor and responsible sourcing proudly on its website, claiming that “providing fair wages, sourcing products responsibly, and making sure everyone feels welcome” are core commitments.
One would think that with these values in mind, before Burton made a multi-million-dollar decision to expand business in China, it would have prepared itself not just to answer questions about ethics, but actually to engage in practices that ensured its ability to do good—to live out its stated purpose and commitments.
The moral error here is deep. At one point in the BBC interview, Smith deflects by saying that he simply isn’t sufficiently educated in areas like politics to make a determination about the topic of human rights. This position isn’t sustainable, and the public will not buy that it takes a political science degree to diagnose detention camps and re-education centers as morally wrong.
Smith’s actual view is clear: ethics is just not something that he has to think about.
I know that answers in this disturbing case and countless others are not easy. But at a bare minimum, businesses must have good answers, answers that explain their decisions in principled, defensible ways. Businesses must do their ethical homework and be prepared to show their work. Not as a PR strategy, but as an ethical commitment.
Committing to doing good takes time and effort. It’s easy to post words to a website. Companies today need to dig deep and do something more: learn what ethical behavior actually looks like in their context, and then commit to that.