Businesses must act with integrity to ensure success in the long term and management accountants should be helping to formulate strategies that place ethical behaviour at the forefront, as firms strive to emerge from the financial crisis.
Ethical trading can benefit businesses in many ways and management accountants should be able to prove to both internal and external stakeholders how it can help an organisation realise its commercial objectives.
For example, some firms that operate an ethical trading policy report that the close working relationships developed with their suppliers to implement these strategies helps build mutual trust and, in turn, greater efficiency and less disruption in the supply chain, with a by-product being and improvement in product quality.
In addition, as the recent food industry scandals have shown, it is becoming ever more apparent that business reputation can be badly damaged in an instant.
Firms that do not pay attention to their supply chain or are seen to be putting profit above human or environmental cost will not last long in what has become a global village.
Recent surveys, for example, have shown that customers are now quick to boycott brands that do not match up to their standards of integrity and one showed that nearly half of shoppers polled stated that they would boycott a product even if there was no other choice.
Also, it becomes much harder to access funds if an organisation does not act with integrity, as both socially responsible and mainstream investors now look at how companies handle supply chain risks as a measure of the overall quality of their management and their approach to managing risk.