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The value of ethics in the global marketplace

by Marion C. Blakey, AIA President & CEO
Originally appeared in Jane's, May 11, 2010

For members of the aerospace and defence industries to be successful and to meet the expectations of their customers requires ethical business behaviour in all circumstances and those practices need to be sustained across borders.

This is especially true given the global and collaborative nature of the aerospace and defence industry. International supply chains and partnerships are increasingly the norm. No company wants to partner with another that has a questionable reputation and no company wants to compete on an unequal basis against others who might not be following the same rules. As a whole, industry suffers when any one company contravenes ethical practices. It has become increasingly clear that the risk to corporate and industry reputations has no statute of limitations and the scrutiny that companies face is constant from outside stakeholders, oversight organisations and ourselves.

These concerns are clearly not only the purview of large companies. Government and private sector customers and partners want confidence in all levels of the process we use to provide our goods and services. At the same time, ethics compliance in the global supply chain is both critical and challenging.

Developing, sustaining and enforcing an ethical business code of conduct for any company requires a substantial commitment of time, effort and resources. For smaller companies, there are limited authoritative resources to rely on to navigate the challenges and opportunities for maintaining a consistent, high-level ethics compliance programme.

Two years ago leaders of the Aerospace Industries Association of America (AIA) and the AeroSpace and Defence Industries Association of Europe (ASD) began developing a set of principles that would guide the global aerospace and defence industry. A meeting during October 2009 marked the first time aerospace associations from different regions came together to affirm a set of Global Principles.

AIA, ASD and industry leaders collaborated on the Global Principles to clearly delineate the appropriate conduct of businesses and their employees in four key areas. Firstly, companies will institute written policies governing their use of advisers and these advisers will be vetted by trained personnel and will be made aware of company integrity policies. To avoid conflicts of interest, companies shall follow all applicable laws, regulations and directives concerning the employment or engagement of public officials.

Secondly, full compliance with all anti-bribery laws is required under the Global Principles. Thirdly, businesses will also establish and enforce policies and internal control procedures that prohibit the company and their employees from promising or providing incentives to obtain any improper competitive advantage. Finally, soliciting or accepting a third party's proprietary information - such as bid and proposal figures - is unacceptable under the dictates of the Global Principles unless the owner of the data has agreed to its release.

Most US and European companies had ethics guidelines outlining the aforementioned priorities before the creation of the Global Principles agreement. US companies conform to the recommendations of the Defense Industry Initiative of Business Ethics and Conduct while European firms have signed on to their Common Industry Standards.

What is significant about the Global Principles agreement is that it reconciles the values and ethical priorities and practices of both US and European companies at the highest common denominator. The adopted principles will help to level the playing field by ensuring companies are competing under similar conditions and should provide assurances to industry customers and stakeholders regarding their commitment to ethical business.

The Global Principles of Business Ethics resulted from steadfast dedication by corporate ethics officers on both sides of the Atlantic. The International Forum on Business Ethical Conduct for the Aerospace and Defense Industry (IFBEC) in January brought together representatives from the European Defence Agency, NATO, the US Department of Defense, EU Ministries of Defence, non-governmental organisations and US and European industry representatives.

The January IFBEC was not a one-off meeting. A meeting in June in Washington, DC, will bring stakeholders together again for a constructive dialogue. The Global Principles is considered to be a living document; continuing discussion between interested parties will help to strengthen and refine the goals. The long-term success of the aerospace industry depends, in large part, on the refinement and widespread adoption of the Global Principles.

While the US and Europe have taken the lead on the global ethics principles, other associations and international groups have expressed interest in the objectives. We are now encouraging them to join us in adhering to and expanding on this document. The ethical challenges facing the European and US aerospace and defence industry are not ours alone. Aerospace and defence is a global market and business ethics are applicable across all borders. For the principles of business ethics to have a real impact they need to be truly global. This is why we call on organisations and companies worldwide to embrace this groundbreaking initiative.

Marion C Blakey is President and CEO of the Aerospace Industries Association of America and Franois Gayet is Secretary-General of the AeroSpace and Defence Industries Association of Europe

Views expressed in 'Opinion' articles are those held by the writer and should not be taken as a reflection of the editorial stance of IHS Jane's.

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