Ethics and Profitability

The Knights of Columbus and modern Catholic social teaching were born less than a decade apart: the Knights in 1882 and the Church’s social teaching that took into account the rapidly changing world of commerce with Pope Leo XIII’s encyclical Rerum Novarum in 1891. Catholic social teaching and the Knights of Columbus also share a common motivation: Christ’s commandment that we love our neighbors as ourselves.

Father McGivney’s motivation for founding the Knights of Columbus had both religious and financial components. He was not interested in making money for shareholders or in pursuing profit at any cost. Instead, he wanted to safeguard the faith – and the finances – of Catholic families. As a Catholic organization, the Knights of Columbus has taken that message to heart ever since.

Prior to his election as Pope Benedict XVI, in the 1980s Cardinal Joseph Ratzinger warned that without an ethical foundation, market economies would collapse. Unfortunately, too many companies – and too many individuals who worked for those companies – compromised core values for the false promise of quick profit. The United States, along with the whole world, is still suffering as a result.

Since the economic downturn in 2008, the ethics involved in business decisions have been a topic of much discussion. Whatever else caused the downturn, there can be no doubt that greed was a key catalyst.

The key question is this: Can a business be both ethical and successful? The answer, of course, is yes. And people know it.

CHARITY AND FRATERNITY

A Knights of Columbus/ Marist College of Public Opinion poll last year found that three quarters of Americans, and more than 9 out of 10 executives, agree that a business can be both ethical and successful.

This is not just a matter of opinion. In a book by Jim Collins and Jerry I. Porras titled Built to Last: Successful Habits of Visionary Companies (HarperBusiness, 2004), the authors begin by rejecting the notion that “the most successful companies exist first and foremost to maximize profits.”

The authors add that profit is not the “dominant driving force or primary objective” of visionary companies and conclude that “visionary companies make more money than the more purely profit-driven comparison companies.”

There are many such visionary enterprises, and one of these is the Knights of Columbus.

The Order has led by example both in our charitable giving and in our ability to run a successful business enterprise based on Catholic social teaching. We consciously strive to safeguard the finances of our brother Knights and their families who invest with us and to treat our employees fairly.

Our goal has never been simply to make money. Rather, the Order exists to protect the financial future of its members’ families. And our brother Knights are our family. That is our strength – and a consideration that underlies all of our decisions. That is the rationale underlying our program of insurance by brother Knights, for brother Knights.

Ethical dealings in any area, including business, must be based on the understanding of the dignity of each person, and on our responsibility to our neighbor. Rather than embracing the greed and jealousy that motivated Cain to kill his brother and then pretend ignorance of the crime by asking, “Am I my brother’s keeper?”, a proper approach to business takes as its model the Good Samaritan and concern for our brother.

At the Knights of Columbus, that means that our investment standards rule out investing in companies that violate Catholic teaching in a number of areas, including pornography and abortion. Yet, in one of the worst financial crises in memory, we still made money, and even improved our strength relative to the industry – not by compromising our principles, but by holding to them.

THE GOLDEN RULE

Because of our commitment to running our business in a way consistent with Catholic social teaching, we are one of only three U.S. life insurance companies – and the only one in Canada – to have achieved the highest rating for financial strength from A.M. Best and Standard & Poor’s, as well as ethical certification from the Insurance Marketplace Standards Association.

This last certification is very important because it is our ethical commitment that makes profitability possible and sustainable into the future. It is financial strength through moral strength that allows economic development to be truly sustainable. Pope Benedict made this clear in latest encyclical, Caritas in Veritate (Charity in Truth).

Catholic social teaching tells us and our own experience proves that the golden rule – which states that we should treat others as we wish to be treated – makes good business sense.

Over time, it is the ethically run business that will avoid risky bets with others’ money. It is the ethical company that will treat its customers and business associates in a manner that will earn their trust, their future business and their loyalty.

We have seen this in recent months with an increased demand for quality, especially in regard to financial products as a key to economic recovery. But for Christians, and indeed for all people of good will, “quality” must always include the quality of a corporation’s moral compass. All of us – whether we are executives, employees, investors or consumers – must insist that this be the case.

This is not a job solely or even primarily for government, although government policies can be used to help create a more moral business climate. Each of us has a responsibility to love our neighbor and to create an ethical environment at home, at work and throughout society.

As a general model of business, then, we can say with political economist and author Peter Drucker (1909-2005) that we do not have a need for “business ethics”; our personal ethics – present in every aspect of our lives – should eliminate the need for any specialized ethics.

Basing profitability on time-tested moral values means basing decisions on bedrock and not on the shifting sands of the latest risky fad. This is a truth that Father McGivney understood, a truth Pope Benedict understands, and it remains a guiding principle of the Knights of Columbus.