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Commercial ethics: reflections on a turbulent year

December 30, 2021

For many, 2021 has once again been a year like no other. Volatile, uncertain, emotionally and intellectually challenging. In future years, researchers looking back at how we reacted – the impacts on our societies, our values, the way we interact with each other – will observe the opportunists and the philanthropists, those who sought advantage and those who acted generously to others. But will they mark it as a turning point in human attitudes and behaviors?

It is in times like this that questions of ethics come to the fore – and commercial ethics are a critical element in overall well-being and recovery. There are some who have sought to profit, who have delighted in the disruption and their ability to add to it. I suspect historians will observe this in many of the supply shortages that have occurred. They may well comment also on the actions of the media, so often desperate to sensationalize, to spread alarm and despondency. The role of politicians – and geopolitics in particular – is also certain to come under scrutiny.

But what of the business world in general? Has this shared experience caused us to think and act differently? Will future generations look back and see a turning point, a shift from competition to cooperation, a new spirit of collaboration?

Back in April, at the World Commerce and Contracting Academic Symposium, Ugur Sahin (CEO of BioNTech and developer of the Pfizer vaccine) called on the commercial community to formulate a new model – a model for ‘trust based collaboration’. He drew on the experience of vaccine development, achieved in record time, to explain and extol the commercial framework that had been used to such positive effect.

So can we learn from the experiences of vaccine development? Does this provide us with a fresh perspective on the ethical and practical standards for commercial relationships, or was this just an aberration?

The CFO of Pfizer recently observed that the best deals are often those where there is no deal. In making this comment, he perhaps mirrored Ugur Sahin’s reflection that in a time of crisis, there is no room or place for contracts. Creative action demands a focus on discipline and structure, but not on issues of commercial precision and enforceability. Those come later, once there is sufficient certainty about outcomes. Hence, BioNTech and Pfizer established clear procedures for governance, but contracts came much later.

AstraZeneca and Oxford University followed a similar path, though with commercial principles in some ways more clearly defined. From the outset, they established that any vaccine they produced would be on a non-profit basis. With an average price of $4 (against Pfizer’s $20) and much lower distribution and storage costs, AstraZeneca have arguably contributed far more to the world than any other manufacturer. Their commercial ethos has extended to supporting production at scale in many of the world’s poorest countries, entering contracts and providing a full guidance toolkit to support rapid availability of vaccine. (At this time, the AstraZeneca vaccine is world leader in terms of production).

Yet AstraZeneca also gained headlines for a high profile contractual dispute with the European Commission. It may well be argued that the company was commercially naïve and fell foul of geopolitics, combined with agreeing to an inappropriate form of contract. In spite of all its altruistic endeavour, AstraZeneca has emerged (unfairly, in the view of many) with a mixed reputation – unlike others, who have actually made substantial windfall profits and seen a surging share price.

So what conclusions can we draw on the status of commercial morality and ethics? Might we be able to claim that business has become more socially aware, that the pandemic has perhaps enabled greater momentum for the ESG principles and an increased sense of moral obligation? The evidence for such a change is mixed. The political environment has, if anything, deteriorated. We have yet to see whether business practices have fundamentally altered, whether ‘collaboration’, to the extent it is occurring, is being driven by need, or by principle.

Within the commercial community, there are those who are genuinely inspired and inspiring others with the potential for new and better ways. New technologies enable the sort of transparency, visibility and – in some cases – anonymity that can turn good intent into practical reality. There are heart-warming examples where exploitation is being exposed, where lives and livelihoods truly are improving. In my work at the University of Leeds, I am encouraged and excited by the number of law students who are motivated to tackle injustice and create a fairer, more open society. At WorldCC, we observe growing interest and adoption of relational principles within contracting.

Times of turbulence generate change and changes are without question happening – but many are fragile. My hope for 2022 is that the commercial community raises its voice and promotes the ethical standards and supporting systems that alone can move us along the path to making trust-based collaboration a norm, rather than an exception.

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