New research into concept of Ethical Business Regulation endorsed by UK Government Review

16 September 2016

Research by FLJS Board Member and Professor of Civil Justice Systems Chris Hodges has today been published in an FLJS Policy Brief that develops the emerging concept of Ethical Business Regulation (EBR) currently being adopted by the UK Government.

The policy brief, entitled Ethical Business Regulation: Growing Empirical Evidence, is the result of the author's research and consultation with UK and Scottish Governments, regulators, and business representatives, and expands upon research published yesterday by the UK Government as part of its Review of Ethics for Regulators conducted by the Committee on Standards in Public Life

It outlines the concept of Ethical Business Regulation (EBR), which aims to foster a business culture of mutual engagement, respect, learning, and constant improvement, based on social trust. The concept is based on existing evidence on why people observe or break rules, on how culture can support continuous performance and innovation, and commercial success. The findings were recently endorsed in the UN's Manual on Consumer Protection.

The policy brief provides an assessment of current examples and empirical evidence of successful applications of EBR in industries including civil aviation, energy, and pharmaceuticals. It develops the concept of an open and just 'no blame' culture, to encourage voluntary reporting of failures to meet regulatory standards and to enable adequate measures to be put in place.

Professor Hodges argues that "a stable and healthy contemporary society should encourage and support its people to do the right thing in all aspects of life — home, work, social, and public life." He goes on to say that "people often respond to problems by asking, ‘Who’s to blame?’, rather than taking care to find out what the real cause of the problem is, hence what the real solution is, and then taking steps to reduce the risk that the problem recurs."

Designing a new approach to regulation to reflect shifting priorities from economic regulation to consumer protection, the policy brief advocates a pragmatic regulatory policy that acknowledges the growing importance of social factors in regulating behaviour: "Sophisticated coordination is needed between sanctions imposed on persons and organizations, and responses imposed by different authorities — without obscuring the fact that it is social responses, such as ostracism or public reputational effects, that are sometimes the most powerful."

It is social responses, such as ostracism or public reputational effects, that are sometimes the most powerful

The objective of the research is to build on the evidence to enhance business performance in compliance with the values of society, and hence to boost economic growth, while maintaining public trust.

Professor Hodges is Board Member and Programme Director of the European Civil Justice Systems programme of the Foundation for Law, Justice and Society; Professor of Justice Systems, and head of the Swiss Re/CMS Research Programme on Civil Justice Systems at the Centre for Socio-Legal Studies, University of Oxford.

His policy brief is the latest addition to our publications programme of over 100 policy briefs and reports, freely available to download from our Publications pages. 

Download: Ethical Business Regulation: Growing Empirical Evidence Professor Chris Hodges, Professor of Justice Systems, University of Oxford

People often respond to problems by asking, ‘Who’s to blame?’, rather than taking care to find out what the real cause of the problem is, and then taking steps to reduce the risk that the problem recurs