Fordham Professor Explores Whether Companies Are Allowed to Put Ethics First
I was fortunate to have taught an online Accounting Ethics class for Fordham University a few years ago. Since then, I’ve kept up with what’s happening on campus and in the community. Last week I received the Fordham Now newsletter online. The topic discussed is of great interest to me as an ethicist. It is: “Are Companies Allowed to Put Ethics First?” When I read the title, it made me think that ethics should always go first.
The article interviews Santiago Mejia, PhD, a professor of law and ethics in the Gabelli School of Business at Fordham, who wrote a paper that was published in the Business Ethics Quarterly. He prefaces his remarks by saying that companies may be foregoing profits to do the right thing, which could bring lawsuits from shareholders who expect the companies they invest in to put profits above all else. Professor Mejia raises an interesting question that addresses the tradeoff between ethics and profits, which is should a legal rule be adopted to protect executives who cite ethics when doing things that could hurt profits.
What is the Business Judgment Rule?
The Business Judgment Rule is a legal doctrine that helps to guard a corporation’s board of directors against frivolous legal allegations about the way it conducts business. A legal staple in common law countries, the rule states that boards are presumed to act in “good faith”—that is, within the fiduciary standards of loyalty, prudence, and care directors owe to stakeholders. Absent evidence that the board has blatantly violated some rule of conduct, the courts will not review or question its decisions.
Fiduciary standards include the “duty of care” and the “duty of loyalty.” The first is an obligation to act on an informed basis. The second requires directors to put the interests of the corporation over their own self-interest or the interests of others. That’s the problem with the Business Judgment Rule as it now stands. The problem with loyalty is it could be used to justify actions that might harm others, such as not disclosing a negative event that occurred in a company because the CEO said so.
What Should the Business Judgment Rule Look like?
I wondered, what should the business judgment rule look like? According to Mejia, there would be an ethics judgment rule. This got my attention. For years, I have been teaching the standard philosophical reasoning methods, including utilitarianism, rights, and justice as guides to ethical decision making. I was interested to learn that his research led him to believe that pursuing ethical initiatives under the guise of profit was a way to justify the decisions. In other words, it could be used as a rationalization for an ethical action. Ethics is much more.
I’ve always told my students that they should make ethical decisions, be a good person, and treat others the way they wish to be treated, not because it could lead to profit but because it is the right way to behave. The next question is what I mean by “right way.” This gets us back to the philosophical reasoning methods. However, the reason for being ethical is simpler than that. The answer lies in virtuous behavior.
Virtue is not always viewed by philosophers as a specific method of ethical reasoning, but it does have an innate value in contemplating the right thing to do. I like it as a method of reasoning because it is “character based.” If a person can lead their life in accordance with characteristic traits of behavior such as honesty, integrity, empathy, compassion and the like, it will give them a good feeling and maximize happiness. What could be a better motivator than happiness—which could be linked to gaining meaning in life or self-actualization.
So, my idea is to make “moral fortitude” the business judgment rule.
The Importance of Moral Fortitude
One reason I like moral fortitude as the ethics judgment rule is to speaks directly to the idea of whistleblowing and it can be applied to all endeavors—both personal and professional. We need more whistleblowers in society, especially in business and government. A good example is what happened to Congressman Eric Swalwell last week. Swalwell has now been accused by multiple women of sexual assault; at least two others claim he harassed them with unwanted come-ons and explicit photos. The women were reluctant to blow the whistle at first but ultimately did so. In other words, they had the courage of their convictions and acted with fortitude, informed by integrity, to call out Swalwell.
Aristotle emphasized fortitude as a virtue that helps individuals to confront challenges and difficulties with courage. It is part of his broader ethical framework, which emphasizes the importance of moral character and virtues in achieving a well-lived life. Saint Thomas Aquinas included fortitude among the four cardinal virtues in his works, discussing its importance in moral decision-making.
The bottom line is I agree with Professor Melia that: “Sometimes what ethics requires is not doing well but doing right.” My only concern is there appears to be a qualification in saying “sometimes.” It could be taken to mean that each individual might use their individual perspectives to decide what is ethical on a case-by-case basis. I agree with him if each individual comes by their decisions in an ethical manner—and with fortitude as explained above. Nevertheless, kudos go to Professor Mejia and Fordham for such a thoughtful piece.
Blog posted by Steven Mintz, PhD, professor emeritus from Cal Poly San Luis Obispo, on April 20, 2026. Learn more about Steve’s activities by visiting his website.