Profile: The business missionary: Jack Mahoney, Professor of Ethics at the LBS, tells Richard Thomson his job is not to pillory companies

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IT IS ENTIRELY fitting that the new Dixons Professor of Business Ethics and Social Responsibility at the London Business School should have his office in the college chapel. Jack Mahoney is, after all, a Jesuit priest. And although the chapel is Anglican, a matter of mere religious denomination is not something that worries the professor unduly.

His office is a narrow, stuffy, beige-coloured room with an ancient carpet, situated in the clerestory of King's College chapel, off the Strand. For the professor's - and perhaps the congregation's - privacy, the arches that used to open on to the nave have been glazed with the kind of wavy glass most people have in their bathroom windows. Prof Mahoney refuses to put curtains on the windows because it would block the chapel's light. When services are on, he tries not to move about too much lest his shadow should disturb the devotions below. He enjoys the services, though. 'I get the best of both worlds up here: I can hear the music but not the sermons,' he says in his soft Lanarkshire brogue.

Prof Mahoney is in deep cover as an academic, dressed in a dark suit and nondescript tie. The informality of his greeting, and the piles of papers and books in the background, give the fleeting illusion that you have actually turned up for a tutorial.

It is only when you start on the questions that you begin to doubt whether he really is only an academic. He is a mite too patient, a touch too tolerant - there is something of the local vicar about him. He is short, rather round, with wispy white hair and an open friendly face, the kind you could imagine quite easily confessing things to. As a Catholic priest, he is qualified to listen.

So it is no surprise that his field is ethics. He has been teaching it, in one form or another, for most of his life, and will now continue to do so at the LBS. He took up his post last week as the first incumbent of the new chair of business ethics created by Dixons, the electrical retailer, with a pounds 1m grant. Stanley Kalms, the outspoken chairman of Dixons, is keenly interested in the subject. 'I've met him once. He is a devout Jew with a strong religious motivation,' Prof Mahoney says approvingly.

The professor is required to give courses in business ethics to MBA students, and hopes to use his influence with other staff to bring an awareness of business ethics into other courses. 'My challenge is to get the subject accepted into the core curriculum,' he says.

Quite. But what exactly are business ethics? Are they some new and specialised form of human activity, or simply the extension of ordinary good behaviour into business life?

Prof Mahoney is quick with his definition: 'It is applying ethical principles and values to the conduct of business.' People talk of medical ethics (about which Prof Mahoney himself has written at length) and media ethics, so why not business ethics? This is not to say that the world of business is a rampant Hobbesian free-for-all, a place of unbridled skulduggery populated entirely by crooks. Prof Mahoney believes most businessmen and women are decent people trying to behave well in often difficult circumstances. But they could do with some guidance.

Or to put it another way: 'Business is power. The question is, will that power be used for good or ill? As it becomes increasingly powerful, the responsibilities for business become ever greater.'

The profit motive, in other words, is not everything. But didn't we already know that? Perhaps, Prof Mahoney says patiently, but it tends to get forgotten. Business folk need to be in the habit of considering the ethical dimension of their actions - what happens to a local community if they close a factory, whether their companies discriminate on sex or race, whether they are being honest with their customers, and so on.

Nestle, the Swiss foods group, knowingly selling unsuitable powdered milk to the Third World, which resulted in the death of many babies, is a classic example of what happens when ethics get left out. Ernest Saunders and one or two others in the Guinness scandal might have avoided a lot of trouble had they received a spot of ethical counselling before the Distillers bid.

Mostly, ethical questions are not as cut and dried as these. Trading with South Africa in the 1970s and 1980s, for example, was a particularly tricky problem. Prof Mahoney was not against trade with South Africa, but on certain conditions. In his view, continuing to do business there while trying to change the system from within, even to the extent of breaking the law, would have been as ethical as pulling out altogether.

More topically, questions of corporate governance and executive pay come under his microscope. Are massive pay rises for directors the best way for shareholders to spend their money? Are they socially divisive? Do they distort the way society rewards certain kinds of activity?

Most of the time he does not want to tell people what to do. 'I am not prescriptive,' says Prof Mahoney. He is not trying to pillory businessmen, or hold them up to censure or ridicule. 'My job is just to get people to think about the arguments.'

It is not immediately obvious why anyone should pay much attention to what he says about business. As he readily admits, he has virtually no direct experience of it.

He was born in 1931 in Coatbridge, Lanarkshire, the son of an engine driver. His grandparents or great-grandparents (he seems unsure which) came over to Scotland when most of the rest of Catholic Ireland was heading for America. After attending the local school, he went to Glasgow University, joining the Jesuits when he graduated. For the next 16 years he studied to become a Jesuit priest, doing classics and theology and a doctorate in ethics at the Pontifical University in Rome on the way.

Most of the next 20 years were spent teaching theology. He became head of Heythrop College, the Jesuit school, and in 1986, looking for new pastures, became Professor of Moral and Social Theology at King's College - the first Roman Catholic to hold the post. It was about then that he noticed the work being done in the US on business ethics and became interested.

So although his experience of business is distinctly limited, Prof Mahoney is able to point out: 'I can bring to bear a certain knowledge of how ethics has developed over the last 3,000 years, and how to ask ethical questions.'

But lest businessmen think him some wild-eyed religious fanatic, Prof Mahoney is keen to reassure them that he is user-friendly. He believes his Catholicism has not the slightest relevance to his approach to the subject. 'I'm Roman Catholic, but I'm also a humanist. I don't think religion has got anything original to contribute to ethical behaviour.' (In what is probably a massive understatement, he says that evangelical Christians tend to disagree with this view.) He is not trying to turn businessmen into Christians.

Nor is he trying to change the system. 'I think that capitalism and the market system is a sound way of creating wealth. It is an honourable activity.' Or it is as long as you behave ethically.

He does not even accept the cliche that business ethics deteriorated sharply in the grab-it-all Eighties. It is simply that as business grows in power, the opportunities for going wrong grow too. The problem is that some values get lost over time.

Over the past couple of centuries, for example, business lost the idea of community, that it had responsibilities to society as a whole. Margaret Thatcher gave clear expression to this attitude when she claimed there was no such thing as society. But she may have been out of step with the times when she said that. Prof Mahoney thinks the industrial excesses and environmental problems of the last few decades may be swinging the pendulum back, with business growing more aware of its role in communities.

He is also encouraged that shareholders are at last beginning to perceive their responsibilities as owners of companies, and to do something about it. To most people in the City this is largely a question of whether or not companies perform better with more interventionist shareholders. To Prof Mahoney it is a matter of ethics.

For him, there are two ultimate guardians of a company's conscience. One is the shareholders. They must realise that they have responsibility for everything a company does. The other is the customers. They have a responsibility not to buy the products of a company that behaves badly.

Prof Mahoney is working on a scheme that is hardly likely to endear him to company directors, as it will supply yet another benchmark against which to measure their performance. He wants to persuade companies to include an 'ethical review' into their annual report, partly to keep shareholders and customers up to date.

He believes the idea of 'social accounting' was a flop in the 1980s because it attempted to quantify unquantifiable achievements. But Prof Mahoney is trying to evolve a better way to keep a check on the good behaviour of corporate Britain. Executives, be warned.

(Photograph omitted)