Using the royal commission as a core example, Dr Longstaff said that people are not inherently evil, but that good people are led to do bad things by misguided institutional ideas – in this case, the quest for profit.

He said that the most effective communications in any context are those which “speak to a truth” rather than ones dispassionately “injected into an audience”.

According to Dr Longstaff, consumers increasingly want to know what an organisation stands for before determining whether to give it their custom.

And, most telling for businesses, it is not just their own personal experience they are relying on, but the experiences of others – whether known to them or not.

Dr Longstaff explained to those in attendance that there is a paradox as to how ethics works in the business world, meaning that the adage “ethics is just good business” is something of a half-truth.
It is not enough to simply act ethically or do ethical things. Instead, he said, businesses need to be doing so for the right reasons, which includes vehemently sticking to their core values, even when it goes against short-term financial interests.

Returning to the banking royal commission, Dr Longstaff said “[Commissioner] Kenneth Hayne, I think, has done us an unexpected but remarkable favour … the lessons [from his findings] are applicable generally”, not just to the banking and finance sector.

“[Perceptions of dishonesty] cannot be fixed by being better than competitors at such things as service or product design, and getting all the nuts and bolts right.

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“More than that is required. It all comes back to principled behaviour.”

He concluded: “If you do it for the dividend, you won’t get the dividend. It’s not a Pollyanna-world where every ethical decision is met with instant rewards. It’s a case of being ethical for its own sake. The rewards of trust only flow to the trustworthy.”

In a separate press statement issued in the lead up to the release of the banking royal commission’s final report, Governance Institute of Australia CEO Megan Motto said the evidence of misconduct are a “wake-up call” for the industry and the wider business community.

“The royal commission has highlighted just how badly we need to open up a discussion on how we measure business success, especially in terms of key intangibles such as business culture and ethical conduct. How do we create new ways of incentivising our business leaders to perform, beyond the current obsession with profit-based metrics?,” she said.

“Overseas we’ve seen companies tackling these tough questions by creating new executive positions, such as a chief ethics officer. These roles can provide independent feedback loops to the board, standing outside of traditional executive reporting lines, and working closely with auditors and regulators to ensure the company is compliant. Is it now time for the industry to consider these kinds of changes here too?”

This story was originally published on Lawyers Weekly's sister publication, My Business.