How Companies Should Deal with Historical Corporate Misconduct

Corporate Accountability
Knowledge Center


Jaap de Jonge
Editor, Netherlands

How Companies Should Deal with Historical Corporate Misconduct

🔥NEW Companies that exist for many years have sometimes committed acts in the past that were allowed and considered normal at the time, but should they have occurred today would be considered as crimes or at least as undesirable, unwanted behavior. For example environmental acts (pollution), humanitarian acts (slave trade), financial acts (tax avoidance), power abuse (monopolies, unfair competition, even current issues with big tech companies (privacy), and more.

How should today's top management of large companies approach, handle and respond to any such dark chapters in the history of their company?
Professor Federman recommends to not take a defensive or strict legal stance, trying to avoid corporate accountability as this almost always backfires. The corporate reputation and trust in the company is at stake and even if it could be legally possible to avoid the company is being held responsible for now, (social) media are these days a powerful tool for various stakeholders and activists to communicate bad corporate practices of the past, demand actions and even organize a boycott. And note that politicians and laws are known to follow public opinion (even if that is often a slow process).

That's why Federman recommends to instead of being defensive:
  • Proactively investigate the company's past internally (before external parties call for justice),
  • Proactively accept (moral and fiduciary) responsibility,
  • Proactively apologize making public statements, and
  • Proactively continue to respond and act in meaningful ways, so the company can avoid being accused of meaningless "words without actions".
Makes a lot of sense to me. A "wait and see"-approach will most likely not work out well. As a company you should come up with regrets, apologies and remedies of your own accord.
If you haven't researched beforehand what happened in the past, or if you don't do anything until after a media storm brakes loose, you'll always be too late, much less credible, and your company's and leadership reputation have already been tarnished.
⇨What do you think?

"How wonderful it is that nobody has to wait a second before improving the world"
Anne Frank (1929-1945)
German-Dutch diarist of Jewish heritage and victim of the Holocaust

Source: Federman S., "How Companies can Address their Historical Transgressions - Lessons from the Slave Trade and the Holocaust", HBR Jan-Feb 2020, pp. 82-91.


Bernice A

Wait and See is Dangerous

That's practically true @Jaap. It's dangerous to adopt the "wait and see approach". It would be as i... Sign up

Maurice Hogarth
Consultant, United Kingdom

Accountability for Past and Historical Misconduct

The term confirms that the misconduct is something that occurred in the past. This raises the aspec... Sign up


More on Corporate Accountability:
Discussion Topics
The Need for More Accountability in Africa
Corporate Accountability versus Corporate Social Responsibility
Globalisation Asks for More Accountability
👀How Companies Should Deal with Historical Corporate Misconduct
Accountable Leadership
A Case of Misapplied Accountability Principle
The Roles of Audit Committees
Special Interest Group

Do you know a lot about Corporate Accountability? Become our SIG Leader

Corporate Accountability
Knowledge Center

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2023 12manage - The Executive Fast Track. V16.1 - Last updated: 30-3-2023. All names of their owners.