What is moral licensing?
Moral licensing is the tendency for individuals that have behaved morally in the past, to use this as justification for not being as moral in the current time. There may be a tendency to assume that you are morally superior, and in turn not to worry about following ethical standards in other regards.
The same tendency may also occur in firms. Employees working in firms that are typically viewed as being particularly good on CSR grounds may paradoxically be the firms where employees can use this doing-good as a justification for not following other ethical standards.
The danger of moral licensing to firms
If there is a tendency for employees to rest on their or their firm’s prior good behavior as justification for not following ethical or appropriate CSR standards, this can potentially undermine the firm’s ethical position. Even if the firm’s top management intends that their firms follow high ethical standards, there is always the potential that employees may deviate from these good intentions, and a tendency for moral licensing may be part of this.
The importance of monitoring behaviors
The paradox of moral licensing is that it may impact specifically the companies that are generally regarded positively on CSR and other ethical grounds. The companies may have strong company values emphasizing the importance of ethical considerations, and yet still face employees engaging in behaviors that go against these standards.
As such, it is important to monitor the behaviors that are going on at lower levels of the company. Even if the company overall places a strong emphasis on ethical decisions, processes to ensure that decisions are being made in-line with these standards are still important to maintain.