In the ever-evolving landscape of corporate governance, ethical leadership has emerged as a crucial driver of business success. It’s no longer enough for companies to adhere strictly to regulatory frameworks; today’s leaders are tasked with making decisions that align with broader societal values, ensuring that their actions contribute positively to the communities they serve. In a recent podcast, Pablo Hepworth Lloyd OBE, Chair of Twin Group and an accomplished social entrepreneur, shared his insights on ethical leadership drawn from over 30 interviews with leading CEOs. His reflections offer valuable lessons for leaders seeking to navigate the complex intersection of ethics, responsibility, and business performance.

From Finance to Social Impact: Pablo’s Journey

Pablo’s career is a testament to the power of aligning personal values with professional ambition. With over 20 years of experience in the education sector and a background in corporate finance, he has witnessed firsthand the consequences of placing profits over principles. Early in his career, Pablo worked for Arthur Andersen, a global accounting firm that ultimately collapsed under the weight of unethical practices. Reflecting on this period, Pablo shared,

“There was only one KPI anyone cared about—billable hours. If you were at the top of that table, you were rewarded, but if you questioned the ethics behind it, you were encouraged to look elsewhere.”

It was this discomfort that pushed Pablo to seek a different path. He left the profit-driven corporate world and transitioned into social entrepreneurship, founding and co-founding several enterprises aimed at creating social impact. His most recent venture, Visionnaires, provides mentoring and support to early-stage entrepreneurs, particularly those without traditional qualifications or social capital. Through Visionnaires, Pablo and his team have helped over 2,000 entrepreneurs launch their businesses, proving that ethical leadership can fuel both social good and economic growth.

The Power of Ethical Decision-Making

One of the key insights Pablo shared from his conversations with CEOs is the idea that ethical leadership goes beyond mere regulatory compliance. While regulations provide a framework for responsible business conduct, truly impactful leaders strive to do more. “Ethical leadership sets the tone for responsible practices,” Pablo explained, “and regulatory compliance is just a guidepost for ethical decisions.”

Pablo’s reflections draw on his wide-ranging discussions with CEOs across various industries. He emphasised that ethical leadership is about making tough decisions that may not always yield immediate financial rewards but can lead to sustainable success in the long term.

“It’s easy to make decisions that prioritise short-term gains, but the best leaders are those who think beyond the quarterly results and consider the broader impact of their actions,”

he said.

This long-term view was shaped by Pablo’s experience at Nationwide Building Society in the 1990s, where the CEO made the bold decision to reject privatisation despite the potential financial gains. The decision was driven by a commitment to maintaining the building society’s core mission of providing financial peace of mind to its customers. “That moment was pivotal for me,” Pablo noted. “It made me realise that leadership is about more than just profits; it’s about staying true to your values, even when the financial incentives suggest otherwise.”

The Challenges of Ethical Leadership

Despite the clear benefits of ethical leadership, Pablo acknowledged that it is not without its challenges. One of the recurring themes in his conversations with CEOs was the difficulty of balancing ethical considerations with the demands of running a profitable business. Many leaders feel overwhelmed by the sheer scope of responsibilities they now face, particularly in the context of global supply chains, environmental sustainability, and social responsibility.

As Pablo pointed out, “It can be overwhelming, but I see it as a fabulous opportunity. When you acquire power and authority, there’s an expectation that you’ll use it wisely. The challenge is to leverage that power to make a bigger difference, even when it’s not the easiest or most profitable route.”

One of the most compelling stories Pablo shared was from his time working with a leader whose team had been affected by the 9/11 attacks. The trauma experienced by the team led to difficult conversations about how to support staff who no longer felt safe travelling to their Manhattan office. The leader could have prioritised the company’s bottom line, insisting that employees return to work. Instead, they made the compassionate decision to offer financial and emotional support to any team member who wanted to leave the company or work remotely. “It was a huge risk to the business,” Pablo explained, “but it was the right thing to do. And in the long term, it paid off—people wanted to work for an organisation that cared about them as individuals.”

Ethical Leadership in a Regulated World

Pablo also discussed the symbiotic relationship between ethical leadership and regulatory compliance. Regulations, while essential, are often seen as a baseline for ethical conduct. True leaders, Pablo argued, go beyond these requirements to foster a culture of integrity that permeates every aspect of their business. “Compliance should be the foundation, but not the ceiling,” he said. “Ethical leaders understand that regulations provide the framework, but it’s up to them to build something meaningful on top of it.”

One area where this dynamic is particularly evident is in the field of environmental sustainability. Pablo noted that many CEOs he spoke to are grappling with the complexities of meeting increasingly stringent environmental regulations while also striving to reduce their companies’ overall carbon footprints. “The regulations are necessary, but they don’t always go far enough,” he said.

“The leaders who stand out are the ones who go above and beyond, not because they have to, but because they believe it’s the right thing to do.”

Lessons from 30 Conversations with CEOs

Throughout his discussions with CEOs, Pablo identified several recurring themes that define ethical leadership. First, ethical leaders must be clear about their personal values and how these align with the organisation’s mission. “You have to know what you stand for,” Pablo said. “If your decisions don’t reflect your core values, you’ll find it hard to lead with integrity.”

Second, Pablo highlighted the importance of long-term thinking. Leaders who prioritise short-term financial gains often miss opportunities to build trust and loyalty with their employees, customers, and other stakeholders. “It’s not about maximising profits every quarter,” Pablo explained. “It’s about creating an organisation that people believe in, one that they want to support and work for.”

Finally, Pablo stressed the need for courage in ethical leadership. Making principled decisions can be risky, especially when they conflict with immediate business interests. However, the CEOs he spoke to were unanimous in their belief that ethical decisions ultimately lead to better outcomes in the long run. “There’s always a risk,” Pablo acknowledged, “but the rewards—both in terms of business performance and personal satisfaction—are worth it.”

Ethical Leadership: Performance, Principle, and Power

A crucial aspect of Pablo’s insights revolves around the principles of Performance, Principle, and Power Decision-Making, which he sees as fundamental to ethical leadership. These three elements form a balanced framework for leaders who seek to make impactful decisions that align with their values. As Pablo explained during the podcast, “Performance is essential—every leader must ensure their organisation delivers results. But focusing solely on performance risks losing sight of the bigger picture.” This is where Principle comes in—making decisions grounded in ethics, rather than just financial returns. Pablo believes that principled leaders are those who consistently align their actions with core values, even when it’s difficult or unpopular.

Power Decision-Making refers to the responsibility that comes with leadership. “When you hold power, there’s an expectation that you will use it wisely,” Pablo said, highlighting that ethical leaders must be conscious of the broader impact of their decisions. This framework encourages leaders to use their power not just for profit, but to foster a culture of responsibility and trust.

The Five Pillars of Ethical Leadership

Expanding on this framework, Pablo outlined the Five Pillars of Ethical Leadership, captured through the mnemonic ETHIC. These pillars guide leaders in navigating complex moral decisions:

1. Empathy: Knowing and listening to your stakeholders, understanding their needs and concerns.

2. Traction: Turning ideas into action, making sure ethical values translate into real-world results.

3. Higher Purpose: Defining what the organisation stands for beyond profit, and focusing on its long-term mission.

4. Ingenuity: Using creativity and smart thinking to align ethical goals with business sustainability.

5. Conscience: Tapping into personal values and ensuring they align with professional actions, making decisions that reflect the leader’s true beliefs.

Pablo explained that the final pillar, Conscience, is often the most challenging for leaders. It requires them to look beyond organisational metrics and ask themselves, “What do I truly care about? And how do I align my leadership with that?” According to Pablo, this is the key to authentic leadership—being deeply connected to one’s own moral compass and using it to guide decisions.

The Future of Ethical Leadership

Looking ahead, Pablo is optimistic about the future of ethical leadership. He believes that as more leaders embrace the principles of transparency, fairness, and social responsibility, businesses will become more resilient and better equipped to tackle the challenges of the modern world. “We’re moving in the right direction,” he said.

“The more leaders focus on ethical decision-making, the more we’ll see businesses thrive not just financially, but socially as well.”

Pablo’s own career stands as a powerful example of what can be achieved when leaders prioritise ethics over expediency. Through his work with Twin Group and Visionnaires, he continues to push for a more inclusive, socially responsible approach to leadership—one that empowers individuals and benefits society as a whole.

Conclusion

Pablo’s reflections on ethical leadership, drawn from his conversations with CEOs and his own extensive experience, provide a compelling blueprint for modern leaders. In a world where the pressures of regulatory compliance, financial performance, and social responsibility often collide, Pablo’s insights offer a way forward. Ethical leadership is not just about following the rules; it’s about setting a standard that others can aspire to, making decisions that reflect core values, and creating a lasting positive impact on society.