Ethics

Broadly defined, a company’s ethics are the principles and standards that it espouses to guide it in its day-to-day business activities and its relations with internal and external stakeholders in accordance with its established corporate values.

Ethical business conduct provides a strong measure of organisational integrity that should permeate its culture, motivate its strategy, business goals, policies and activities. The total commitment of the board and senior management is required. A company’s code of ethics should be set out in enough detail to give clear guidance, be accompanied by a training programme and be widely communicated. The board of directors is responsible for defining the company’s code of ethics whilst management has to implement the code within the company.

Examples of ethical values might include trustworthiness, honesty, respect, responsibility and accountability, the pursuit of excellence, law-abiding behaviour and protection of the environment. Although Codes of Ethics will differ between companies, the following may be considered some key areas in which companies may wish to define parameters of ethical conduct:

• advertising and marketing practices
• bribery and dishonesty
• conflicts of interest, including family and personal relationships, outside employment and financial investments
• employee and customer privacy
• employment practices, equality of employment opportunity, non-discrimination, freedom from sexual harassment
• gifts, entertainment and gratuities
• insider trading
• intellectual property and trade secrets
• political contributions
• product quality and safety, including consumer protection standards
• protecting company assets
• stakeholder relations

Key questions:

• Has the board of my company adopted a code of ethics? 
• Do I personally aim for high ethical standards in my capacity as a director? 
• Is a high ethical tone set ‘from the top’ (i.e. by the board of directors)? 
• Are the company’s ethical and moral values unequivocally communicated to all its employees and other stakeholders?