Corporate ethics

1. Chapter 2
Corporate Ethics
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Corporate Governance

2. Introduction
Ethical behaviour is behaviour that is seen as morally good or correct by
society.
In corporate terms, ethics describes the moral responsibilities of a company
to its employees, shareholders, other stakeholders and the wider community
in which it operates.
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3. The Importance of Ethics
Ethics provide:
• A foundation for a well managed company.
• A key method for a company to distinguish itself from the competition in a
positive fashion. Can enhance reputation and attract and retain customers
and employees.
• A reduction in the risk of civil and criminal liability.
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4. Compliance Gaps
A compliance gap is where a gap exists between actual practises and the
required standard under regulation or ethical standards.
Compliance gaps will emerge as the corporate and regulatory landscape
change.
Companies must be vigilant in keeping up with regulatory changes in order to
close compliance gaps as quickly as possible.
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5. The Interaction Between Ethics and Black
Letter Law
Ethics go beyond the law, they provide guidance for resolving moral dilemmas.
Laws are reactive, prohibiting undesirable behaviour. Ethical standards are
proactive, setting standards to which persons should aspire.
Ethical standards are self regulated, whereas the law is regulated by the
government.
Many laws are based on the concepts of ethics and morality in our society.
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6. Examples of Ethical professional Self-Regulation
1. Company Directors
The codes of conduct issued by the Australian Institute of Company Directors
is an example of Ethical Self regulation.
Members are bound and the code is enforced through disciplinary action,
including expulsion from membership.
The code overlaps with legislation, it is intended to go beyond and expand on
the legislation.
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7. Examples of Ethical professional Self-Regulation
2. Accounting Profession
On 1 July 2011 the joint code of professional conduct that applied to the
members of Chartered Accountants and CPA Australia was replaced. The new
code is called the Code of Ethics for professional Accountants.
Three parts:
a. Establishes the fundamental principles of professional ethics and
conceptual framework to guide the application of those principles.
b. How the conceptual framework applies to members of public practice.
c. How the conceptual framework applies to members in business.
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8. Company Codes of Conduct
The advantages of company codes of conduct include:
• Enhancing the company’s reputation for fair and responsible dealing.
• Helping to maintain high standards of behaviour throughout the
organisation.
• Giving all employees a clear idea of what the company is trying to achieve
and how it will be done.
• Developing pride among staff and giving focus to the organisation as a
whole.
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