Business Ethics

1. BUSINESS ETHICS 1
3 Responsibilities of Board of Directors
◆ Management
◆ Planning
◆ Legal

2. BUSINESS ETHICS 2
Legal Responsibilities
◆ Safeguard assets
◆ Provide annual and interim reports
◆ Allocate resources (investment/dividends)
◆ Arrange meetings
◆ Ensure compliance with company law

3. BUSINESS ETHICS 3
Moral Responsibilities ?
◆ Utility
◆ Rights
◆ Equity
◆ Common Good
◆ Virtue

4. BUSINESS ETHICS 4
◆ Corporate
 Governance, conflict of interest
 Mergers, acquisitions & takeovers
 Corporate Social Responsibility
◆ Finance & Accounting
 Accounting fraud, corruption, taxation
 Insider trading, securities fraud
 Executive compensation
◆ Human Resources
 Discrimination, bullying, retaliation
 Employment contracts, employee rights
 Health & safety, working conditions

5. BUSINESS ETHICS 5
◆ Sales and Marketing
 Pricing, bribery
 Anti-competitive practises
 Strategies: greenwashing, viral, spam, advertizing…
◆ Production and Supply Chain
 Dangerous products
 Environmental damage
 Harmful technologies: GM, cellular…
 Product testing: animals, disadvantaged groups...
◆ Globalization
 Offshoring, call centres, modern slavery…
 Pariah states
 Fair trade

6. BUSINESS ETHICS 6
Drivers of Compliance
◆ Increased scrutiny
 State and supra-state enforcement agencies
 Activist NGOs
◆ Total visibility
 24/7 news
 Social media make scandals go viral
◆ Public scepticism
 Generation of hyper-aware consumers
 Political correctness
 Anti-corporate bias

7. BUSINESS ETHICS 7
Mitigate Risk
◆ Employees
 Employee code of conduct
 Ensure compliance in hiring and employment issues
◆ Suppliers
 Supplier code of conduct
 Include compliance requirements in contracts
◆ Enforcement
 Assign managers to enforce codes of conduct
 Ensure business partner integrity
 Set up due diligence procedures


8. BUSINESS ETHICS 8
Big Pharma
◆ Revenue
 Over $1 trillion in 2015
 $432 billion : top 10 companies
◆ Power
 Governments and state agencies
 Contributes heavily to budget of FDA
 National health care systems
◆ Lobbying
 Over 1,200 paid lobbyists on Capitol Hill
 1998-2014 : $3 billion in lobbying expenses
 2013-14 : $15 million in campaign contributions


9. BUSINESS ETHICS 9
Johnson & Johnson
◆ Credo (1943)
” We believe our first responsibility is to the doctors, nurses
and patients, to mothers and fathers and all others who use
our products and services.”
◆ Recent scandals
 Illegally promoted Risperdal antipsychotic drug
 Used methylene chloride in baby shampoo
 Phantom recall of Motrin
 Kickbacks to Omnicare Inc. ” educational funding ”
 Paid $2.2 bn. to end civil and criminal investigations

10. BUSINESS ETHICS 10
“ Erst kommt das Fressen, dann kommt die Moral.”