Ethics in Business and Corporate 

p
Governance

Ethics and Corporate 
Ethics and Corporate
Governance

1
 Ethics and Corporate Governance
Ethics and Corporate Governance
• A well‐planned CSR policy is essential for the 
ll l d li i i lf h
inclusive growth of business taking all 
stakeholders into consideration. Social value 
that is incorporated in the mission/vision, and 
is not just an addendum to the business 
model of an organisation, is important for the 
organisation to survive in this twenty‐first 
century. Ethics of corporate governance 
should be embedded in this perception of 
social value that an organisation holds.  
2
 Ethics – Meaning from Dictionary –
(1/2)
• Plural noun 
• 1. ( used with a singular or plural verb ) a 
1. ( used with a singular or plural verb ) a
system of moral principles: the ethics of a 
culture. 
culture
• 2. the rules of conduct recognised in respect 
to a particular class of human actions or a 
particular group, culture, etc.: medical ethics;
particular group, culture, etc.: medical ethics; 
Christian ethics. 

3
 Ethics – Meaning from Dictionary –
(2/2)
• 3. moral principles, as of an individual: His 
f y f f
ethics forbade betrayal of a confidence. 
• 4. ( usually used with a singular verb ) that 
branch of philosophy dealing with values
branch of philosophy dealing with values 
relating to human conduct, with respect to 
the rightness and wrongness of certain actions 
and to the goodness and badness of the 
motives and ends of such actions.

4
 After all What is Corporate 
Governance? – (1/2)
• C
Corporatet GGovernance iis concerned d with
ith
holding the balance between economic and
social goals and between individual and
communal goals.
• The corporate governance framework is
there to encourage the efficient use of
resources and equally to require
accountability
t bilit ffor th
the stewardship
t d hi off those
th
resources.
• The aim is to align as nearly as possible
the interests of individuals, corporations
and society
5
 After all What is Corporate 
Governance? – (2/2)
• Th
The primary
i purpose off corporate
t
leadership is to create wealth legally
and ethically.
ethically
• This translates to bringing a high level of
satisfaction to five constituencies --
customers, employees, investors,
vendors and the society-at-large
society at large.
• The raison d'être of every corporate body
is to ensure predictability,
predictability
sustainability and profitability of
revenues y year after year.
y
6
Significance of Ethics in Corporate 
Governance

7
 Significance of Ethics in Corporate 
Governance – (1/2)
• The history of failed business organisations is 
p
replete with failure* of ethics in business. 
Some of the failed businesses have shaken the 
whole world like the ‘subprime
whole world like the  subprime mortgages
mortgages’ in 
in
US at the beginning of this century.
• There was no dearth of laws governing the 
h h fl h
companies in any of the countries where 
businesses have committed the most 
audacious fraud. {*Enron;
audacious fraud. { Enron; Arthur Andersen} 
Arthur Andersen}
8
 Significance of Ethics in Corporate 
Governance – (2/2)
• What was missing is “Ethics in Governance”.
• Thus, ethical governance can protect both the 
Thus, ethical governance can protect both the
companies and their stakeholder from ruin, 
both in terms of reputation and survival
both in terms of reputation and survival. 
“Reputation, reputation, reputation! O! I have lost my
reputation. I have lost the immortal part of myself
and what remains is bestial.”

9
 Why Good Corporate Governance 
is a Question of Ethics? – (1/4)
• It focuses on what the organisation’s 
p g
relationships are and ought to be with its 
employees, its customers, its share holders, its 
creditors its suppliers its distributors its
creditors, its suppliers, its distributors, its 
neighbours and other members of the 
community / society in which the company
community / society in which the company 
operates.

10
 Why Good Corporate Governance 
is a Question of Ethics? – (2/4)
• Q
Questions, like moral responsibilities, obligations 
ti lik l ibiliti bli ti
and virtues in business decision‐making also form 
part of ethics e g choices and character of
part of ethics e.g. choices and character of 
persons, the policies and cultures of organisation.
• The subject of business ethics, is multi
The subject of business ethics is multi‐levelled
levelled. 
At the level of the individual ("the ethics and 
values of business person"), attention is paid to 
the values by which self‐interest and other 
motives are balanced by concern for fairness, 
properness right / wrong and the common good
properness, right / wrong and the common good, 
both within and outside the company. 

11
 Why Good Corporate Governance 
is a Question of Ethics? – (3/4)
• At
At the level of the organisation ("the ethics of a 
th l l f th i ti ("th thi f
business enterprise"), the focus is on the spoken 
or unspoken group consciousness that every
or unspoken group consciousness that every 
company has either by design or by default, as it 
p
pursues its economic objectives. 
j
• Finally, at the level of society itself (" the ethics of 
business system"), business ethics examines the 
pattern of cultural, political and economic forces 
that drive individuals and firm's values that 
define democratic capitalism in a global
define democratic capitalism in a global 
environment.

12
 Why Good Corporate Governance 
is a Question of Ethics? – (4/4)
• The ethics of Corporate Governance is, therefore, 
h hi fC G i h f
the determination of what is "right", "fair", 
"
"proper" and "just" in decisions and actions that 
" d "j t" i d i i d ti th t
affect other people ‐ goes far beyond simple 
questions of bribery theft and collusion It
questions of bribery, theft and collusion. It 
focuses on what our relationships are and ought 
to be with our employees, our customers, our 
to be ‐ with our employees our customers our
shareholders, our creditors, our suppliers, our 
distributors our neighbours and other members
distributors, our neighbours and other members 
of the community / society in which we operate.

13
 Corporate Governance is About 
Ethical Conduct of Business – (1/3)
• Ethics is concerned with the code of values 
p p p
and principles that enables a person to choose 
between right and wrong, and therefore, 
select from alternative courses of action
select from alternative courses of action. 
Further, ethical dilemmas arise from 
conflicting interests of the parties involved
conflicting interests of the parties involved.
• Therefore, conducting a business under the 
broad umbrella of ethics automatically 
ensures good corporate governance.
ensures good corporate governance. 
14
 Corporate Governance is About 
Ethical Conduct of Business – (2/3)
• For ethical corporate governance, 
g
organisations should focus on:
– Assuring integrity, honesty and ethical behaviour 
in the work place by implementing ethical
in the work place by implementing ethical 
standards.
– Maintaining transparency in duties, deals, rules, 
Maintaining transparency in duties deals rules
processes and procedures, related to work, and 
members in the organisation and other
members in the organisation and other 
stakeholders. Roles and responsibilities of each 
member should be publicly known
member should be publicly known. 
15
 Corporate Governance is About 
Ethical Conduct of Business – (3/3)
– Upholding the interest of all stakeholder.
– Protecting the environment by reducing pollution, 
reducing wastage by economising on use of 
natural resources, energy and water.
– Ensuring rights of shareholders
– Clarifying the role and duties of the board, the 
Clarifying the role and duties of the board the
auditors, the CEO for transparency and fairness of 
practices ##
practices.  ##

16