Corporate Governance and Business Ethics - PPT.pptx

Corporate Governance and Business Ethics

1. Corporate Governance and Business Ethics By Rukmani Sachdeva PRN No. 21010341013 LLM Batch Symbiosis Law School, Hyderabad

2. Introduction Every organization, as they grow has many stakeholders like shareholders, employees, customers, vendors, community, etc. For survival and growth, they have to rely upon healthy relations with all these stockholders. Hence organizations need to provide good returns for shareholders but also good jobs for employees, reliable products for consumers, responsible relations with the community and a clean environment. Business ethics is the application of general ethical principles to business dilemmas and encompasses a broader range of issues and concerns than laws do, as everything that is legal is not ethical.

3. Meaning of Business Ethics Business ethics is a kind of applied ethics. It is the application of moral or ethical norms to business. Ethics is a set of principles or standards of human conduct that govern the behaviour of individuals or organization. Ethics can be defined as the discipline dealing with moral duties and obligation, and explanation what is good or not good for others and for us Business ethics comprises the principles and standards that guide behaviour in the conduct of business. Businesses must balance their desire to maximise profits against the needs of the stakeholders. Maintaining this balance often requires trade-offs. To address these unique aspects of businesses, rules- articulated and implicit are developed to guide the businesses to earn profits without harming individuals or society as a whole.

4. Importance of Business Ethics Ethical is all about developing trust maintaining it fruitfully so that the firm flourishes profitably and maintain good reputation. Trust leads to predictability and efficiency of the business. Trust is used as a indicator variable of ethics. Basically Trust is three dimensional i.e., Trust in customer relationships, Trust in supplier relationships and employee relationships Business ethics makes the employees want to stay with the business, reduce labour turnover and therefore increase the productivity. This also reduce the recruitment costs and enable the company to get the most talented employees.

5. Need of Business Ethics The business unit needs to follow the ethics of business because business ethics involves: The need of Compliance of legal enactments, principle of morality and customs of community together with policy of the company. The Contribution which business makes towards the society by providing goods, services and employment, creating wealth, carrying out social and welfare activities. Bearing the Consequences of business activities towards environment, various stakeholders and good public image. An organization had to follow these 3 Cs of the business ethics for its existence in long run.

6. Corporate Governance Ethics Corporate governance is the complete set of policies and procedures; rules and conduct framed for the purpose of directing and controlling the business activities. Corporate governance ethics are ethical behaviour in the context of corporate governance. Some instances of ethical behaviour are Working with honesty and integrity, avoiding all conflicts arising due to personal and professional relationships. Acting in good faith, with due caution and care, fulfilling all responsibility given at any level of management. To make responsible use of the resources provided at work place. To ensure punctuality and diligence in every aspect of work taken in hand. Maintain the confidentiality of the information of one‘s workplace. It should neither to be disclosed to an outsider nor to be used for personal benefit. Furnishing all the required documents and reports in time with accurate, complete, relevant information. Compliance of law of the land, rules and regulation which are framed by different level of government and regulating body

7. Role of Business Ethics in Corporate Governance The role of  B usiness E thics   in corporate governance refers to the manner in which ethics is applied during the process of running or administering the organization. To this end, business ethics in corporate governance can be applied in the way the management of the organization, which may be a business concern or a government, deals with both internal and external issues. Instances : business ethics in corporate governance is the way in which the management of a company deals with the issue of the selection of employees Business ethics in corporate governance can also be seen in the manner of remuneration that the company uses to compensate the employees for their services to the organization.

8. Role of Business Ethics in Corporate Governance Business ethics in corporate governance can also be seen in the manner in which the management of a company relates with individuals and external businesses, such as distributors, consumers and business partners. It may also be applied to the manner in which a company relates with host communities and the society at large. One of the ethical considerations that the management of an organization must necessarily address is the issue of responsible corporate behaviour, including topics like giving back to the community and ensuring that they do not pollute the environment unnecessarily.

9. Causes of Unethical Conduct in an Organization Pressure to meet unrealistic objectives and deadlines. Increase in Acute Competition Economic Greed Information of unethical acts through media Pressure to Earn profit Lack of management support or poor leadership .

10. World’s Most Ethical Companies Patagonia Based In:  California, United States Ethics:  Organic cotton, environmental sustainability, Fair Trade certificate Known For:  Outdoor apparel, swimwear Kellogg’s Based In:  Michigan, United States Ethics:  Supports farmers, reduces food loss & waste, low-impact packaging Known For:  Cereal, crackers, pastries. IBM Based In:  New York, United States Ethics:  Renewable energy, gender equality, responsible production Known For:  Hardware, software, consulting Allianz Group Based In:  Munich, Germany Ethics:  Clean energy, low-carbon economy, human rights Known For:  Insurance, asset management

11. World Most Ethical Companies PepsiCo Based In:  New York, United States Ethics:  Racial equality, sustainable agriculture, pay equity, sustainable plastics Known For:  Grain-based snack foods, beverages. Tradlands Based In:  California, United States Ethics:  Natural & sustainable materials, ethical practices, recycles leftovers Known For:  Women’s apparel. Important Note : In 2021 , Three Indian companies have been awarded for being the most ethical companies by Ethisphere . And the companies are Infosys Wipro Tata Steels

12. Companies with Unethical Business Practices Examples of least ethical companies as voted for by Ethical Consumer readers were: Nestle Nestle is subject to the world's longest running boycott for the irresponsible marketing of baby milk to mothers in the developing world. The company has also been criticised for a number of other businesses practices including the use of unsustainable palm oil and genetically modified ingredients in its foods. Volkswagen Almost everyone is familiar with one of the latest cases of corporate misconduct: the Volkswagen emissions scandal. The company admitted to having installed software that manipulated emissions readings to make its cars appear as if they were environmentally friendly. Nike In the past, Nike has been accused of using child labour and supposedly nurturing sexual harassment and discrimination cultures. Plus, its factories are not independently monitored by labour rights groups . 

13. Concluding Remarks Good corporate governance goes beyond rules and regulations that the government can put in place. It is also about ethics and the values which drive companies in the conduct of their business. It is therefore all about the trust that is established over time between companies and their different stakeholders. Good corporate governance practice cannot guarantee any corporate failure. But the absence of such governance standards will definitely lead to questionable practices and corporate failures which surface suddenly and massively. In making ethics work in an organization it is important that there is synergy between vision statements, mission statements, core values, general business principles and code of conduct confers a variety of benefits. An effective ethics programme requires continual reinforcement of strong values. Organizations are challenged with how to make its employees live and imbibe the organization codes and values. To ensure the right ethical climate a right combination of spirit and structure is required.

14. THANKYOU