ETHICS

ETHICS IS DERIVED FROM GREEK WORD ETHIKOS

MEANING CUSTOM OR CHARACTER.
ETHICS IS A CODE OF BEHAVIOUR CONSIDORED
CORRECT.
ETHICS
INVOLVES
THE
EVALUATION
AND
APPLICATION OF CERTAIN MORAL VALUES THAT A
SOCIETY OR CULTURE HAS COME TO ACCEPT AS ITS
NORMS.
ETHICS IS A BRANCH OF PHILOSOPHY, IS
CONSIDERED A NORMATIVE SCIENCE BECAUSE IT IS
CONCERNED WITH THE NORMS OF HUMAN
CONDUCT.

BUSINESS ETHICS
BUSINESS-ETHICS IS A SUM TOTAL OF PRINCIPLES AND CODE
OF CONDUCT BUSINESSMEN ARE EXPECTED TO FOLLOW IN
DEALING
WITH
THEIR
STACKEHOLDERS.
SUCH
AS
STOCKHOLDERS, EMPLOYEES, CUSTOMERS, CREDITORS, LAW
ENFORCING AGENCIES ETC.
SINCE BUSINESS-ETHICS IS AN OFFSHUTE OF APPLIED
ETHICS, THE STUDY OF BUSINESS-ETHICS ESSENTIALLY DEALS
WITH UNDERSTANDING WHAT IS RIGHT AND MORALLY GOOD
IN BUSINESS
BUSINESS-ETHICS IS THAT SET OF PRINCIPLES & REASONS
WHICH SHOULD GOVERN THE CONDUCT OF BUSINESS AT
INDIVIDUAL AND COLLECTIVE LEVELS.

PRINCIPLES OF PERSONAL
ETHICS
PERSONAL-VALUES ARE THE CONCEPTION OF WHAT
AN INDIVIDUAL OR A GROUP REGARDS AS
DESIRABLE.
PERSONAL-ETHICS REFER TO THE APPLICATION OF
THESE VALUES IN ANY THING ONE DOES. PERSONALETHICS MIGHT ALSO BE CALLED AS MORALITY.
1. CON CERN RESPECT FOR THE AUTONOMY OF OTHERS.
2. HONESTY AND THE WILLINGNESS TO COMPLY WITH THE LAW.
3. FAIRNESS AND ABILITY NOT TO TAKE UNDUE ADVANTAGE OF
OTHERS.
4. BENEVOLENCE AND PREVENTING HARM TO ANY CREATURE

WHY PEOPLE BEHAVE

ETHICALLY?
1. MOST PEOPLE WANT TO MAINTAIN CLEAR
CONSCIENCE AND WOULD LIKE TO ACT
ETHICALLY UNDER NORMAL CIRCUMSTANCES.
2. PEOPLE WANT TO AVOID PHYSICAL AND
MENTAL INJURIES TO OTHERS.
3. PEOPLE ARE OBLIGED TO OBEY LAWS OF THE
LAND.
4. SOCIAL AND MATERIAL WELL BEING DEPENDS
ON ONES ETHICAL
BEHAVIOUR
IN THE
SOCIETY.

PRINCIPLES OF PROFESSIONAL
ETHICS
A PROFESSION INVOLVES A SPECIFIC BRANCH OF
ADVANCED LEARNING OR A BRANCH OF SCIENCE
PROFESSION OF DOCTOR, ENGINEER, BUISNESS
MANAGER ETC.
A PROFESSIONAL IS ONE WHO IS ENGAGED IN
ACTIVITIES OF A SPECIFIC PROFESSION AS ONES
PAID OCCUPATION
IMIMPARTIALITY: BASIC PRINCIPLE
DILIGLNCE / DUTY
OBJECTIVITY

OPENNESS: FULL
DISCLONURE

FIDELITY TO
PROFESSIONAL
RESPONSIBILITY

CONFIDENTIALITY :
TRUST

A VOIDING
POTANTIAL OR
APPARENT CONFLICT

WHAT IS NOT BUSINESS

ETHICS

RELIGION
LAW
CULTURAL TRAITS
FEELINGS
SCIENCE
COLLECTION OF VALUES

IMPORTANCE AND NEED FOR

BUSINESS ETHICS
1. ETHICAL BEHAVIOUR IS NECESSARY TO GAIN TRUST.
2. TRUST LEADS TO PREDICTABILITY AND EFFIECLCY OF BUSINESS
3. BUSINESS OF BUSINESS IS ETHICAL BUSINESS
4. BUSINESS-ETHICS ENABLES US TO ASSESS THE BENEFITS &
PROBLEMS ASSOCIATED WITH DIFFERENT WAYS OF MANAGING
ETHICS IN THE ORGANIZATION.
5. BUSINESS-ETHICS SEEKS TO IMPROVE WELFARE OF THE
SOCIETY.

CODE OF CONDUCT AND ETHICS

FOR MANAGERS
IN

THE EXERCISE
RESPONSIBILITIES
MANAGERS
MUST
ETHICAL VALUES.

OF

THEIR

OBSERVE

DUTIES

AND

FOLLOWING

INTEGRITY : MORALLY UPRIGHT

IMPARTIALITY : FAIR AND UNPREJUDICED
RESPONSIVENESS TO PUBLIC INTEREST
ACCOUNTABILITY : RESPONSIBLE FOR THEIR ACTION AND
ACCOUNTABLE TO ALL STAKEHOLDERS STOCKHOLDERS,
CREDITORS,
SUPPLIERS,
EMPLOYEES,
CONSUMERS,
GOVERNMENT AND SOCIETTY AT LARGE.
HONESTY : SINCERE, TRUTHFUL AND TRUST WORTHY
TRANSPARENCY : FRANK, OPEN

DISTINCTION BETWEEN VALUES AND

ETHICS
VALUES ARE PERSONAL IN NATURE WHILE ETHICS IS A GENERALIZED
VALUE SYSTEM.
(e.g. (A) VALUES A BELIEF IN CUSTOMER SATISFACTION, BEING A GOOD
PAY-MASTER ETC. (B) ETHICS AVOIDING DISCRIMINATION IN
RECRUITMENT, ADOPTING FAIR BUSINESS PRACTICES)
BUSINESS ETHICS CAN PROVIDE THE GENERAL GUIDELINE WITHIN WHICH
MANAGEMENT CAN OPERATE, WHILE VALUES HAVE ALTERNATIVES TO
CHOOSE FROM
(e.g. PHILANTHROPY AS BUSINESS POLICY IS OPTIONAL VALUES)
MANAGERS MAY HAVE TO RECONCILE DIVERGENT VALUES
(e.g. STANDARDIZATION V/S PRODUCT VARIETY)
MODIFICATION OF VALUES IS FREQUENTLY REQUIRED FOR BUSINESS
STRATEGY IMPLEMENTATION (THOUGH IT IS DIFFICULT)

WHY SHOULD BUSINESS ACT

ETHICALLY
TO PROTECT ITS OWN INTEREST
TO PROTECT THE INTEREST OF BUSINESS COMMUNITY AS A
WHOLE SO THAT PEOPLE HAVE CONFIDENCE IN IT.
TO KEEP ITS COMMITMENT TO SOCIETY TO ACT ETHICALLY
TO MEET STAKEHOLDERS EXPECTATIONS
TO PREVENT HARM TO GENERAL PUBLIC
TO BUILD TRUST WITH KEY STAKEHOLDER GROUPS
TO PROTECT THEMSELVES FROM ABUSE OF UNETHICAL
EMPLOYEES AND COMPETITORS
TO PROTECT THEIR OWN REPUTATION
TO PROTECT THEIR EMPLOYEES BY PROVIDING THEM AN
ENVIRONMENT FACILITATING OBESRVING THEIR OWN
VALUES

ETHICAL DECISION MAKING

IS THE DECISION YOU ARE TAKING LEGAL? IF
NOT, IT IS NOT ETHICAL.
IS THE DECISION YOU ARE TAKING FAIR? WINWIN- EQUITABLE RISK AND REWARDS.
IS THERE READINESS FOR ACCEPTANCE OF
NEGATIVE CONSEQUENCES OF SEEMINGLY
UNETHICAL BEHAVIOR. IF ONES CONSCIENCE IS
CLEAR THERE IS NOTHING TO BE ASHAMED OF.

CHANGING BUSINESS ENVIRONMENT

& ETHICAL CHALLENGES
FAST CHANGING, EXTERNAL ENVIRONMENT CALLS FOR
POSITIVE CHANGE IN RESPONSE OF THE ORGANIZATION
NEW ETHICAL ISSUES.
PROCESS OF DECENTRALIZATION LEADS TO NUMBER OF
ETHICAL ISSUES.
CONFLICT BETWEEN ORGANIZATION & INDIVIDUAL GOALS
CAUSES SEVERAL UNETHICAL PRACTICES.
HUGE INFORMATION FROM ALL SOURCES INCREASES
POTENTIAL
OF
ILLEGAL
USE
OF
PROPERIETORY
INFORMATION.

CHANGING BUSINESS ENVIRONMENT

& ETHICAL CHALLENGES (CONTD.)
McCOY SAYS
DEALING WITH VALUES REQUIRES
CONTINUAL
MONITORING
OF
THE
SURROUNDING ENVIRONMENT, WEIGHING
ALTERNATIVE CAUSES OF ACTION, BALANCING
AND
(WHEN
POSSIBLE)
INTEGRATING
CONFLICTING, RESPONSIBILITIES, SETTING
PRIORITIES AMONG COMPETING GOALS, AND
ESTABLISHING CRITERIA FOR DEFINING AND
EVALUATING PERFORMANCE.

CORPORATE GOVERNENCE
RIGVEDA SAYS
A BUSINESS MAN SHOULD BENEFIT FROM
BUSINESS LIKE A HONEY BEE WHICH SUCKLES
HONEY
FROM
THE
FLOWER
WITHOUT
AFFECTING ITS CHARM AND BEAUTY.
ORGANIZATIONS
FOLLOWING ETHICAL
PRACTICES IN ALL THEIR ACTIVITIES IN ALL
PROBABILITY FOLLOWS BEST CORPORATE
GEVERNENCE PRACTICES AS WELL.

CORPORATE GOVERNENCE
(CONTD.)
SOME PEOPLE DEFINE AS:
CORPORATE GOVERNENCE ARE THE GUIDING PRINIPLES
THAT
ON ONE HAND TRIES TO SYNTHESIZE THE SEMINGLY
CONFLICTING GOALS AMONG THE INDIVIDUALS, THE
CORPORATION AND THE COMMUNITY AND
ON THE OTHER HAND BETWEEN THE IMMEDIATE BENEFITS
TO THE CORPORATION SUCH AS PROFITS AND THE
SECULAR AND LASTING SUBSTANTIVE SOCIAL GAINS.
SOME OTHER DEFINE AS : SET OF RULES THAT GOVERN THE
ADMINISTRATION AND MANAGEMENT OF THE COMPANY.

CORPORATE GOVERNENCE
(CONTD.)
IN ALL FACTS OF CORPORATE
GOVERNANCE THE UNDERLYING
GOAL POSTS ARE:
1. TRANSPARENCY
2. INTEGRITY
3. FULL DISCLOSER OF FINANCIAL AND
NONFINANCIAL INFORMATION
4. PROTECTION OF STAKEHOLDERS
INTEREST

CORPORATE GOVERNENCE
(ETHICAL) PRACTICES
1. ACT WITH HONESTY AND INTEGRITY AVOIDING ACTUAL AND
APPARENT CONFLICT OF INTEREST IN PERSONAL AND
PROFESSIONAL RELATIONSHIP
2. PROVIDE
ACCURATE
COMPLETE,
TIMELY,
RELEVANT
INFORMATION, IN REPORTS AND DOCUMENTS
3. COMPLY WITH LAW OF THE LAND
4. ACT IN GOODFAITH WITHOUT MISREPRESENTING FACTS
5. PROTACT THE CONFIDENTIALITY OF INFORMATION
6. ENSURE THAT CONFIDENTIAL INFORMATION IS NOT USED TO
PROMOTE THE PERSONAL BENEFITS
7. SHARE KNOWLEDGE AND MAINTAIN SKILLS IMPORTANT AND
RELEVANT TO STAKEHOLDER NEEDS
8. ACHIEVE RESPONSIBLE USE OF AND CONTROL OVER ALL
ASSEST AND RESOURCES EMPLOYED OR ENTRUSTED

HOW ETHICS CAN MAKE CORPORATE

GOVERNENCE MORE MEANINGFUL
COREPORATE GOVERNENCE IS MEANT TO RUN COMPANIES ETHICALLY IN A
MANNER SUCH THAT ALL STAKEHOLDERS i.e. CREDITORS, DISTRIBUTORS,
CUSTOMERS, EMPLOYEES, SOCIETY AT LARGE, GOVT. ETC. ARE DEALT WITH IN
A FAIR MANNER.
GOOD C.G. SHOULD LOOK AT ALL THE STAKEHOLDERS AND NOT JUST
SHAREHOLDERS ALONE.
C.G. NOT TO BE IMPOSED IT SHOULD COME FROM WITHIN
THERE ARE PROVISIONS OF COMPANIES ACT WHICH ARE TO BE ADHERED TO
IN LETTER AS WELL AS SPIRITS
CORRECT DECISIONS IN THE AREAS WHERE LAW IS SILENT OR REGULATORY
FRAMEWORK IS WEAK.
SEBI HAS JURISDICTION ONLY UPTO LIMTED/LISTED COMPANIES.

CHARACTERSTIC OF AN ETHICAL
ORGANIZATION
1.EASY INTERACTION WITH DIVERSE INTERNAL AND EXTERNAL STAKEHOLDER GROUPS.
AND MEETING THE NEEDS OF STAKEHOLDERS.
2. OBSESSED WITH FAIRNESS, THEIR GROUND RULES EMPHASIZE THAT THE OTHER
PERSONS INTERESTS COUNT AS MUCH AS THEIR OWN.
3.INDIVIDUAL TAKE PERSONAL RESPONSIBILITY FOR ACTIONS OF THE ORGANIZATION.
4.THEY SEE THEIR ACTIVITIES IN TERMS OF PURPOSE, THE PURPOSE WHICH TIES THE
ORGANIZATION WITH THE ENVIRONMENT, CORPORATE SOCIAL RESPONSIBILITY.
5.CORPORATE EXCELLENCE THROUGH ORGANIZATION CULTURE.

6.MANAGER PERFORMING WELL IN A PRESCRIBED MANNER CORPORATE GOVERNENCE.

CORPORATE SOCIAL RESPONSIBILITY

A. THE CLASSICAL ECONOMIC MODEL:
PUBLIC INTEREST WAS SERVED BEST BY INDIVIDUALS PERSUING THEIR OWN
SELF-INTEREST.
B. THE SOCIAL ECONOMIC MODEL:
* BUSINESS AS A SUB SYSTEM OF HIGHLY INTERDEPENDENT SOCIETY
* COMPANIES HAVE STAKEHOLDERS OTHER THAN STOCKHOLDERS
* STAKEHOLDER AUDIT ALLOWS TO SYSTEMATICALLY IDENTIFY ALL PARTIES
THAT
COULD POSSIBILY IMPACTED BY COMPANYS PERFORMANCE
* BUSINESS HAS AN OBLIGATION TO RESPOND TO THE NEEDS OF ALL
STAKEHOLDERS WHILE PURSUING ITS PROFIT

DEFINITION OF CORPORATE SOCIAL

RESPONSIBILITY
IT IS CONTINUING COMMITMENT BY BUSINESS TO
BEHAVE ETHICALLY AND CONTRIBUTE TO ECONOMIC
DEVELOPMENT, WHILE IMPROVING THE QUALITY OF
LIFE OF THE WORK-FORCE AND THEIR FAMILIES AS
WELL AS OF THE LOCAL COMMUNITY AND SOCIETY AT
LARGE.
COMPANIES TO ANSWER
1. QUALITY OF THEIR MANAGEMENT ( PEOPLE &
PROCESSES)
2. NATURE AND QUALITY OF THEIR IMPACT ON
STAKEHOLDERS INCLUDING SOCIETY AT LARGE

TODAYS CORPORATE SOCIAL

RESPONSIBILITY
1. TO BE VOLUNTARILY RESPONSIBLE TO ETHICAL & SOCIAL
CONSIDERATIONS
2. IT IS NOT A LEGAL BINDING UNLIKE CORPORATE
ACCOUNTABILITYWHICH MAKES COMPANY TO ADHERE TO LEGAL
AND SOCIAL NORMS.
3. IT IS SET OF OBLIGATIONS TO PURSUE THOSE POLICIES AND
ACTIONS DESIRABLE INTERMS OF OBJECTIVES AND VALUES OF
SOCIETY FOR ITS BETTERMENT.
4. IT IS OVERALL RELATIONSHIP WITH ALL ITS STAKEHOLDERS
,THESE INCLUDE CUSTOMERS, EMPLOYEES, COMMUNTIES,
OWNERS / INVESTORS, GOVERNMENT, SUPPLIERS AND
COMPETITORS
5. IT CAN BE EXPLAINED BY FOLLOWING EQUATION:
TOTAL CORPORATE SOCIAL RESPONSIBILITY = ECONOMIC +
LEGAL / ETHICAL + PHILAN THROPIC RESPONSIBILITIES

TODAYS CORPORATE SOCIAL

RESPONSIBILITY (CONTD.)
6. SOCIALLY RESPONSIBLE FIRM SHOULD STRIVE TO:
* MAKE A PROFIT
* OBEY THE LAW
* BE ETHICAL
* BE A GOOD CORPORATE CITIZEN
7. SOCIAL RESPONSBILITY OF BUSINESS IS SOCIETY BASED AND TEMPORAL
(I) SOME SOCETIES HAVE STRONG FORMAL INSTITUTIONS (GOVT., BUSINESS,
ORGANIZED RELIGION ETC.) WHILE OTHERS HAVE STRONG INFORMAL
INSTITUTIONS ( FAMILY, CLAN, CUSTOMER ETC.)
(II) SOCIETY DEMANDS DIFFERENT ROLES FROM INSTITUTIONS
8. TO PROTECT, TO ENHANCE AND TO WORK FOR BETTERMENT OF SOCIETY.

ADVANTAGES OF C.S.R.
1.
2.
3.
4.
5.
6.
7.
8.
9.

IMPROVED FINANCIAL PERFORMANCE

ENHANCED BRAND IMAGE AND REPUTATION
INCREASED SALES AND CUSTOMER LOYALTY
BETTER ATTRACTION & RETENTION OF
EMPLOYEES
REDUCED REGULATORY OVERSIGHTS
INNOVATION AND LEARNING
RISK MANAGEMENT
EASIER ACCESS TO CAPITAL
REDUCED OPERATING COSTS

C.S.R. AS A BUSINESS STRATEGY

FOR SUSTAINABLE DEVELOPMENT

C.S.R. AS A STRATEGY REFERS TO ENHANCING STAKE

HOLDER VALUE AND DELIVERY OF MEASURABLE RESULTS TO
SOCEITY AT LARGE.

IN CONTEXT OF DEVELOPING SOCIETY C.S.R. IS CAPACITY

BUILDING FOR SUSTAINABLE LIVELIHOODS.

EXTERNALLY IT PROMOTES IMAGE AND GOODWILL, SPECIAL

RESPECT AMONGST PEERS, CUSTOMERS, GOVT. AGENCIES,
INVESTORS AND MEDIA, ALL PROMOTING LONGTERM
SHAREHOLDER VALUE AND SUSTAINABLE DEVELOPMENT.

INTERNALLY IT PROMPTES LOYALTY, TRUST IN

ORGANIZATIONAL ETHICS, DIVERSION FROM MUNDANE
THINGS OF DAILY WORK TO MEANING TO EMPLOYEES LIFE.
IT REDUCES ATTRITION RATE

SOCIALLY RESPONSIBLE
INVESTING
S.R.I. AS A STRTEGY IS IMPORTANT BECAUSE
(a) S.R.I. COMPANIES OFFER LONG TERM VALUE.
(b) SOCIAL IMPACT ON TOP OF FINANCIAL
PERFORMANCE PROVIDES ADDITIONAL SAFETY AGAINST
RISK.
S.R.I. PROVIDES A COMPETITIVE ADVANTAGE AS IT IS ACCEPTABLE
TO THE WIDER ENVIRONMENT IN WHICH COMPANIES COMPETE.
PRACTITIONORS OF S.R.I. STRESS THE FACT THAT IT IS THE COSTEFFECTIVE WAY TO GAIN COMPETITIVE ADVANTAGE. COMPANIES, IN
THEIR EFFORTS TO ENGAGE IN STRATEIC CSR AIM TO MATCH
BUSINESS OBJECTIVES WITH THE NEEDS OF THE COMMUNITY E.G.
COCA-COLA PLANT HARVESTING RAIN WATER FOR VILLAGERS, IT
COMPANY EDUCATING SCHOOL CHILDREN IN COMPUTERS ETC.