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The concept of an ethical business is one that has gathered much attention in recent years. If you want to mantain your business reputation you need to be free from accusations of unethical behaviour. This page looks at ethics and how to develop an ethical culture.

What makes a business ethical?

Ethical organisations look to meet the needs of all their stakeholders which includes the communities and the environments in which they operate as well as their own workforce.  

Here are some examples of well known businesses and how they operate in an ethical way.

Marks and Spencer

Ensure all their goods are produced in good working conditions. Develop agreed ethical standards between company and supplier.

Colgate Palmolive

Colgate have a sustainability strategy that looks at three areas the Planet, People and Performance. They want to improve the health and welfare of their staff and their customers, they want to reduce the negative impact their production techniques have on the environment and they want to ensure that they use as much recycling in their manufacturing and use responsibly sourced materials.

PepsiCo

PepsiCo build their guiding principal around sustainability and caring for their customers, consumers and the world in which we live. They refer to embracing diversity and inclusion and respecting others. PepsiCo delivered care packages to earthquake victims in China.

How do ethical obligations differ from legal ones?

Something can be unethical but not illegal. Take for example the food labelling laws in the UK.  In order to call your product reduced fat, it must contain 30% less fat than your standard product. However, in order to improve the taste many manufacturers add more sugar than the standard product contains. By law this increase in sugar compared to the standard product does not have to be made known to consumers. It might be unethical to omit the % sugar increase from the label, but it’s not against the law.

What are the consequences of unethical behaviour?

Nike

From the 1970s Nike began to use factories in low-wage, developing nations such as People’s Republic of China and Vietnam. These factories became known as ‘sweatshops’ for their poor working conditions.

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Nike suffered significant reduction in its financial performance following allegations of the poor treatment of workers in its factories in these developing countries. Public pressure forced Nike to audit all its factories for occupational health and safety issues

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Shell

Shell wanted to dispose of their Brent Spar oil platform into the Atlantic Ocean. Greenpeace started a long campaign to prevent this from happening.

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Public pressure won and Shell had to dispose of the platform in a more environmentally friendly way.

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Lehman Brothers

Lehman Brothers were one of the world’s largest investment banks. At the end of the 90s and into 00s they invested heavily into the deregulated markets of mortgage debt.

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Lehman Brothers filed for bankruptcy in September 2008. Their spectacular collapse led to the global financial crisis of the late 00s.

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Volkswagen

In 2015 VW were accused of deliberately deceiving regulators that it’s diesel cars had lower emissions.

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Their stock price fell by 20% while they faced a number of law suits around the world. VW also had to recall millions of cars.

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Are there any ethical guidelines I should be following?

Most professional bodies in the majority of industries have a code of ethics. You should look to your own professional or even regulatory bodies to see what codes of ethics they expect their members or organisations to abide by.

How do I create an ethical work place?

  • Reward structures and incentive schemes

    Think about building in good ethical practice into your reward structures and incentive schemes. Or consider employee recognition schemes where they get nominated for an award for their commitment to ethical standards.

  • Code of ethics

    Either write your own code of ethics or ensure that all employees are aware of which regulatory or professional body code of ethics they are required to follow.

  • Consistency

    It’s important that the way you and your managers treat your staff is consistent with the ethical standards and principles that you expect your staff to follow. Let them see you leading by example and they will follow.

  • Corporate social responsibility strategy

    Develop a corporate social responsibility strategy. Get staff involved in setting the strategy and choosing activities or community groups that the business should be supporting or working with. Give time off to staff to undertake any activities in association with the CSR strategy.

  • Training

    Make sure your staff receive full and proper training on the code of ethics, the corporate social responsibility policy, Anti Bribery legislation and Data Protection Act.

  • Supplier agreements

    Write ethical practices into your supplier agreements so that you only do business with organisations that have strong ethical principles.

What can I do with staff that have behaved unethically?

If staff have behaved unethically then you should follow your disciplinary procedure for dealing with misconduct.   

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