Corporate Governance and Business Ethics discusses the importance of ethics in business. It defines business ethics as applying moral principles to business decisions and relationships. Maintaining ethical practices is important for building trust with stakeholders and encouraging productivity and talent retention. Unethical conduct can arise from pressures like unrealistic objectives or competition but ethical companies consider impacts on communities, equality and sustainability. The document examines the role of ethics in corporate governance and relationships. It provides examples of companies with strong ethics like Patagonia as well as those involved in misconduct like Volkswagen. Overall it emphasizes that good governance requires upholding values through vision and conduct standards.

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 Business Ethics 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:
1. 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.
2. 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.
3. 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