Ethics are incredibly important on every level — whether as an individual, company, or society in general. Our ethics and values dictate how we act, the decisions we make, and the impact those decisions have.
With consumers becoming ever more conscious of how their lifestyles and purchasing decisions impact on people and the planet, business ethics is more critical to companies than ever before.
So what is business ethics exactly? Let’s take a closer look at business ethics, why it’s important, and how you can integrate business ethics into your business decisions.
What is Business Ethics?
The term business ethics refers to the system of beliefs and morals that underpin a company’s goals, strategies, and processes. It sits under the broader theme of corporate social responsibility (CSR), which is essentially how companies support society and the planet.
An organisation’s business ethics not only set the tone for its goals, values, and wider code of conduct, but also its actions and decisions.
Local and international laws determine this system of ethics to some extent. Aspects such as minimum wages, working conditions, and environmental protections are mandated by legislation.
However, these laws are the minimum ethical values with which companies must comply. All organisations need to make a range of choices beyond what it set out in the law, and so develop their own unique set of business ethics.
The concept of business ethics is far from new: corporate responsibility was a hot topic throughout the 1960s, as social change brought focus on companies’ responsibility to people and society.
Having said that, the key areas and themes of business ethics have evolved through history. In recent years, data privacy and sustainability have emerged as key areas of corporate responsibility and business ethics.
Additionally, after the COVID-19 pandemic, there has been an increased awareness of the importance of staff welfare, and health and safety has become an even more critical aspect of business ethics.
Why is Business Ethics Important?
An awareness of, and respect for business ethics is essential for company integrity. The standards set by an organisation’s leadership are reflected across all areas and levels of the business. It’s important for business leaders to be aware of ethics, as this is a largely voluntary, self-regulated area.
Embracing high standards of business ethics can also have a range of benefits for companies and their leaders, such as:
- Greater loyalty and better performance from employees
- Inspiration and motivation of employees
- Attracting more impressive new hires
- Drawing and keeping investors
- Build trust between the business and its employees and customers
- Enhance reputation with consumers who share similar values (especially important as consumers become more conscious)
Furthermore, there’s a direct link between business ethics and the bottom line. Businesses named on the World’s Most Ethical Companies list performed 10.5% higher than the Large Cap Index over three years. On the flip side, there have been multiple examples of companies seeing their stock price crash after reports of unethical behaviour.
Business ethics are also critically important on a societal level. Ethical practices protect consumers, workers, and the environment, benefiting everyone in the long run.
How to Integrate Ethics in Your Business Decisions
Ethics influence how we act at both an individual and corporate level. Employees and managers can strive to be ethical in how they interact with others and carry out their daily tasks. In the corporate world, the decisions companies make around things like wages, working conditions, labelling, and production are guided by different values and ethics.
Examples of integrating ethics into your business decisions could include:
- Valuing diversity in your workplace through hiring and training programs
- Introducing policies to protect your customers’ data privacy
- Formal action against insider trading, bribery, and other forms of corruption
One way to integrate ethics into all your business decisions is to establish an ethics program. This is a comprehensive framework that covers all aspects of your company and will help guide you on integrating ethics in all decisions, big or small.
Your ethics programme should define your key values and goals as a business and outline policies and procedures that reflect those values. The programme should also provide guidance on training, dealing with misconduct, and managing risk.
Develop a Deeper Understanding of Business Ethics at EDHEC
Would you like to dive deeper into what is business ethics and how values can shape and benefit companies? EDHEC Online offers a range of courses designed to help you develop the skills you need to succeed in the modern, conscious business landscape.
You can study online from anywhere in the world, benefiting from the expertise of EDHEC professors.