Business Ethics

Overview of Business Ethics

  • Business ethics relates to the moral or ethical dilemmas that can arise in a business setting.
  • It is about evaluating what is right or wrong in a business context and taking decisions accordingly.
  • The principles of business ethics promote accountability, fairness, transparency, and integrity within an organisation.

Types of Business Ethics

  • Conflict of interest: Occurs when a professional individual has a personal interest that could potentially interfere with their capacity to act in the best interest of their organisation.
  • Corruption and bribery: Entail offering, giving, receiving, or soliciting something of value in order to gain undue advantage.
  • Insider trading: The illegal practice of trading on the stock exchange to one’s own advantage through having access to confidential information.
  • Corporate social responsibility (CSR): Relates to a business approach that delivers economic, social, and environmental benefits for all stakeholders.

The Importance of Business Ethics

  • Reliable ethical practices can enhance a company’s reputation and brand image in the eyes of stakeholders (shareholders, employees, customers, community, etc.).
  • Organisational commitment to business ethics promotes employee morale and commitment.
  • Adherence to business ethics reduces the risk of legal implications and fines.
  • Ethical businesses attract investors who see ethicality as a pillar of long-term success.

Application of Business Ethics in Financial Services

  • Ethical considerations are integral to financial services. Professionals should always uphold the principles of honesty, integrity, and transparency.
  • Financial service professionals should always put the customer’s interest first, avoid misleading or deceptive conduct and strive to offer clear, fair and not misleading financial advice.
  • Failures or lapses in business ethics in financial services can lead to major scandals, regulatory fines, reputation damage and loss of customer and shareholder trust.

Role of Regulation and Compliance in Upholding Business Ethics

  • Regulatory bodies implement laws and regulations to enforce ethical conduct within organisations.
  • Compliance departments within organisations ensure that these laws and regulations are being followed.
  • Breaches of these laws and regulations not only lead to penalties and fines but can severely damage the reputation of the business involved.

Ethical Dilemmas and Decision Making in Business

  • Ethical dilemmas originate when a decision could benefit the business but might not be morally correct or socially acceptable.
  • Ethical decision making involves critically evaluating the situation and considering the potential impact on all stakeholders before taking a decision.
  • An organisation with a strong ethical culture will be better equipped to handle and resolve ethical dilemmas effectively.