PRINCIPLES OF BUSINESS ETHICS Part I

CHAPTER OVERVIEW
(1) (2) (3)
Businss Et!i"s C#r$#rat %#&rnan" '
C#r$#rat S#"ia(
Rs$#nsi)i(it*
W#r+$(a" Et!i"s
1. Defni
tion
2. Moral
s vs Ethics
3. Ethic
al Issues
4. Ethic
al Dilemma
5. Bene
fts of Business
Ethics
1. Stakeh
olders
2. or!or
ate "overnance
Meanin# and $eatures
%e& Issues
3. or!or
ate Social 'es!onsi(ilit&
Meanin# and )eed
%e& Develo!ments
Strate#ies in
Im!lementation
"uidelines for
'e!ortin# S'
Benefts of S'
1. Meanin#
2. Im!ortance
3. $actors in*uencin#
+ork!lace ethics
4. Morals and
Standards
5. Ethical Dilemma ,
Issues in -ork!lace
.. Em!lo&ment
Discrimination / Meanin# and
ommon 0ractices
1. 2arassment in
-ork!lace
3. Mana#in#
-ork!lace Ethics 4 "uidelines
1, BUSINESS ETHICS
-, ./n (a) Et!i"s0 an1 ()) Businss Et!i"s
1. Et!i"s2 Ethics are the !rinci!le of conduct #overnin# an individual or a
#rou!. Ethics relates to +hat is #ood or (ad5 and havin# to do +ith moral dut& and
o(li#ation.
2, Businss Et!i"s2
6a7 Ethics in (usiness refers to the a!!lication of da&4to4 da& moral or ethical
norms to (usiness. Business Ethics are the !rinci!les and standards that determine
acce!ta(le conduct in (usiness or#ani8ations.
6(7 Business Ethics in a (usiness or#ani8ation relates to a cor!orate culture
of values5 !ro#rams5 enforcement and leadershi!.
6c7 Business ethics is a set of !rinci!les or reasons +hich should #overn the
conduct of (usiness / at the individual frm 9evel or at the collective Industr& 9evel5 (&
the a!!lication of ethical reasonin# to s!ecifc (usiness situations and activities.
3. R3uir4nts2 Bein# ethical in (usiness re:uires actin# +ith an
a+areness of/
6a7 ;he need for com!l&in# +ith rules5 e.#. / 617 la+s of the land5 6ii7 customs ,
e<!ectations of the communit&5 6iii7 !rinci!les of moralit&5 6iv7 !olicies of the
or#ani8ation5 and 67 #eneral concerns such as the need s of others and fairness.
6(7 2o+ the !roducts5 service and actions of a (usiness enter!rise5 can a=ect its
stakeholders 6i.e. em!lo&ees5 customers5 Su!!liers5 Shareholders5 and communit& >
Societ& as a +hole75 either !ositivel& or ne#ativel&.
5, .istin6uis! )t7n 8#ra(s an1 Et!i"s,
Parti"u(ars 8#ra(s Et!i"s
1.Meanin# Moral is defned as relatin# to !rinci!les of ri#ht Ethics relates to +hat is #ood
and +ron#. or (ad5 and havin# to do +ith
oral dut& and o(li#ation.
2. 'oot +ord ,
?nal&sis
9atin +ord @mosA5 meanin# @customA. ustom is
defned (& a #rou! over time. Societies have
@ustomA.
"reek +ord @ethosA5 meanin#
@characterA. haracter is a
!ersonal attri(ute.
0eo!le have @characterA
3. )ature Morals are acce!ted from an authorit&. 6cultural5
reli#ious5 etc.7
Ethics are acce!ted (ecause
the&BB follo+ from !ersonall&
acce!ted !rinci!les.
4. E<!ression Moral )orms can usuall& (e e<!ressed as
#eneral rules5 and statement5 e.#. @al+a&s tell
the truthA.
Ethical )orms are
com!arativel& a(stract and
cannot (e descri(ed in
#eneral rules and
statements.
5. ?(sor!tion Morals are t&!icall& frst a(sor(ed as a child
from famil&5 friends5 school5 reli#ious teachin#s
and other associations.
Ethics are ado!ted> a(sor(ed
(& an individual #raduall& (&
takin# reasona(le actions >
decisions in a!!ro!riate
situations.
.. Sco!e Morals +ork on a smaller scale than ethics5 more
relia(l&5 (ut (& addressin# human needs for
(elon#in# and emulation.
Ethics has a much +ider
sco!e5 and includes
evaluation of moral
standards of an individual or
societ&5 to see +hether these
standards are reasona(le or
unreasona(le in concrete
situations and issues.
9, Writ s!#rt n#ts #n Et!i"a( Issus,
1. ?n Ethical Issue ins an identifa(le !ro(lem5 situation or o!!ortunit& that
re:uires a !erson to choose from amon# several actions that ma& (e evaluate as ri#ht or
+ron#5 ethical or unethical.
2. in (usiness5 such a choice #enerall& involves com!arin# monetar& !roft
a#ainst +hat ma& (e a!!ro!riate conduct5 i.e. fnancial vs no4 fnancial im!lications.
3. 9earnin# to reco#ni8e ethical issues is the most im!ortant ste! in
understandin# Business Ethics.
:, Writ s!#rt n#ts #n Et!i"a( .i(44as,
1. Et!i"a( .i(44aC ? Ethical Dilemma is a situation +here the decision /
maker has to choose (et+een ri#ht and ri#ht. $or e<am!le5 in 'ama&ana5 'am had to
choose (et+een t+o Dharmas / 6a7 to a(ide (& his $atherDs +ords and !roceed to the
forest for 14 &ears5 or 6(7 to i#nore his fatherDs +ords and rule the countr& as a %shatri&a
0rince. Both these alternatives constitute Dri#ht actionA (& a!!l&in# di=erent &ardsticks >
vie+!oints.
2. Et!i"a( .i(44a in )usinss2 In (usiness5 the mana#er > decision /
maker is faced +ith moral and ethical decisions dail&. 2e has to tackle ethical issue and
choose (et+een 4 7i7 ri#ht and +ron#5 6ii7 ri#ht and ri#ht. $or e<am!le5 in the case of a
Sales!erson5 does o=erin# a #ift to a customer constitute a (ri(e or sales !romotionE
1;, Out(in t! n1 < i4$#rtan" =#r t!i"s in )usinss,
1. Us #= Rs#ur"s2 Societ& (esto+s u!on (usinesses5 the authorit& to+n
and use land and natural resources. In return5 In return5 societ& has the ri#ht to e<!ect
that !roductive or#ani8ation 6i.e. (usiness enter!rises7 +ill cater to the #eneral interests
of consumers em!lo&ees and communit&.
2. Fairnss2 Societ& ma& also e<!ect that (usiness enter!rises honour
e<istin# ri#hts and limit their activities +ithin the (ounds of Fustice5 e:uit& and fairness.
3. I4$(i1 C#ntra"tC ?ll !roductive enter!rises can (e vie+ed as en#a#in#
in an im!lied contract +ith the Societ&. So5 under this @social contractA (et+een societ&
and (usiness5 the (ehaviour of (usiness enter!rises is #uided (& @Business EthicsA.
4. C#r$#rat 6#&rnan"C in the !rocess of cor!orate decision / makin#5
mana#ers contri(ute5 consciousl& or unconsciousl& to the sha!in# of human societ& / it is
not a choice (et+een !rofts and ethics5 (ut !rofts in an ethical manner. ;his has lead to
the evolution of @cor!orate #overnanceA.
Sta+!#(1rs 4ust su$$#rt #r6ani>ati#na( t!i"s initiati&s )"aus it 4a+s 6##1
)usinss sns in t! (#n6 tr4, C#44nt,
;he advanta#es > (enefts of Business ethics are /
S#"ia( W(( )in6C $ocus on (usiness Ethics has im!roved social +ill /(ein#. E<!loitation
of +orkers5 mono!olistic !rice f<in# and !rofteerin#5 intimidation and harassment of
em!lo&ees at +ork!lace5 etc. cannot (e !racticed (& (usiness enter!rises no+. ;he Societ&
has demanded that (usiness enter!rises !lace hi#h value on fairness and e:ual ri#hts5 thus
resultin# in im!roved social +elfare.
Pu)(i" I4a6C the fact that an or#ani8ation re#ularl& #ives attention to its ethics can !ortra&
a stron# and !ositive cor!orate ima#e to the !u(lic. Societ& re#ards or#ani8ations as valuin#
!eo!le more than !roft5 and strivin# to o!erate +ith utmost inte#rit&5 fairness and e:uit&.
8aintainin6 4#ra( "#urs in ti4s #= "!an6C Business ethics is useful durin# times of
fundamental chan#e5 +here there is no clear moral com!ass to #uide leaders thou#h
com!le< con*icts a(out +hat is ri#ht or +ron#. ontinuin# attention to ethics in the
+ork!lace sensiti8es leaders and sta= for maintainin# consistenc& in their actions.
Ta47#r+ an1 Pr#1u"ti&it*2 -here a $irm fnds dis!arit& (et+een its !referred value and
the values actuall& re*ected (& +ork!lace (ehaviour5 continuous attention and dialo#ue
re#ardin# values5 (uilds o!enness5 inte#rit& and communit&5 all critical in#redients of stron#
terms in the +ork!lace. Em!lo&ees feel stron# ali#nment (et+een their values and those of
the or#ani8ation. ;he& react +ith stron# motivation and !erformance.
E4$(#*? $riendl& 0oliciesC ?ttention to ethics ensures hi#hl& ethical !olicies and
!rocedures in the +ork!lace. $or e<am!le5 in the matter of ethical treatment of em!lo&ee vis4
a /vis hirin#5 evaluatin#55 disci!linin#5 trainin#5 terminatin#5 etc. most $irms feel that it is far
(etter to incur the cost of mechanisms to ensure ethical !ractices than to incur costs of
liti#ation later.
CORPORATE %%OVERNANCE ' CORPORATE SOCIAL RESPONSIBILIT@
Writ s!#rt n#ts #n Sta+!#(1rs,
Mana#ement is not accounta(le solel& to Investors 6Shareholders75 (ut to other interest
#rou!s > constituents +ho are a=ected (& cor!orate activit&. ;he +ord @StakeholdersA
descri(es such constituents of an or#ani8ation / the individuals5B #rou!s or other
or#ani8ations +hich are a=ected (&5 or can a=ect the or#ani8ation in !ursuit of its #oals.
Stakeholders of a com!an& +ould include4
6a7 Em!lo&ees5
6(7 ;rade Gnions5
6c7 ustomers5
6d7 su!!liers5
6e7 Shareholders and
investors5
6f7 om!etitors5
6#7 "overnment5
6h7 Industr& as a +hole5
and
6i7 Societ& at lar#e.
11, Writ s!#rt n#ts #n "#r$#rat %#&rnan",
1. Meanin#C or!orate "overnance deals +ith !romotin# cor!orate fairness5
trans!arenc& and accounta(ilit&. It is concerned +ith structures and !rocesses for
decision / makin#5 accounta(ilit&5 control and (ehaviour at the to! level of or#ani8ations.
It in*uences ho+ the o(Fectives of an or#ani8ation are set and achieved5 ho+ risk is
monitored and assessed and ho+ !erformance is o!timi8ed.
2. DefnitionC or!orate "overnance can (e defned as @the formal s&stem
of accounta(ilit& and control for ethical and sociall& res!onsi(le or#ani8ational decisions
and use of resourcesA. ?ccounta(ilit& relates to ho+ +ell the content of +ork!lace
decisions is ali#ned +ith the or#ani8ationDs stated strate#ic direction. ontrol involves the
!rocess of auditin# and im!rovin# or#ani8ational decisions and actions.
3. Sco!eC or!orate "overnance arran#ements are ke&B determinants of a
$irmDs relationshi! +ith the societ& at lar#e5 and encom!ass the follo+in# as!ects4
6a7 0o+er #iven to Mana#ement and control over Mana#ementDs use of such !o+er5
6(7 Mana#ementDs accounta(ilit& to stakeholders5
6c7 $ormal and informal !rocesses (& +hich stakeholders in*uence mana#ement
decisions.
4. 0ervasiveC ;he :uestion of #ood Hor!orate "overnanceA arises in all
cate#ories fo Indian om!anies4
6a7 0u(lic Sector Gnits 60SGs7 +here the "overnment is the maForit& Shareholder and the
#eneral !u(lic holds minorit& stake.
6(7 Multi / )ational com!anies 6M)s7 +here the $orei#n 0arent is the dominant stake5
and the (alance is held (& the #eneral !u(lic.
6(7 Domestic Business "rou!s +here the 0romoters 6and their friends , relatives7 are the
dominant shareholders5 "overnment o+ned fnancial institutions hold a com!ara(le
stake5 and the (alance is held (& the #eneral !u(lic.
5. 9e#al $rame+orkC In India5 the le#al frame+ork of cor!orate #overnance is contained in
Sec.2I2? of the com!anies ?ct 6relatin# to ?udit ommittee7 and clause 4I of 9istin#
?#reement +ith SEBI 6in res!ect of 9isted om!anies7.
W!at ar t! +* issus < 4aA#r =a"t#rs in &a(uatin6 "#r$#rat %#&rnan"B
"enerall&5 or!orate "overnance measures include / 6a7 a!!ointin# )on / E<ecutive Directors5
6(7 !lacin# constraints on mana#ement !o+er and o+nershi! concentration5 and 6c7 ensurin#
!ro!er disclosure of fnancial information and e<ecutive com!ensation. Some ke& issues
considered +hile evaluatin# cor!orate "overnance are/
As$"t .s"ri$ti#n
A""#unta)i(i
t* #= B#ar1
#= 1ir"t#rs
(BO.)
6a7 BJD is the link (et+een Mana#ement , shareholders5 and
!otentiall& the most e=ective instrument of #ood #overnance. Directors
on the Board are elected (& Shareholders to esta(lish cor!orate
mana#ement !olices and make decisions on make decisions on maFor
issues !ertainin# to the om!an&.
6(7 Inde!endent directors ensure that the Board does not o!erate
outside the s!here of mana#ement in*uence. 9ar#e Investors seek out
com!anies +here there are more Inde!endent Directors +ho have no
com!anies +here there are more Inde!endent directors +ho have no
commercial links to the frm and +ho demonstrate an o(Fective
+illin#ness to :uestion the decisions of the mana#ement.
Finan"ia(
.is"(#sur
an1 "#ntr#(s
6a7 ;he cor!orate structure should include and ?udit committee
com!osed of Inde!endent Directors +ith si#nifcant e<!osure on
fnancial transactions.
6(7 ;he ommittee should have the sole !o+er to a!!oint the com!an&Ds
?uditors and a!!rove non /audit services from the ?uditor.
6c7 ;o! Mana#ement 'emuneration should (e determined (&
measura(le !erformance #oals 6'JE5 'JE5 etc.7 and should also (e
fnali8ed (& an inde!endent 'emuneration ommittee. ;his
'emuneration !acka#e > (enefts should (e full& disclosed to the
shareholders.
St#"+
O$ti#ns
E<ecutive Board Directors ma& #rant #enerous Stock o!tions to ;o!
Mana#ers. -hile Stock o!tions o=er mana#ers an incentive to !erform +ell5
overloaded Stock / J!tions create the !ossi(ilit& of un+anted share value
dilution. or!orate "overnance seeks to avoid misuse of stock / J!tions.
W!at ar t! =aturs #= 6##1 C#r$#rat 6#&rnan"B
? "ood or!orate "overnance should (e /
1, EC"int an1 D"ti& 6i.e. doin# the ri#ht thin#s and doin# thin#s and doin# thin#s ri#ht7
2. In tune +ith the a!!lica(le (6a( r3uir4nts,
3. trans$arnt as re#ards decisions and actions.
4. A""#unta)( to stakeholders.
5, C#nsnsus #rint1 and !artici!ator& in decision /makin#5 i.e. !romote acce!ta(ilit& of
decisions rather then forcin# them on the !arties concerned.
.. E3uita)( and inclusive.
1, Rs$#nsi& and ada!tive to environmental chan#e.
Writ s!#rt n#ts #n C#r$#rat S#"ia( Rs$#nsi)i(it*,
1. 8anin6 2 cor!orate Social 'es!onsi(ilit& 6S'7 focuses on the idea that
a (usiness has social o(li#ations a(ove and (e&ond makin# !roft and follo+s from a
decision (& mana#ement to e<!and traditional #overnance arran#ements to include
accounta(ilit& to the full ran#e of stakeholders.
2. S"#$2 S' is a +a& of inte#ratin# the economic5 social5 and
environmental im!eratives of (usiness activities. ;he term "#r$#rat "iti>ns!i$
denotes the e<tent to +hich (usiness enter!rises meet the 6a7 le#al5 6(7 ethical5 6c7
economic and 6d7 voluntar& > discretionar& res!onsi(ilities5 !laced on them (& their
stakeholders.
3, ./niti#ns2
S' is the continuin# commitment (& (usiness to (ehave ethicall& and contri(ute to
economic develo!ment +hile im!rovin# the :ualit& of the life of the +orkforce and their
families as +ell as of the local communit& and societ& at lar#e.
Brin6 #ut t! n1 =#r S#"ia( Rs$#nsi)i(it* #= a Businss Entr$ris,
1. Ir#n La7 #= Rs$#nsi)i(it*C Societ& #ives (usiness its charter to e<ist
and that charter can (e amended or revoked at an& time if it fails to live u! to societ&Ds
e<!ectations. ;herefore5 if a (usiness intends to retain its e<istin# social role and social
!o+er5 it must res!ond to societ&Ds needs constructivel&. ;his is called the Ir#n La7 #=
Rs$#nsi)i(it*. In the lon#4run5 those enter!rises +ho do not use !o+er in a manner
that societ& considers res!onsi(le5 +ill tend to lose it.
2. C#n&rsi#n #= Rsistan"s int# Rs#ur"sC If the innovative a(ilit& of
a (usiness is turned to social !ro(lems5 man& resistances !ro(lems7 can (e transformed
into resources and the functional ca!acit& of resources can (e increased man& times.
3. Wa(t! "rati#nC Social res!onsi(ilit& (ecomes an inte#ral !art of the
+ealth creation !rocess / +hich if mana#ed !ro!erl& should enhance the com!etitiveness
of (usiness and ma<imi8e the value if +ealth creation to societ&.
4. ED"ti& us #= Rs#ur"s an1 P#7rC Businesses command !o+er
over the !roductive resources of a communit&. ;he& are o(li#ed to use those resources
for the common #ood of societ&. ;he& should realise that the !o+er to command
resources has (een dele#ated to them (& the societ& to #enerate more +ealth for tits
(etterment. ;he& must honour social o(li#ations +hile e<ercisin# the dele#ated economic
!o+er.
5. L#n6?Tr4 )usinss IntrstC a (etter societ& +ould !roduce a (etter
environment in +hich the (usiness ma& #ain lon#4term !roft ma<imi8ation. ? frm +hich
sensitive to communit& needs +ould5 in its o+n self4interest5 like to have a (etter
communit& to conduct its (usiness. ;o achieve that5 it +ould im!lement s!ecial
!ro#rammes for social +elfare.
6. Bttr Pu)(i" I4a62 Each $irm must enhance its !u(lic ima#e to
secure more customers5 (etter em!lo&ees and hi#her !roft. ?cce!tance of social
res!onsi(ilit& #oals lead to im!roved !u(lic ima#e.
7. A&#i1in6 %#&rn4nt Intr&nti#nC 'e#ulation and control are costl&
to (usiness5 (oth in terms of ener#& and mone& and restrict its *e<i(ilit& of decision /
makin#. $ailure of (usinessmen to assume social res!onsi(ilities invites "overnment to
intervene and re#ulate or control their activities. ;he !rudent course for (usiness is to
understand the limit of its !o+er and to use that !o+er res!onsi(l&5 there(& avoidin#
"overnment intervention.
Vari#us +* 1&(#$4nts !a& ta+n $(a" in t! (ast 1"a10 t# s!a$ t! 1ir"ti#n
#= CSR,
In"ras1 Sta+!#(1r A"ti&is4C Societ& is lookin# to the 0rivate Sector to hel! +ith com!le<
social and economic issues. om!anies +hich are $r"i&1 (& the Societ& as not (ein# sociall&
res!onsi(le5 are tar#eted throu#h actions5 e.#. !u(lic demonstrations5 !u(lic e<!oses5 (o&cotts5
shareholder 'esolutions5 @ denial of serviceA attacks on com!an& +e(sites5 etc.
1. En6a6in6 Sta+!#(1rsC Involvin# or en#a#in# @stakeholdersA 6interest #rou!s7 is
decision / makin# !rocess has evolved from E7!t!r to en#a#e stakeholdersA to EH#7
to en#a#e stakeholdersA. om!anies and stakeholders have5 !ro#ressed (e&ond mere
dialo#ue !rocess5 to a more meanin#ful and rational stakeholder !artici!ative !rocess.
2. C#1s0 Stan1ar1s an1 In1i"at#rsC )e+ voluntar& S' standards5 #uidelines and
!erformance measurement tools are added (& various com!anies as !art of their ?nnual
'e!orts. ;here is also a #ro+in# consensus to evolve a standard in S' re!ortin# and
dissemination of information.
3. Va(u C!ain "#n"$tC S' is characteri8ed (& the e<!ansion of (oundaries of cor!orate
accounta(ilit&. Stakeholders ma& hold com!anies accounta(le for the !ractices of their
Business 0artners throu#hout the entire Kalue hain +ith s!ecial focus on su!!liers5
Environment la(our and human ri#hts !ractices. ?lso5 com!an& 0urchasin# 0o+er is
(ein# vie+ed as a uni:ue resource that contri(utes to economic develo!ment5
investment ca!ital5 as +ell as facilitatin# (asic trade of !roducts and services.
4. Trans$arn"* an1 R$#rtin6C om!anies have to meet increased demands for
trans!arenc& and #ro+in# e<!ectations that the& measure5 re!ort5 and continuousl&
im!rove their social5 environmental and economic !erformance. om!anies are e<!ected
to !rovide access to information on im!acts of their o!erations5 to en#a#e stakeholders in
meanin#ful dialo#ue a(out issues of concern that are relevant to ether !art& and to (e
res!onsive to !articular concerns not covered in standard re!ortin# and communication
!ractices.
5. CSR ' C#r$#rat %#&rnan"C or!orate "overnance and S' conce!ts have to (e
vie+ed in a conver#ent manner. S' activities have (e#um to stress the im!ortance of
Board and Mana#ement ?ccounta(ilit&5 "overnance and decision / makin# structures5 for
e=ective institutionali8ation of S'.
EF$(ain )riG* t! strat6is in i4$(4ntati#n #= CSR,
Some ke& strate#ies that can (e used (& om!anies +hen im!lementin# S' !olicies and
!ractices are /
1, 8issi#n0 &isi#n an1 Va(us Stat4nt2
S' deserves a !rominent !lace in a com!an&Ds core mission5 vision and values
statements> documents5 +hich / 6i7 state a com!an&Ds #als , as!irations5 and 6ii7 !rovide
insi#ht into the com!an&Ds values5 culture and strate#ies for achievin# its aims.
2. P(ans &s Pr=#r4an"2 S' re:uires an environment +here innovation and
inde!endent thinkin# are +elcomed. ;here must (e a commitment to close the #a!
(et+een +hat the com!an& sa&s it stands for and the realit& of its actual !erformance.
"oals and as!irations should (e am(itious5 (ut care should (e e<ercised so that the
com!an& sa&s +hat ist means and means +hat it sa&s.
3, 8ana64nt Stru"tur2
S' mana#ement s&stem seeks to inte#rate cor!orate res!onsi(ilit& concerns into a
om!an&Ds values5 culture5 o!erations and (usiness decisions at all levels of the
or#ani8ation.
4. 9on# / term strate#ic 0lannin#C om!anies can incor!orate S' into their lon# term
!lannin# !rocesses5 identif&in# s!ecifc #oals and measures of !ro#ress or re:uirin# S'
im!act statements for an& maFor com!an& !ro!osals.
5. "eneral ?ccounta(ilit&C In addition to the cor!orate and divisional social res!onsi(ilit&
#oal5 a om!an& can address S' issues in the Fo( descri!tions and !erformance
o(Fectives of as man& Mana#ers and Em!lo&ees as !ossi(le. Each em!lo&ee can
understand ho+ he > she can contri(ute to the com!an&Ds overall e=orts to (e sociall&
res!onsi(le.
6. E4$(#* R"#6niti#n an1 R7ar1sC Em!lo&ees tend to en#a#e in (ehaviour that is
reco#ni8ed and re+arded and avoid (ehaviour that is !enali8ed. ;he s&stem of recruitin#5
hirin#5 !romotin#5 com!ensatin# and !u(licl& honorin# em!lo&ees should (e desi#ned to
!romote cor!orate social res!onsi(ilit&.
List t! )n/ts #= C#r$#rat S#"ia( Rs$#nsi)i(it*< s#"ia((* 1sira)( "#r$#rat
$r=#r4an" $r#&i1s &ari#us )n/ts t# C#4$anis, C#44nt,
;he (enefts of S'5 i.e. @#ood cor!orate citi8enshi!A include4
1. I4$r#&1 Finan"ia( Pr=#r4an"2 Sociall& res!onsi(le (usiness !ractices are linked to
!ositive fnancial !erformance. Im!roved fnancial results are attri(uted to sta(le socio4
!olitical / le#al environment5 enhanced com!etitive advanta#e throu#h (etter cor!orate
re!utation and (rand ima#e5 im!roved em!lo&ee recruitment5 retention and motivation5
motivation5 im!roved stakeholder relations and a more secure environment to o!erate in.
2. O$ratin6 C#st R1u"ti#nC S' initiatives can hel! to reduce o!eratin# costs.
Im!rovin# environmental !erformance e.#. reducin# emissions of #ases that contri(ute to
#lo(al climate chan#e or reducin# use of a a#rochemicals5 can lo+er costs.
3. Bran1 I4a6 an1 R$utati#n2 ? com!an& considered sociall& res!onsi(le can (eneft
(oth from its enhanced re!utation +ith the !u(lic as +ell as its re!utation +ithin the
(usiness communit&5 increasin# the com!an&D a(ilit& to attract and tradin# !artners.
4. In"ras1 Sa(s ' Cust#4r L#*a(t*C Businesses must frst satisf& customersD ke&
(u&in# criteria5 i.e. !rice5 :ualit&5 availa(ilit&5 safet& and convenience. 2o+ever5 studies
sho+ an increasin# consumer desire to (u& 6or not (u&7 (ased on other values4(ased
criteria5 such as @s+eatsho! /freeA and @child / la(our4 freeA clothin#5 lo+er
environmental im!act5 and a(sence of #eneticall& / modifed materials or in#redients.
5. Pr#1u"ti&it* an1 Hua(it*C Im!roved +orkin# conditions5 reduced environmental
im!acts or increased em!lo&ee involvement in decision / makin#5 lead to / 6a7 increased
!roductivit&5 and 6(7 reduced erro4r> defective rate in a om!an&.
.. A)i(it* t# attra"t an1 rtain 4$(#*sC om!anies !erceived to have stron# S'
commitments fnd it easier to recruit and retain em!lo&ees5 resultin# in a reduction in
turnover and associated recruitment and trainin# costs.
WORIPLACE ETHICS
Writ s!#rt n#ts #n W#r+$(a" Et!i"s,
1, 8anin62
6a7 EW#r+$(a" Et!i"sJ relates to ho+ one a!!lies values to +ork in actual decision
makin# / a set of ri#ht and +ron# actions that directl& im!act the +ork!lace.
6(7 ;he& are an e<tension of the $rs#na( stan1ar1s or lack of them that is intrinsic
in the !eo!le +ho com!rise the +ork!lace.
2, N12
6a7 0u(lic concerns a(out ethical !ractices in (usiness usuall& relate to issues like / 6i7
fnancial scams5 fraud and em(e88lement5 6ii7 acce!tin#5 or !romotin# (ri(es5 or 6iii7
l&in# or dece!tive advertisin# of !roducts and services5 unfair com!etitive !ractices5
etc.
6(7 Ensurin# the !resence of sound values and ethics is a vital and on#oin# !art of
#ood #overnance in com!anies and an inte#ral !art of #ood mana#ement !ractices.
Out(in t! i4$#rtan" #= Et!i"a( B!a&i#ur at t! W#r+$(a"
;he !rinci!le of e:uit& re:uires that @)o man should (e e<ecuted in his +ork or alienated
throu#h his +orkA 2ence5 if an em!lo&er > enter!rise does not take ste!s to create a +ork
environment +here the em!lo&ees have a clear5 common understandin# of +hat is ri#ht and
+ron#5 and feel free to discuss and ask :uestions a(out ethical issues and re!ort violations5
the follo+in# !ro(lems could arise4
1, 'isk of em!lo&ees makin# unethical decisions.
2, ;endenc& of em!lo&ees to re!ort violations to outside re#ulator& authorities (ecause
the& lack an ade:uate internal forum.
3, Ina(ilit& to recruit and retain eLcient !eo!le.
K, 9oss of com!etitive advanta#e in the market!lace.
L, 9oss of re!utation and #ood+ill in the industr& and the communit&.
-, 2i#her e<!osure to le#al (attles in ourts of 9a+.
BriG* 1s"ri) t! r#( #= In1i&i1ua( 8#ra(s an1 stan1ar1s in 1/nin6 W#r+$(a"
Et!i"s,
1, Va(us2 Kalues re*ect endurin# (eliefs5 that one holds5 that in*uences attitudes5
actions5 and the choices one makes. Kalues of individuals are sha!ed (& / 6a7 !ersonal
(eliefs develo!ed in childhood and &outh5 6(7 test of values and on /the4 Fo( decisions
re*ectin# the em!lo&eeDs understandin# of ethical res!onsi(ilit&5 and 6c7 various socio/
!s&cholo#ical factors,
2, N6ati& Attitu1s2 Individuals could develo! ne#ative attitudes or lose
!ersonal motivation due to reasons like4
6a7 )e#ative +ork or life e<!eriences5
6(7 Em!lo&ees failin# to res!ect each others uni:ue !ersonalities5
6c7 Jverl& a##ressive fnancial or (usiness tar#ets5 and
6d7 0ressures to !erform and take :uick decisions.
3, Et!i"a( B!a&i#ur2 ?n individualDs ethical (ehaviour in +ork!lace 6a7 a=ects his
or her re!utation +ithin the om!an&5 and also 6(7 contri(ute to the +a& in +hich the
om!an& is !erceived (& others.
W!at ar t! )asi" ras#ns =#r Et!i"a( .i(44as in 7#r+$(a"B %i& Fa4$(s #=
t!i"a( issus =a"1 )* t! in1i&i1ua( in t! 7#r+$(a",
1. Et!i"a( .i(44as < oncernsC ?n individualDs ethical concerns are
di=erential relationshi!s and res!onsi(ilities at the +ork!lace +here there are no @correctA
rules to follo+.
2. E<am!lesC E<am!les of ethical issues faced (& an individual in the
+ork!lace are4
6(7 Bri(er& and immoral entertainment
6c7 Discriminatin# (et+een Su!!liers
Writ s!#rt n#ts #n E4$(#*4nt 1is"ri4inati#n0 in t! "#ntFt #= W#r+$(a" Et!i"s,
1, 8anin6 2 ;he discriminate means @to distin#uish one o(Fect from another.A In
the conte<t of -ork!lace Ethics5 Em!lo&ment Discrimination refers to4
6a7 treatin# !eo!le di=erentl&5 i.e.5 the +ron#ful act of makin# a di=erence in treatment or
favour on a (asis other than individual merit.
6(7 ;reatin# one !erson (etter than another (ecause of their a#e5 #ender5 race5 reli#ion or
other !rotected class status5 +hich is not relevant to the Fo( that the& !erform.
2. E(4nts2 Merit is i#noredC Discrimination relates to a decision a#ainst one or more
em!lo&ees 6or !ros!ective em!lo&ees7 that is not (ased on individual merit5 e.#. the a(ilit& to
!erform a #iven Fo(5 seniorit&5 or other morall& le#itimate :ualifcations.
List t! "#44#n(* r"#6ni>1 E4$(#*4nt .is"ri4inati#n $ra"ti"s,
;he !ractices +idel& reco#ni8ed as discriminator& are4
1. R"ruit4nt Pra"ti"sC $irms that rel& onl& on +ord4 of mouth referrals of
!ersent em!lo&ees to recruit ne+ +orkers5 tend to recruit onl& form those racial and
se<ual #rou!s that are alread& re!resented in their la(or force. $urther5 +hen desira(le
Fo( !ositions are onl& advertised in media that are not sued (& minorities or +omen or
are classifed as for men onl&5 recruitment +ould tend to (e discriminator&.
2. S("ti#n < S"rnin6 $ra"ti"sC Mo( :ualifcations are discriminator& +hen
the& are not relevant to the Fo( to (e !erformed 6e.#. re:uirin# !rofessional :ualifcations
for an essentiall& manual task.7. Fo( intervie+s are discriminator& if the intervie+er
routinel& dis:ualifes certain class of !eo!le / e.#. assum!tions a(out occu!ations
Hsuita(le for +omenD in @maleA environments.
3. C#n1iti#ns #= E4$(#*4ntC Discrimination in terms and conditions of
em!lo&ment include non4com!liance +ith the follo+in# as!ects4
6a7 E:ual -a#es and Salaries to !eo!le +ho are doin# essentiall& the same +orik.
6(7 $air -a#es (ased on industr& standards and !revalent local environmental
situations.
4. Pr#4#ti#n Pra"ti"sC 0romotion5 Fo( !ro#ression5 and transfer !ractices are
discriminator& +hen /
6a7 em!lo&ers !lace males on Fo( tracks se!arate from those o!en to +omen ,
minorities5 6(7 !romotions rel& on the su(Fective recommendations of immediate
su!ervisors.
5. .is4issa( C $irin# an em!lo&ee on the (asis of his or her race or #ender is a
clear form of discrimination. ?lso5 la&o= !olicies that rel& on a seniorit& s&stem5 in +hich
+omen and minorities have the lo+est seniorit&5 are also discriminator& in nature.
EF$(ain a =7 6ui1(ins =#r 4ana6in6 t!i"s in t! 7#r+$(a",
;he follo+in# are a fe+ #uidin# !rinci!les of mana#eIn# ethics in the +ork!lace4
1. Int6rat1 Et!i"s 8ana64nt2 Ethics 0rinci!les should (e
incor!orated in other mana#ement !ractices. $or e<am!le5 +hen develo!in# the Kalues
statement durin# strate#ic !lannin#5 ethical values !referred in the +ork!lace should (e
included. ?lso5 ethical !rinci!les should (e taken into account +hen develo!in# !ersonnel
!olicies5 and then desi#n !olicies to N!rdoce these (ehaviours.
2. Pr#? a"ti& R#(C E<ecutives and Mana#ers should / 6a7 endorse strict
standards of conduct5 and also 6(7(e tolerated5 and that the& are e<!ected to re!ort an&
+ron#doin# the& come across5 thus communicatin# clearl& that the com!an& relies on 5
rather than discriminates a#ainst5 those +ho come for+ard concernin# ethical (reaches.
3. O$n C#44uni"ati#nC ;o! Mana#ement should e<!lain the reasons for
the ethics 0olic& and revie+ the #uidelines and conduct formal or informal trainin# to
further sensiti8es em!lo&er to !otentialB ethical issues. It is necessar& to create a +ork
environment +here em!lo&ees to have an ethical dilemma5 and #ive +orkers the
resources to hel! resolve such situation.
4. At4#s$!r #= trustC reatin# an atmos!here of trust is critical in
encoura#in# em!lo&ees to re!ort ethical violations the& come across. ;his function mi#ht
(e !rovided (& / 6a7 an outside consultant5 e.#. 9e#al ?dvisor or !rofessional 6(7 a @ti!>
com!laint (o<A in +hich em!lo&ees can re!ort sus!ected unethical activities5 and do so
safel& on an anon&mous (asis.
5. C#1 #= C#n1u"t ' Et!i"s2 odes of onduct s!ecif& actions in the
+ork!lace and odes of Ethics are #eneral #uides to decisions a(out those actions. Some
as!ects of ode of onduct are / 6a7 !referred st&le of dress5 6(7 avoidin# ille#al dru#s5
6c7 adherence to instructions of su!eriors 6d7 (ein# relia(le and !rom!t5 6e7 maintainin#
confdentialit&5 6f7 not acce!tin# !ersonal #ifts5 etc.
.. %ri&an" P#(i"*C ? "rievance !olic& should (e included for em!lo&ees
to resolve disa#reements +ith su!ervisors and sta=.
ETHICS VIS ? ENVIRON8ENT
1, EF$(ain t! "#n"$t #= Sustaina)( .&(#$4nt,
1 2i#h economic #ro+th means hi#h rate of e<traction5 transformation and utili8ation of
non / rene+a(le resources. In this conte<t5 Sustaina(le Develo!ment refers to
maintainin# develo!ment over time.
2 Sustaina(le Develo!ment is @develo!ment that meets the needs of the !resent +ithout
com!romisin# the a(ilit& of future #enerations to meet their o+n needsA.
3 ? nation or societ& should satisf& its !resent of the 0resent +ithout a com!romisin# the
a(ilit& of future #enerations to meet their o+n needsA.
4 ;he conce!t of @sustaina(le Develo!mentA 6as !er Brundtland 'e!ort7 reco#ni8es that
economic #ro+th ecolo#ical costs.
List t! 4ain =#r4s #= P#((uti#n ' Rs#ur" 1$(ti#n an1 t!ir 1tri4nta( D"ts,
P#((uti#n Rs#ur" .$(ti#n
It refers to the undesira(le and
unintended contamination of the
environment (& the manufacture or use
of commodities.
It refers to the consum!tion of fnite or
scarce resources. 0ollution ma& also (e
seen as a t&!e of 'esource De!letion
since contamination of air5 +ater5 or land
diminishes their (enefcial :ualities.

;he main forms of 0ollution De!letion are #iven (elo+4
A. .$(ti#n #= F#ssi( Fu(s2 De!letion of $ossil $uels 6oil and coal7 at an e<!onentiall&
risin# rate5 constitute loss of non4 rene+a(le source of ener#&. ?lso5 the loss of forest
ha(itats com(ined +ith the e=ects of !ollution has led to the e<tinction of a lar#e num(er
of s!ecies and the dan#er of man& e<istin# s!ecies disa!!earin# forever.
B, Watr P#((uti#n2
1. CaussC -ater is essential to human life5 and also for industrial #ro+th , develo!ment.
-ater 0ollution can (e caused (& / 6a7 intentionall& usin# +ater (odies as dum!in# &ards>
dis!osal sites for +astes 6e.#. for intermediate and lo+4level radioactive +astes75 or 6(7
accidents and disasters 6e.#. oil s!ills7
2. ED"t2 0ollution of +ater (odies5 cou!led +ith increase in !o!ulation and ur(an economic
activit& results in reduction of the +orldDs !er ca!ita su!!lies of +ater. ;o meet ur(an
demands5 +ater is (ein# increasin#l& diverted form a#ricultural irri#ation to !rovide +ater
for cities.
C, Lan1 P#((uti#n2
1. S#(i1 WastsC 0eo!le livin# in cities !roduce tons of solid +astes ever& &ear. it&
"ar(a#e Dum!s are si#nifcant sources of !ollution5 containin# !oisonous su(stance such
as cadmium 6from rechar#ea(le (atteries7 mercur&5 lead 6from can (atteries and ;K
!icture tu(es75 co!!er5 8inc5 etc. 'a!id advancements in the I; industr& have led to the
!ro(lem of e4+aste dum!in# 6i.e. old com!uter s&stems5 hard+are5 accessories5 etc.7
+hich cannot (e re4used.
2. Ha>ar1#us #r T#Fi" Su)stan"sC these can result in / 6a7 increase in mortalit& rates5
6(7 irreversi(le or inca!acitatin# illness5 or 6c7 seriousl& adverse health or environmental
e=ects. $or e<am!le5 Bn>ns is a common industrial to<ic chemical used in !lastics5
d&es5 n&lon5 food additives5 deter#ents5 dru#s5 fun#icides5 and #asoline. 2o+ever5
Ben8ene +orkers are several times more likel& than the #eneral !o!ulation to #et
leukemia. Vin*( C!(#ri1 is used in the !roduction of !lastics5 +hich is released in small
amounts +hen !lastic !roducts deteriorate5 and causes liver dama#e5 (irth anomalies5
liver5 res!irator&5 and (one dama#e5 (rain and l&m!h cancers5 etc.
D. Air P#((uti#nC
1. CaussC ?ir 0ollution ma& (e caused (& / 6a7 #ases and !articulates emitted (& industrial
!rocesses and vehicles5 and 6(7 industrial accidents and disasters. 6e.#. Bho!al #as 9eak
;ra#ed& of 1I347
2. ED"t2 ?ir !ollutants have the follo+in# adverse e=ects4
6a7 the :ualit& of the air +e (reathe5 (ecomes ha8ardous to health and life5
6(7 a=ect ve#e4tation leadin# to decreasin# a#ricultural &ields5
6c7 deteriorate e<!osed construction materials throu#h corrosion5 discoloration5 and rot5
6d7 #lo(al dama#e like #lo(al +armin#5 o8one la&er destruction5 and acid rains. Ouestion
(elo+P
Writ s!#rt n#ts #n %(#)a( War4in6, W!at is t! i4$a"t #= "(i4at "!an6B
1. r#( #= 6rn!#us %ass2 "reenhouse "ases / ar(on Dio<ide5
)itrous J<ide5 Methane5 and $D 6hloro4 $luoro / car(ons75 occur naturall& in the
atmos!here to a(sor( and hold heat from the sum5 !reventin# it from esca!in# (ack in to
s!ace5 to kee! the earthDs tem!erature at the ri#ht levels so that life can evolve and
*ourish.
2. %(#)a( War4in62 Industrial and other human activities durin# the
last 5N &ears5 !articularl& the (urnin# of fossil fuels5 have released su(stantiall& hi#her
amounts of #reenhouse #ases into the atmos!here5 resultin# in increasin# amounts of
heat5 and raisin# tem!eratures around the #lo(e.
3. A1&rs ED"ts2 ?vera#e #lo(al tem!eratures are no+ hi#her than
(efore5 ;his risin# heat +ill have the follo+in# adverse e=ects4
6a7 E<!ansion of the +orldDs deserts.
6(7 Increase in the fre:uenc& and ma#nitude of drou#hts.
6c7 Meltin# of !olar ice ca!s5 causin# sea levels to rise
6d7 -arnin# of +ater / (odies like lakes and oceans5 thus Shiftin# the
#eo#ra!hical distri(ution of fsh and other marine s!ecies.
6e7 E<tinction of several s!ecies of !lants and animals.
6f7 Disru!tion in farmin# and reduced a#ricultural &ield levels.
6#7 Increase in the distri(ution and severit& of disease.
4. N12 ;he increase in levels of #reenhouse #ases can (e addressed
(& reducin# current emissions of #reenhouse #ases (& .NQ to 1NQ. 2o+ever5 this +ould
seriousl& dama#e the economies of (oth develo!ed and develo!in# nations.
Writ s!#rt n#ts #n O>#n 1$(ti#n,
O>#n La*r2 ? la&er of J8one in the lo+er stratos!here !rotects all life on earth from
harmful ultraviolet 6GK7 radiation. 2o+ever5 this J8one 9a&er is destro&ed (& $ #ases5
+hich are used in aerosol cans5 'efri#erators5 ?ir onditioners5 Industrial Solvents5 etc.
.$(ti#n2 -hen released into the air5 $ #ases rise. In 1 to 1N &ears5 the& reach the
stratos!here5 and destro& o8one molecules and remain for 15 to 13N &ears5 continuin# all the
+hile to (reak do+n additional o8one molecules.
ED"t2 Shrinkin# of the J8one 9a&er and conse:uent increase of GK ra&s +ill lead to / 6a7
ne+ cases of shin cancer5 and 6(7 destruction of 15Q of the +orldDs maFor cro!s that are
sensitive to GK li#ht.
Writ s!#rt n#ts #n A"i1 Rain,
8anin62 ?cid 'ain is a threat to the environment attri(uted to the com(ustion> (urnin# of
fossil fuels 6oil5 coal and )atural "as575 +hich are heavil& used (& utilities to !roduce
electricit&.
A"i1 Rain2 Burnin# fossil fuels5 containin# hi#h levels of sul!hur5 release lar#e :uantities of
Sul!hur J<ides and )itro#en J<ides into the atmos!here5 +hen these #ases are carried into
the air5 the& com(ine +ith +ater va!our in clouds to form )itric ?cid and Sul!huric acid. ;hese
acid are then carried do+n in the rain5 thus raisin# the acidit& of the +ater sources.
ED"ts2 ?cid 'ain/
6a7 Soaks into soils and falls directl& on trees and other ve#etation. ?cid rain directl&
dama#es forests and indirectl& destro&s the +ildlife and s!ecies that de!end on forests
for food and (reedin#.
6(7 Increases the acidit& of the +ater sources. Man& fsh !o!ulations and other a:uatic
or#anisms are una(le to survive in lakes and rivers that have (ecome hi#hl& acidic due
to acid rain.
6c7 'eleases to<ic metals from the soil and carries these into +ater+a&s5 +here the&
contaminate drinkin#5 +ater and lead to various diseases.
6d7 orrodes and dama#es (uildin#s5 statues5 and other o(Fects5 s!ecifcall& those made of
iron5 limestone5 and mar(le.
Writ s!#rt n#ts #n E"#(#6i"a( Et!i"s,
Businss is a $art #= t! E"#(#6i"a( S*st4, E(a)#rat,
S*st4C ?n Ecolo#ical S&stem is an inter4 related and inter / de!endent set of or#anisms
and environments5 e.#. a lake5 in +hich the fsh de!end on small a:uatic or#anisms5 +hich in
turn live of f deca&in# !lant and fsh +aste !roducts.
Intr? r(at1C Since the various !arts of an ecolo#ical s&stem are inter4related5 the
activities of one of its !arts 6i.e. su(4s&stems7 +ill a=ect all the other !arts 6su( / s&stems7.
R#( #= BusinssC Business Enter!rises are !arts of a lar#er ecolo#ical s&stem5 Business
$irms de!end on the natural environment is a=ected (& the commercial activities of
(usiness frms. 2ence5 there is a need to reco#ni8e5 maintain and !reserve the ecolo#ical
s&stems +ithin +hich +e live.
E"#(#6i"a( Et!i"sC Ecolo#ical Ethics is (ased on the idea that the environment should (e
!rotected not onl& for the sake of human (ein# s (ut also for its o+n sake. ;his resolve (&
(usiness enter!rises is re:uired in order to counter the !ro(lems of !ollution and resource
de!letion.
Out(in t! i4$#rtan" #= C#nsr&ati#n #= Natura( Rs#ur"s,
8anin62
6a7 onservation refers to the savin# or rationin# of natural resources
for later use.
6(7 onservation5 looks !rimaril& to the future5 i.e. the need to limit
consum!tion no+ to have resources availa(le for tomorro+. ;hus5 0ollution @
consumesA !ure air and +ater5 and 0ollution control @ conservesA them for the future.
6c7 De!letion of resources is !rimaril& a concern for future #enerations.
onservation5 therefore5 is the onl& +a& of ensurin# a su!!l& of tomorro+Ds
#enerations.
A7arnss2
6a7 Earlier5 Business enter!rise +ere mainl& concerned +ith @usin#A the
economic resources in the (est !ossi(le manner. )o+5 there is an increase a+areness
to @conserveA the ecolo#ical resources.
6(7 $actors like /6i7 a+areness of social res!onsi(ilit&5 6ii7 need to ado!t
ethical values5 and 6iii7 more statutor& re:uirements to+ards !ollution control5
environment / friendl& !ractices5 etc5 have translated into !rovidin# safet& for ht
+orkers at +ork!lace5 concern for their health5 reducin# !ollution and incor!oratin#
environmental values in #overnance.
Writ s!#rt n#ts #n En&ir#n4nta( Et!i"s,
8anin62 Environmental Ethics concerns the value s&stem of societies / the value
s&stem that has (rou#ht the state of environment to the !resent situation. It focuses on
the need to minimi8e !ollution5 and ado!tion of environment / friendl& (usiness !ractices.
%(#)a( I4$a"tC 0ro(lems like "lo(al -armin#5 J8one De!letion and dis!osal of
ha8ardous +astes5 a=ect the entire +orld. ;he& re:uire international co4 o!eration and
have to (e tackled at he #lo(al level.
Pr&asi&2 the issue of Environmental Ethics concerns ethical (ehaviour of all t&!es of
or#ani8ations ran#in# from International Bodies5 )ational "overnments5 J!inion Markers5
Media5 Intelli#entsia5 !u(lic and 0rivate enter!rises and )"Js.
Fa"ts2 Environmental Ethics has to+ facets / 6a7 the e=ect5 i.e. !ro(lems relatin# to
!rotection of environment or nature in terms of !ollution5 resource utili8ation or +aste
dis!osal5 and 6(7 the (asic cause 5i.e. issues of e<!letive human nature and attitude that
should (e addressed in a rational +a&.
R#( #= BusinssC Ethical 0ractices vis /a / vis environment have to (e ado!ted (&
Business Enter!rises. $or e<am!le5 a $irm en#a#ed in e<!ort for !roducts has to satisf&
the im!orter in re#ard to the :ualit&5 ethics and environmental standards.
EF$(ain E"#?=rin1(* Businss $ra"ti"s, W!at ar t! )n/ts #= n&ir#n4nta((*
=rin1(* )usinss $ra"ti"sB
Writ s!#rt n#ts #n EEn&ir#n4nt =rin1(* )!a&i#urJ #= Businss ntr$riss,
Basi" As$"tsC Environmental Mana#ement is the !riorit& area and a ke& determinant to
Sustaina(le Develo!ment. Since (usiness and Industr& are closel& linked +ith
environment and resource utili8ation. co4 friendl& (usiness !ractices should involve / 6a7
eco4 friendl& !roduction !rocesses5 strate#ies , technolo#ies5 and 6(7 e=ective
mana#ement of +astes.
Va(u Ana(*sisC Economic !ro#ress and environmental !rotection are not con*ictin#
!ro!ositions. om!anies can re4desi#n !roducts and ado!t latest technolo#ies availa(le
in order to achieve the #oals of +asta#e reduction and resources de!letion. Businesses
can also evaluate their !roduct utilities / ho+ to retain !roduct :ualit& +ith minimum
resource consum!tion5 +hether rene+a(le resources can (e used> su(stituted for non /
rene+a(le resources5 etc.
E"#? Frin1(* Attitu1C om!anies should ado!t ne+ ideas and strate#ies +ith re#ard
to environment / (usiness relationshi!. ? chan#e is needed at all levels startin# from
or#ani8ational structure5 fnance5 manufacturin#5 marketin#5 o!erations5 accountin# and
other related disci!lines. 0olicies that sho+ environmental concern / vi8. Environment
Im!act assessment 6EI?7 and Environmental ?udits5 should (e ado!ted.
Wast 8ana64ntC -aste Mana#ement can (e e=ectivel& achieved throu#h / 6a7
minimum !roduction of +aste5 6(7 ma<imi8in# re4use of +aste and re4c&clin#5 and 6c7
!romotin# environmentall& sound +aste dis!osal !ractices5 Business $irms +hich !ollute
the environment have to !a& the costs of mana#in# such +astes. Such frms cannot enFo&
su(sidies #iven (& the #overnment.
Us #= Natura( Rs#ur"sC Industries +hich consume natural resources5 6e.#. minerals5
tim(er5 f(re5 oil5 coal5 foodstu=s5 etc.7 have a s!ecial res!onsi(ilit& for /
6a7 ado!tin# !ractices that have (uilt / in environmental consideration 5
6(7 Introducin# !rocesses that minimi8e the use of natural resources
and ener#&5 reduce +aste5 and !revent !ollution5
ETHICS IN 8ARIETIN% AN. CONSU8ER PROTECTION
W!at ar t! t!i"a( 1i(44as in t#1a*Ms 4ar+tin6 s"nari#B
8ar+tin6 As$"tsC the (asic o(Fective of Marketin# is to in*uence the (ehaviors of
customers5 (& usin# tools such as / 6a7 desi#n of a !roduct5 6(7 the !rice at +hich it is
o=ered5 6c7 the massa#e used to descri(e to5 and 6d7 the !lace in +hich it is made
availa(le.
Et!i"a( .i(44aC Marketin# E<ecutives face the challen#e of (alancin# their o+n (est
interests in the form of reco#nition5 !a&5 and !romotion5 +ith the (est interests of
consumers5 their or#ani8ation5 and societ& into a +orka(le #uide for their dail& activities.
;he& should (e a(le to distin#uish @ethicalA form @unethicalA marketin# !ractices5 and act
accordin#l&5 re#ardless of the !ossi(le conse:uences.
%ui1(ins2 Man& (usiness enter!rises have odes of Ethics that identif& s!ecifc acts
6like (ri(er&5 acce!tin# #ifts7 as unethical and descri(e the standards that em!lo&ees are
e<ce!ted to live u! to. ;hese #uidelines +ill4
6a7 reduce the chance that an em!lo&ee +ill kno+in#l& violate
om!an&Ds standards5
6(7 Stren#then a com!an&Ds !osition in dealin# +ith its customers or
!ros!ects that encoura#e ethical +ork (ehaviour.
6c7 ?ssist &oun# or ine<!erienced e<ecutives5 to resist !ressure to
com!romise !ersonal ethics in order to move u! in the or#ani8ation.
W!at ar t! ras#ns =#r s!#7in6 t!i"a( )!a&i#r in 8ar+tin6B
;he reasons for (ehavin# ethicall& in Marketin# are as under4
C#nsu4r W(( )in6C onsumers are the life(lood of a (usiness. 2ence5
mana#ement should (e concerned +ith the +ell4 (ein# of consumers. Ethical (ehaviour in
marketin# strate#ies5 !olicies and cam!ai#ns ensure reco#nition of consumersD interests.
P#siti& R#( #= 8ar+tin6C Marketin# activities should not (e misconstrued (& !u(lic
as consistin# onl& of misleadin# !acka#e la(els5B false claims5 !hon& list !rices5 and
infrin#ements of +ill esta(lished
I4a6 B##st t# t! Or6ani>ati#nC Bu&ers form an im!ression of an entire or#ani8ation
(ased on their contract +ith one !erson5 i.e. the !erson +ho re!resents the marketin#
function5 6e.#. Sales lerk7. Marketin# !ersonnel to develo!5 maintain and im!rove the
cor!orate ima#e should ado!t sound and ethical !ractices.
R1u"1 6#&rn4nt R6u(ati#nC Business a!ath&5 resistance5 or token res!onses to
unethical (ehaviour +ill increase the !ro(a(ilit& of more #overnment re#ulation. Most of
the "overnmental limitations on marketin# arise out of mana#ementDs failure to maintain
ethical standards in marketin#. ;o minimi8e su!ervision (& "overnment5 (usinesses must
voluntar& ado!t ethical !ractices in marketin#.
8at"!in6 P#7r ' rs$#nsi)i(it*C Marketin# E<ecutives +ield a #reat deal of social
!o+er as the& in*uence markets and s!eak out on economic issues. 2o+ever5 there is a
res!onsi(ilit& related to that !o+er. If Marketin# Mana#ers do not use their !o+er in a
sociall& acce!ta(le manner5 that !o+er +ill (e lost in the lon# run.

W!at is t! 4anin6 #= "#4$titi#nB
8anin62 om!etition is a situation in a market in +hich Sellers inde!endentl& strive for
the Bu&ersD !atrona#e5 in order to achieve a certain (usiness o(Fective 6s75 e.#. !roft5 sales5
market share etc.
N12 ? !re4 re:uisite for a #ood com!etition is trade5 e.#. the unrestricted li(ert& of ever&
man to (u& sell and (arter5 +hen5 +here and ho+5 of +hom and to +hom he !lease.
ED"t2 In conditions of e=ective com!etition5 com!etitors +ill (e havin# e:ual o!!ortunities
to com!ete for their o+n economic interest. 2ence5 the :ualit& of their out!uts and resource
de!lo&ment +ill (e #iven to! !riorit& in order to sustain and succeed in the market (&
meetin# consumersD demand at he lo+est !ossi(le cost.
EF$(ain t! r(ati#ns!i$ )t7n "#4$titi#n an1 C#nsu4r W(=ar,
om!etitionC om!etition refers to rivalr& in the market!lace5 it is re#ulated (& a set of
!olicies and la+s to achieve the #oals of / 6a7 economic eLcienc&5 6(7 consumer +elfare5
and 6c7 avoidin# concentration of economic !o+er. ;hese #oals have an interactive
relationshi! and5 +hen in harmon&5 deliver ;otal -elfare.
E=ect on consumersC onsumers are the #reatest (enefciaries of com!etition. ?lso5
onsumers are the main losers due to anti4 com!etitive activities in a market. ;he
consumers are +orse o= due to their lack of ca!acit& to deal +ith such !ro(lems.
0ervasive E=ectC ;he desi#n and im!lementation of a com!etition !olic& !romotes the
advancement and increased +elfare of the !oor 6Macro 9evel E=ect7. ?n e=ective
com!etition re#ime or consumer la+ 6coverin# com!etition distortions7 can !revent
consumer a(uses5 (oth at industr& level as +ell as in a villa#e or localit& +here one
sho!kee!er can cheat the +hole communit& 6Micro 9evel E=ect7.
onclusionC ?n a!!ro!riate and d&namic com!etition !olic& and la+ are necessar& to
monitor economic develo!ment avoid corru!tion5 reduce +asta#e and ar(itrariness5
im!rove com!etitiveness and !rovide su!!ort to the !oor.
W!at ar t! initiati&s t!at !a& ta+n in t! In1ian "#ntFt t#7ar1s 4aintainin6
an1 $r#4#tin6 !a(t!* "#4$titi#nB
EFtnt2 ;he om!etition ?ct 2NN25 e<tends to the +hole of India5 e<ce!t the State of Mammu
and %ashmir.
O)A"ti&s2 ;he 0ream(le to the om!etition ?ct5 2NN2 lists the follo+in# o(Fectives4
6a7 %ee!in# in vie+ of the economic develo!ment of the countr&5 to
!rovide for the esta(lishment of a commission Rcalled om!etition ommission of
India 6I7 to !revent !ractices havin# adverse e=ect on com!etition5
6(7 ;o !romote and sustain com!etition in markets5
6c7 ;o !rotect the interests of consumers5
6d7 ;o ensure freedom of trade carried on (& other !artici!ants in
markets5 in India5
6e7 ;o !rovide for matters connected there+ith and incidental thereto.
./n t! tr4 EC#nsu4rJ un1r t! "#4$titi#n A"t0 2;;2, Ns", 2(=)O
C#nsu4r
In res!ect of %OO.S
Rdefned u>s 26i7P
In res!ect of SERVICES
Rdefned u>s 26u7P
Means5
Bu&er of an& #oods.
Means5
2irer or ?vailer of an&
Service.
Includes an& Gser of #ods5
+hen such use is made +ith
the a!!roval of the (u&er.
Includes and Benefciar& of
services5 +hen such services
are availed of +ith the
a!!roval of the 2irer or
?vailer.
W!at ar t! 4ain in6r1ints< 6#&rnin6 $r#&isi#ns #= t! C#4$titi#n A"tB
T! C#4$titi#n A"t =#"uss #n t! =#((#7in6 aras aD"tin6 "#4$titi#n
Pr#!i)iti#n #= Anti C#4$titi& A6r4nts NS", 3O2 ?#reements like ;ie in
?rran#ements5 E<clusive Dealin#s5 'efusal to Deal and 'esale 0rice Maintenance5 artels
for Bid 'i##in#5 ollusive Biddin# etc. Shall (e considered anti / com!etitive and hence
void5 if the& cause or are likel& to cause an a!!recia(le adverse e=ect on the com!etition
+ithin India.
Pr#!i)iti#n #= a)us #= 1#4inant $#siti#n NS",KO2 Im!osin# unfair or discriminator&
conditions or limitin# and restrictin# !roduction of #oods or services or indul#in# in
!ractices resultin# in denial of market access or throu#h an& other mode is !rohi(ited.
R6u(ati#n #= C#4)inati#ns NS",L ' -O2 om(inations +hich cause or are likel& to
cause an a!!recia(le adverse a=ect on com!letion +ithin the relevant market in India are
void5 unless it is a!!roved (& I.
Et!i"a( A""#untin6 En&ir#n4nt
W!at ar t! as$"ts t# ) "#nsi1r1 in "ratin6 an Et!i"a( A""#untin6 En&ir#n4nt
in a )usinss Entr$risB
;he follo+in# as!ects should (e considered for creatin# a sound and ethical accountin#
environment in a Business Enter!rise4
E4$(#* A7arnss2 ?ll em!lo&ees should (e made a+are of their le#al and ethical
res!onsi(ilities. ;o! Mana#ement should initiate !olicies to train and motivate em!lo&ees
to +ards ethical (ehaviour. Em!lo&ees should (e encoura#ed to re!ort cases of frauds5
mani!ulations5 misa!!ro!riations5 etc.
R$#rtin6 #= Frau1sC Em!lo&ees should (e !rovided facilities throu#h +hich the& could
communicate +ith a!!ro!riate Mana#ers5 for re!ortin# frauds5 mismana#ement or an&
other form of non /routine detrimental (ehavioru5 +ithout the fear of (ein# re!rimanded
or fred. ;his ma& (e in the form of a hel!line com!risin# of senior mem(ers of the
Consideration: it may have been (a)
paid or (b) promised or (c) partly paid and
partly promised, or (d) under any system of
deferred payment.
Purpose: Purchase of goods may be
(a) for resale or (b) for any commercial
purpose or (c) for personal use
Consideration: It may have been (a)
paid or (b) promised or (c) partly paid and
partly promised, or (d) under any system of
deferred payment.
Purpose: Hiring or Availing of Services
may be (a) for any commercial purpose or (b)
for personal use.
om!an& +ho are availa(le for #uidance on an& moral5 le#al ethical issues that an
em!lo&ee of the com!an& ma& face.
Fair Trat4nt t# W!ist( B(#7rsC ? -histle Blo+er is an em!lo&ee> !erson +ho
re!orts fraud5 mismana#ement5 or unethical !ractices to the a!!ro!riate level of
mana#ement. $air treatment and a!!reciation of +histle (lo+ers is necessar& to check
fraud.
W!at ar t! 6nra( ras#ns =#r unt!i"a( )!a&i#ur in "#ntFt #= A""#unts an1
Finan"B
;he maFor reasons leadin# to unethical (ehaviour in the conte<t of ?ccounts and $inance are4
8#n*? 8in11nssC It is said that @a (usiness +hich makes nothin# (ut mone&5 is a
!oor kind of (usinessA. 2o+ever5 most (usiness enter!rises are (lindl& (ehind @!roFectin#
and dis!la&in#A #ood !rofts5 +hether the& are actuall& (ein# earned or not. Such
o(session to+ards @re!ortin# !roftsA rather than @earnin# !roftsA ma& lead to unethical
accountin# and fnancial !ractices.
A""#untin6 "#4$(FitisC ?ccountin# !rinci!les are under#oin# routine and re!id
chan#es. ;he standards have (ecome more com!le< and it is diLcult to identif&
deviations from these com!le< set of re:uirements. Gnethical (ehaviour ma& (e caused
(& / 6?7 com!le<it& of accountin# !rinci!les5 and 6(7 diLcult& in identif&in# their
misa!!lication.
S!#rt tr4 Pr#/ta)i(it*C Mani!ulatin# accountin# entries to de!ict #ood short4term
!rofta(ilit& can hel! om!anies (oost their market ima#e and o(tain further ca!ital from
the market. Jver4 em!hasis on maintainin# rates of dividend5 E0S5 0>E ratio5 'JI5 etc. in
the Short /term5 (& +indo+4 Dressin#5 +ill lead to the do+nfall of the om!an& in a fe+
&ears.
I6n#rin6 s4a(( unt!i"a( issusC ;oleration or com!romise of small ethics la!ses could
lead to lar#er !ro(lems. 2ence5 (usiness enter!rises should develo! an environment
+here small ethical la!ses are taken seriousl& so that the& are not re!eated in the future.
W!at ar t! &ari#us t!rats 7!i"! "an ) =a"1 )* a Finan" an1 A""#untin6
Pr#=ssi#na( 7!i( 7#r+in6 as an Au1it#r0 C#nsu(tant #r an E4$(#* in an
#r6ani>ati#nB
;hreats can (e faced (& a $inance and ?ccountin# and ?ccountin# 0rofessional +hile +orkin# as
an ?uditor5 onsultant or an Em!lo&ee in an or#ani8ation5 +here(& the (asic !rinci!les 6#iven in
an earlier :uestion7 cannot (e com!lied +ith. Such threats ma& (e classifed as follo+s /
1. S(= intrst t!rats ma& occur as a result of the fnancial or other interests of
a $inance and ?ccountin# 0rofessional or of an immediate or close famil& mem(er.
2. S(=?R&i7 T!rats ma& occur +hen a !revious Fud#ment needs to (e re4
evaluated (& the $inance and ?ccountin# 0rofessional res!onsi(le for that Fud#ment.
3. A1&#"a"* t!rats occur +hen a $inance and ?ccountin# 0rofessional 0romotes a
!osition or o!inion to the !oint that su(se:uent o(Fectivit& ma& (e com!romised.
4. Fa4i(iarit* t!rats occur +hen a $inance and ?ccountin# 0rofessional has close
relationshi!s in the +ork environment and such relationshi!s im!air his sel*ess attitude
to+ards +ork.
5. Inti4i1ati#n T!rats occur +hen $inance and ?ccountin# !rofessional ma& (e
!rohi(ited from actin# o(Fectivel& (& threats5 actual or !erceive.
%i& Fa4$(s #= S(= ?Intrst T!rats 7!i"! "an ) =a"1 )* a Finan" an1
A""#untin6 $r#=ssi#na( 7!i( 7#r+in6 as (a) Au1it#r #r C#nsu(tant0 #r ()) E4$(#*
in a "#4$an*,
W#r+in6 as "#nsu(tants #r Au1it#rs W#r+in6 as 4$(#*s
1. ? fnancial interest in a client or Fointl&
holdin# a fnancial interest +ith a client.
2. Gndue de!endence on total fees from a
client.
3. 2avin# a close (usiness relationshi! +ith a
client.
4. oncern a(out the !ossi(ilit& of losin# a
client.
5. 0otential em!lo&ment +ith a client.
.. ontin#ent fees relatin# to an assurance
en#a#ement.
1. $inancial
interest5 loans and #uarantees in the
com!an& in +hich the !rofessional is
+orkin# .
2. Incentive
com!ensation arran#ements.
3. Ina!!ro!riat
e !ersonal use of cor!orate assets.
4. oncern
over em!lo&ment securit&.
5. ommercial
!ressure from outside the em!lo&in#
or#ani8ation.
S(= R&i7 t!rats =r# Finan" an1 A""#untin6 Pr#=ssi#na(s W#r+in6 as
C#nsu(tants #r Au1it#rs,
Discover& of a si#nifcant error durin# a re4 evaluation of the !rofessionalDs +ork.
'e!ortin# on the o!eration of fnancial s&stems after (ein# involved in their desi#n or
im!lementation
2avin# !re!ared the ori#inal data used to #enerate records that are the su(Fect matter of the
en#a#ement.
? mem(er of the assurance team (ein#5 or havin# recentl& (een5 a Director or JLcer of that
client.
? mem(er of the assurance term (ein#5 or havin# recentl& (ee a em!lo&ed (& the lient5 and
is in a !osition to e<ert direct and si#nifcant in*uence over the su(Fect matter of the
en#a#ement
W!at ar t! &ari#us sa=6uar1s 7!i"! !a& t# ) a1#$t1 )* a Finan" an1
A""#untin6 $r#=ssi#na(0 t# "#untr < #&r"#4 t!ratsB
N12 Safe#uards 6a#ainst the a(ovementioned threats 7 shall / 6a7 ensure an ethical
environment5 6(7 increase the likelihood of identif&in# or deterrin# unethical (ehaviour5
and 6c7 eliminate or reduce the threats to an acce!ta(le level.
T*$s2 Safe#uards ma& (e created (& the / 6?7 $inance , ?ccountin# 0rofession5
9e#islation and 'e#ulation5 6B7 Business enter!rise em!lo&in# the !rofessional. Some
e<am!les are #ive (elo+4
A, Sa=6uar1s "rat1 )* t! $r#=ssi#n0 L6is(ati#n #r
R6u(ati#n2
6a7 Educational trainin# and e<!erience re:uirements for entr& into the
!rofession.
6(7 ontinuin# 0rofessional Develo!ment re:uirements.
6c7 or!orate "overnance 'e#ulations.
6d7 0rofessional Standards.
6e7 0rofessional or re#ulator& monitorin# and disci!linar& !rocedures.
6f7 E<ternal revie+ (& a le#all& em!o+ered third !art& of the re!orts5
returns5 communications or information !roduced !rofessionals.
B, Sa=6uar1s in t! W#r+ En&ir#n4nt2
6a7 om!an&Ds s&stems of cor!orate overvie+> su!ervision > re!ortin#.
6(7 om!an&Ds ethics and conduct !ro#rams.
6c7 'ecruitment !rocedures in the om!an&5 em!hasi8in# the
im!ortance of em!lo&in# hi#h cali(er com!etent sta=.
6d7 ?de:uate s&stem of Internal ontrols.
6e7 ?!!ro:uate disci!linar& !rocesses and !rocedures.
6f7 9eadershi! that stresses the im!ortance of ethical (ehaviour ad the
e<!ectation that em!lo&ees +ill act in an ethical manner.
6#7 0olicies and !rocedures to im!lement and monitor the :ualit& of
em!lo&ee !erformance.
EF$(ain EEt!i"a( .i(44aJ in t! "#ntFt #= a Finan" an1 A""#untin6 Pr#=ssi#na(,
Et!i"a( .i(44a2 Ethical Dilemmas e<ist +hen $inance and ?ccountin# 0rofessionals need to
decide from various alternatives and there are / 6a7 value4 con*icts amon# di=erin# interests5
6(7 multi!le alternatives +hich can all (e Fustifed5 and 6c7 si#nifcant conse:uences to all
stakeholders.
EFa4$(2 In !re!arin# a 0roft $orecast of a ne+ !roFect to (e fnanced (& E<ternal De(t5 a
$inance and ?ccountin# 0rofessional ma& have to decide (et+een / 6a7 !roFectin# realistic (ut
insuLcient revenue5 +hich is not satisfactor& to the 9ender5 and conse:uent closure of the
!roFect. Both actions !ro!osed have #ot there o+n risks. ;here is no direct > ri#ht ans+er to
such a situation.
.s"ri) t! "#n"$t #= Et!i"a( C#nGi"ts =#r a Finan" an1 A""#untin6 Pr#=ssi#na(,
C#nGi"t #= Intrst2 ? $inance and ?ccountin# 0rofessional faces an @ Ethical on*ictA
+hen the circumstances are such that he is not in a !osition to com!l& +ith the !rinci!les
6inte#rit&5 o(Fectivit&5 confdentialit&5 etc.7 that #overn ethical (ehaviour. It crates a @
con*ict of interest Asituation5 +here the !rofessional is re:uired to decide (et+een
com!liance +ith !rinci!les5 and actions +hich are (enefcial to the (usiness enter!rise.
C#nsu(tants #r Au1it#rs2 $or $inance , accountin# 0rofessionals +orkin# as
onsultants or ?uditors5 a threat to o(Fectivit& is created5 +hen a 0rofessional ?ccountant
in !u(lic !ractice5 com!etes directl& +ith a client or has a Moint Kenture or similar
arran#ement +ith a maFor com!etitor of a client. Such circumstances !ose a con*ict of
interest and #ive rise to non4 com!liance +ith the fundamental !rinci!les.
E4$(#*s2 $or $inance , ?ccountin# 0rofessionals +orkin# as Em!lo&ees of a (usiness
ether !rsie5 there ma& (e !ressure to act or (ehave in +a&s that could directl& or
indirectl& threaten com!liance the fundamental !rinci!les. Such !ressure ma& (e / 6a7
e<!licit or im!licit5 6(7 from a Mana#er5 Director or another individual +ithin the om!an&.
Such !ressure ma& (e to /
6a7 ?ct contrar& to 9a+ or re#ulations.
6(7 ?ct contrar& to technical or !rofessional standards.
6c7 $acilitate unethical or ille#al earnin#s / mana#ement strate#ies.
6d7 9ie to5 or other+ise intentionall& mislead 6includin# misleadin# (&
remainin# silent7 others5 !articularl& to the ?uditors of the om!an&5 or 'e#ulator&
?uthorities.
6e7 Issue5 or other+ise (e associated +ith5 a fnancial or non4 fnancial
re!ort that materiall& misre!resents the facts5 includin# statements in connection
+ith5 e.#. / the $inancial Statements5 ta< com!liance5 9e#al com!liance5 or 'e!orts
re:uired (& SEBI5 'BI and other 'e#ulator& a#encies.
C#nGi"t Rs#(uti#n Pr#"ssC Based on the a(ove5 the $inance and ?ccountin# !rofessional
should /
6a7 -ei#h the conse:uences> e=ects of each !ossi(le course of action.
6(7 onsult +ith other a!!ro!riate !ersons +ithin the frm or em!lo&in#
om!an& 6includin# those char#ed +ith #overnance of the or#ani8ation5 e.#. Board of
Directors7.
6c7 Determine the suita(le course of action that is consistent +ith the
fundamental !rinci!les identifed.