Corporate Ethics Study Notes

• Study notes for corporate ethics:

Business Ethics Features

• Business ethics focuses on moral values and enhances corporate reputation.
• It should not focus on profit maximization only.

Benefits of Business Ethics

• Business ethics help build brand reputation, increase customer trust, and improve employee loyalty.

Business Ethics Types

• Personal ethics, managerial ethics and financial ethics are all types of business ethics.
• Academic ethics is not a type of business ethics.

Definition of "Business Ethics"

• "Business ethics" refers to the moral principles that guide business conduct.

Factors Influencing Ethical Decision-Making

• Ethical decision-making influenced by cultural values, legal frameworks, and personal beliefs.

Purpose of a Code of Ethics

• A code of ethics in a company primarily serves to establish standards for ethical behavior.

Typical Code of Ethics

• A typical code of ethics does not include employee salary structure.
• A typical code of ethics includes honesty and integrity, fairness and accountability, and compliance with laws.

Well-Defined Code of Ethics Benefits

• A well-defined code of ethics helps businesses in reducing unethical behavior, enhancing stakeholder trust, and ensuring legal compliance.

Code of Ethics vs. Code of Conduct

• A code of ethics focuses on general principles, while a code of conduct focuses on specific behaviors.

Morals vs. Ethics

• Morals are personal principles, while ethics are professional guidelines.

Ethical Dilemma Example

• Choosing between honesty and loyalty in business negotiations is an example of an ethical dilemma.

Influence on Personal Morals

• Personal morals are influenced by family upbringing, religion, and cultural background.

Challenge in Implementing Business Ethics

• The biggest challenge in implementing business ethics is resistance to change.

Major Ethical Issue for Businesses Today

• A major ethical issue businesses are faced with is data privacy and security concerns.

Challenge in Global Business Ethics

• Varying ethical standards across cultures is a major challenge in global business ethics.

Professional Ethics Definition

• Professional ethics applies to ethical standards that should be followed in a profession.

Key Principles of Professional Ethics

• Profit maximization is not a key principle of professional ethics.
• Integrity, competence, and confidentiality are key principles of professional ethics.

Importance of Professional Ethics

• Professional ethics help to ensure integrity and accountability in the workplace.

Consequences of Violating Professional Ethics

• A violation of professional ethics may lead to legal action, damage to professional reputation, and termination from employment.

Unethical Professional Behavior Example

• Engaging in bribery or corruption is an example of unethical professional behavior.

Managerial Ethics

• Managerial ethics references to the ethical principles followed by managers in decision-making.

Ethical Leadership in Management

• Ethical leadership in management involves promoting fairness and accountability.

Major Ethical Issue in Management

• Employee promotions based on favoritism is a major ethical issue in management.

Manager's Ethical Responsibility

• A manager's ethical responsibility towards employees includes providing fair wages, offering career growth opportunities, and ensuring workplace safety.

Challenges in Managerial Ethics

• One of the biggest challenges in managerial ethics is balancing profit-making and ethical responsibility.

Cyber Security Ethics

• Cyber security ethics refers to following ethical practices in handling digital data.

Unethical Cyber Security Practice

• Phishing and identity theft are considered an unethical cyber security practice.

Cyber Security Ethical Concerns

• Protecting personal and financial data from cyber threats is a key ethical concern in cyber security.

Information Security Ethical Responsibility

• Implementing strong access controls is an ethical responsibility in information security.

Ethical Issues in Information Security

• Unauthorized access to personal data is a major ethical issue in information security.

Corporate Social Responsibility (CSR)

• Corporate Social Responsibility (CSR) is a company's duty to engage in ethical, social, and environmental activities.

Aspects of CSR

• Maximizing executive salaries is not a key aspect of CSR.
• Environmental sustainability, employee welfare and community engagement are all key aspects of CSR.

Benefits of CSR

• CSR benefits businesses by improving brand reputation.

CSR Example

• A company implementing eco-friendly production methods is an example of CSR.

Primary Objective of CSR

• The primary objective of CSR is to balance business profits with social and environmental responsibilities.

Stakeholders in CSR

• Stakeholders in CSR include customers, employees, suppliers, and the community.

Ethical Responsibility Towards Employees

• Providing a safe and inclusive work environment is a company's ethical responsibility towards its employees.

Company's Responsibility Towards Customers

• Offering quality products and fair pricing is a company's responsibility towards its customers.

Responsibility Towards Suppliers

• Engaging in fair trade practices is how businesses can be responsible towards suppliers.

Key Responsibilities Towards the Environment

• To implement waste management and pollution control measures are key responsibilities toward the environment.

CSR Regulations in India

• CSR regulations in India are governed under The Companies Act, 2013.

Indian CSR Regulations

• According to Indian CSR regulations, companies with a net profit of ₹5 crore or more must spend at least 2% of their net profit on CSR activities.

Role of Regulatory Bodies in CSR

• Regulatory bodies in CSR ensure businesses follow CSR norms and ethical practices.

First Step in Planning a CSR Initiative

• The first step in planning a CSR initiative is identifying the company's CSR goals and values.

Successful CSR Implementation Requirements

• Successful CSR implementation requires a clear CSR strategy and stakeholder involvement.

Corporate Governance Definition

• Corporate governance primarily refers to the way companies are managed and controlled.

Principles of Corporate Governance

• Monopoly creation is not a principle of corporate governance.
• Principles of corporate governance are transparency, accountability, and fairness.

Corporate Governance

• Corporate governance should ensure effective decision-making in organizations.

Objectives of Corporate Governance

• The main objective of corporate governance is to maximize shareholder wealth while maintaining transparency and accountability.

Elements of Good Corporate Governance

• An element of good corporate governance is effective risk management.

Clause 49 of the Companies Act

• Clause 49 of the Companies Act mainly deals with corporate governance norms for listed companies.

Clause 49 Introduction

• Clause 49 was introduced by The Securities and Exchange Board of India (SEBI).

Key Requirements Under Clause 49

• A key requirement under Clause 49 is the appointment of independent directors on the board.

Purpose of Clause 49

• The purpose of Clause 49 is to ensure financial transparency and accountability in listed companies.

Audit Committee Composition

• As per Clause 49, the Audit Committee must consist of at least two independent directors.

Benefits of Corporate Governance

• Increased corporate fraud is not a benefit of good corporate governance.
• There are many benefits of corporate governance, improved investor confidence, better risk management and enhances corporate reputation.

Issues in Corporate Governance

• A lack of transparency and disclosure is one of the biggest issues in corporate governance.

Poor Corporate Governance

• Poor corporate governance can lead to corporate fraud and financial scandals.

Definition of Insider Trading

• Insider trading refers to trading of securities based on non-public, price-sensitive information.

Prevention of Insider Trading

• Securities and Exchange Board of India (SEBI) oversees and monitors and prevents insider trading.