Developing a Code of Ethics for Your Business
Oct. 22nd 2009
I remember my 3rd year Business Ethics course beginning with the professor saying, “I know most of you think this is a stupid course because you Gen-Yers grew up hearing about the unethical practices of companies like Enron and you don’t think you could possibly learn to make ethical decisions.” It wasn’t my favourite course but it sure was interesting.
The theory of business ethics seemed like a distant cousin of ethical business in practice. When I think of ethical companies I think of Ten Thousand Villages for its fair trade policies, Toyota for its commitment to the environment and attention to safety, and Starbucks for its policies on fair trade and commitment to people. These companies aim to act ethical and portray themselves as companies that “do good,” however, they still wouldn’t receive perfect scores by the standards set forth in Business Ethics class.
Despite what you think of ethics in business, every business should have a set of guidelines. These are three pillars upon which to develop a Code of Ethics for your business:
- Environmental Policy –How will your business minimize environmental impact?
- People Policy –How does your business treat its employees, customers and stakeholders? How do you strive to improve people’s lives?
- Production policy –How are products produced or services delivered?
I hope our generation can run ethical businesses that don’t just care about creating wealth but also creating purpose -because that’s what entrepreneurship is all about.
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Should the policies be explicit from day one? Is there merit in leading by example and having your people help to form to principles that the company should operate by? Will employees sacrifice salary for social good if they have a say?
While ethical practices are ideal, is social enterprise actually more profitable yet? It seems to me, consumers don’t care enough about a company’s practices to cause a significant financial impact. Will this green trend be strong enough to change that?
Making the policies explicit from day one helps organizations attract talented people who share a common vision.
The green trend is a good one to bring up. The shift in values and consumer mindset towards sustainable practices are leading many experts to conclude that it does, indeed, pay to be green. So I think the green trend is already strong enough to cause significant financial impact for many companies.
It doesn’t look like the green trend will disappear either. The LOHAS Consumer Trends Database shows that 67% of people think the green trend and more eco-conscious business practices are here to stay.