Understanding and demonstrating ethical business practices
Many different stakeholder groups have an interest in how organisations operate and behave. By understanding their concerns, businesses can optimise the transparency and robustness of their processes. Where helpful, third party benchmarks and schemes can demonstrate credentials.
All businesses should comply with all relevant legislation and regulation.
But ethical businesses go above and beyond this. They work to the spirit, not just the word, of law and regulation. They understand who their stakeholders are and the aspects of business behaviour that are of concern. Their leaders identify, manage and mitigate reputational risks associated with those behaviours and ‘walk the talk’ on ethics to promote and demonstrate responsible corporate behaviours.
Ethical business goes way beyond having appropriate policies. It is about ‘doing the right thing’ as part of business as usual, in relation to issues including:
- Fair pay and labour conditions
- Data protection
- Fair and free competition for contracts
- Payment of tax
- Fair pricing
- Combating fraud and corruption
The elements of ethical business
Mark Turner of Action Sustainability talks about the elements of an ethical business, and steps your business can take to ensure you are operating ethically.
Why is ethical business important?
Business ethics are important because they define how a company is perceived. A company’s approach can, for example, make the difference between getting on a tender list, or not.
On the flip-side, a perceived ethical breach can result in negative press and social media coverage and also loss of customers and contracts.
The following stakeholders will have a particular interest in business ethics:
- Workers & employees
- Suppliers and contractors
- Statutory bodies (e.g. HMRC)
- Community groups
- Non-governmental organisations