Editing Business ethics (section)

==Implementation==
===Corporate policies===
{{See also|Corporate governance}}
{{More citations needed section|date=March 2025}}

As part of more comprehensive compliance and ethics programs, many companies{{Who|date=March 2021}} have formulated internal policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly generalized language (typically called a corporate ethics statement), or they can be more detailed policies, containing specific behavioral requirements (typically called corporate ethics codes). They are generally meant{{by whom|date=March 2021}} to identify the company's expectations of workers and to offer guidance on handling some of the more common ethical problems that might arise in the course of doing business. It is hoped{{by whom|date=March 2021}} that having such a policy will lead to greater ethical awareness, consistency in application, and the avoidance of ethical disasters.

An increasing number of companies{{Who|date=November 2017}} also require employees to attend seminars regarding business conduct, which often include discussion of the company's policies, specific case studies, and legal requirements. Some companies{{Who|date=March 2021}} even require their employees to sign agreements stating that they will abide by the company's rules of conduct.

Many companies{{Who|date=November 2017}} are assessing the environmental factors that can lead employees to engage in unethical conduct. A competitive business environment may call for unethical behavior. Lying has become expected in fields such as trading. An example of this are the issues surrounding the unethical actions of the [[Salomon Brothers]].

Not everyone{{Who|date=November 2017}} supports corporate policies that govern ethical conduct. Some claim that ethical problems are better dealt with by depending upon employees to use their own judgment.

Others{{Who|date=November 2017}} believe that corporate ethics policies are primarily rooted in utilitarian concerns and that they are mainly to limit the company's legal liability or to curry public favor by giving the appearance of being a good corporate citizen. Ideally, the company will avoid a lawsuit because its employees will follow the rules. Should a lawsuit occur, the company can claim that the problem would not have arisen if the employee had only followed the code properly.

Some corporations{{Who|date=March 2021}} have tried to burnish their ethical image by creating whistle-blower protections, such as anonymity. In the case of [[Citigroup|Citi]], they call this the Ethics Hotline.<ref>{{Cite web|title=Citi {{!}} Investor Relations {{!}} Ethics Hotline|url=https://www.citigroup.com/citi/investor/ethics_hotline.html|access-date=2020-06-15|website=www.citigroup.com}}</ref> Though it is unclear whether firms such as Citi take offences reported to these hotlines seriously or not. Sometimes there is a disconnection between the company's code of ethics and the company's actual practices{{Who|date=November 2017}}. Thus, whether or not such conduct is explicitly sanctioned by management, at worst, this makes the policy duplicitous, and, at best, it is merely a marketing tool.

Jones and Parker wrote, "Most of what we read under the name business ethics is either sentimental common sense or a set of excuses for being unpleasant."<ref>{{harvnb|Jones, Parker, et al.|2005}}</ref> Many manuals are procedural form filling exercises unconcerned about the real ethical dilemmas. For instance, the US Department of Commerce ethics program treats business ethics as a set of instructions and procedures to be followed by 'ethics officers'.,<ref name=program/> some others claim being ethical is just for the sake of being ethical.<ref>{{harvnb|Jones, Parker, et al.|2005|pp=3–8}}</ref> Business ethicists may trivialize the subject, offering standard answers that do not reflect the situation's complexity.<ref name=ag43/>

Richard DeGeorge wrote in regard to the importance of maintaining a corporate code:

{{Blockquote|Corporate codes have certain usefulness and there are several advantages to developing them. First, the very exercise of doing so in itself is worthwhile, especially if it forces a large number of people in the firm to think through, in a fresh way, their mission and the important obligations they as a group and as individuals have to the firm, to each other, to their clients and customers, and to society as a whole. Second, once adopted a code can be used to generate continuing discussion and possible modification to the code. Third, it could help to inculcate in new employees at all levels the perspective of responsibility, the need to think in moral terms about their actions, and the importance of developing the [[virtue]]s appropriate to their position.<ref>{{cite book|last=DeGeorge|first=Richard|title=Business Ethics|publisher=Prentice Hall|pages=207–208}}</ref>}}

Ethics codes often state a company's view on [[Diversity, equity, and inclusion|DEI]] (diversity, equity, inclusivity).<ref>{{Cite web |title=The Ethics of DEI: Cultivating a Positive Workplace |url=https://www.icpas.org/information/copy-desk/insight/article/fall-2023/the-ethics-of-dei-cultivating-a-positive-workplace?utm_source=chatgpt.com |access-date=2025-02-27 |website=www.icpas.org}}</ref><ref>{{Cite web |first= |title=Examining Professionalism through a DEI Lens |url=https://naceweb.org/diversity-equity-and-inclusion/best-practices/examining-professionalism-through-a-dei-lens/?utm_source=chatgpt.com}}</ref> In 2025, some companies began changing their ethics policies to reduce the focus on DEI,<ref>{{Cite web |last=Clarence-Smith |first=Louisa |date=2025-01-28 |title=DEI is not over, but it will have to be reinvented |url=https://www.thetimes.com/business-money/companies/article/dei-is-not-over-but-it-will-have-to-be-reinvented-s6gfhn0gt?utm_source=chatgpt.com&region=global |access-date=2025-02-27 |website=www.thetimes.com |language=en}}</ref><ref>{{Cite web |last=Jeyaretnam |first=Miranda |date=2025-02-26 |title=These Companies Aren't Ditching DEI |url=https://time.com/7261857/us-companies-keep-dei-initiatives-list-trump-diversity-order-crackdown/?utm_source=chatgpt.com |access-date=2025-02-27 |website=TIME |language=en}}</ref> and some companies have decided to complete eliminate DEI from their policies.<ref>{{Cite web |last=Franey |first=James |date=2025-02-26 |title=BlackRock, Bank of America drop DEI policies amid White House's war on 'woke' |url=https://nypost.com/2025/02/26/business/blackrock-bank-of-america-drop-dei-policies-amid-white-houses-war-on-woke/?utm_source=chatgpt.com |access-date=2025-02-27 |language=en-US}}</ref>

===Ethics officers===
Following a series of fraud, corruption, and abuse scandals that affected the United States defense industry in the mid-1980s, the Defense Industry Initiative (DII) was created to promote ethical business practices and ethics management in multiple industries. Subsequent to these scandals, many organizations began appointing ethics officers (also referred to as "compliance" officers). In 1991, the Ethics & Compliance Officer Association —originally the Ethics Officer Association (EOA)—was founded at the Center for Business Ethics at [[Bentley University]] as a professional association for ethics and compliance officers.<ref>{{cite book|title=Business ethics : ethical decision making and cases|last1=Fraedrich|first1=John|last2=Ferrell|first2=Linda|last3=Ferrell|first3=O.C.|isbn=978-1305500846|pages=11–13|oclc=937450119|date = January 2016|publisher=Cengage Learning }}</ref>

The 1991 passing of the Federal Sentencing Guidelines for Organizations in 1991 was another factor in many companies appointing ethics/compliance officers. These guidelines, intended to assist judges with sentencing, set standards organizations must follow to obtain a reduction in sentence if they should be convicted of a federal offense.<ref>{{Cite book|title=Business ethics : ethical decision making and cases|last1=Fraedrich|first1=John|last2=Ferrell|first2=Linda|last3=Ferrell|first3=O.C.|isbn=978-1305500846|pages=12–16|oclc=937450119|date = January 2016|publisher=Cengage Learning }}</ref>

Following the high-profile corporate scandals of companies like [[Enron]], [[WorldCom]] and [[Tyco International|Tyco]] between 2001 and 2004, and following the passage of the [[Sarbanes–Oxley Act]], many small and mid-sized companies also began to appoint ethics officers.<ref>{{cite book|title=Business ethics : ethical decision making and cases|last1=Fraedrich|first1=John|last2=Ferrell|first2=Linda|last3=Ferrell|first3=O.C.|isbn=978-1305500846|pages=12–14|oclc=937450119|date = January 2016|publisher=Cengage Learning }}</ref>

Often reporting to the chief executive officer, ethics officers focus on uncovering or preventing unethical and illegal actions. This is accomplished by assessing the ethical implications of the company's activities, making recommendations on ethical policies, and disseminating information to employees.<ref>{{Cite book|title=Business ethics : ethical decision making and cases|last1=Fraedrich|first1=John|last2=Ferrell|first2=Linda|last3=Ferrell|first3=O.C.|isbn=978-1305500846|pages=228–229|oclc=937450119|date = January 2016|publisher=Cengage Learning }}</ref>

The effectiveness of ethics officers is not clear. The establishment of an ethics officer position is likely to be insufficient in driving ethical business practices without a [[Organizational culture|corporate culture]] that values ethical behavior. These values and behaviors should be consistently and systemically supported by those at the top of the organization.<ref>"Business Ethics: Ethical Decision making and Cases", Ferrell Fredrich and Ferrell.</ref> Employees with strong community involvement, loyalty to employers, superiors or owners, smart work practices, trust among the team members do inculcate a corporate culture.<ref>{{Cite web |url=http://bba12.weebly.com/uploads/9/4/2/8/9428277/9781133816300.pdf |title=Business Ethics |access-date=2016-09-14 |archive-url=https://web.archive.org/web/20161221053014/http://bba12.weebly.com/uploads/9/4/2/8/9428277/9781133816300.pdf |archive-date=2016-12-21 |url-status=dead }}</ref><ref>"Business Ethics: Ethical Decision making and cases", 9e, Ferrell Friedrich, Ferrell.</ref>

===Sustainability initiatives===
Many [[strategic management|corporate and business strategies]] now include [[sustainability]]. In addition to the traditional environmental 'green' sustainability concerns, business ethics practices have expanded to include [[social sustainability]]. Social sustainability focuses on issues related to [[human capital]] in the business supply chain, such as [[worker's rights]], working conditions, [[Child labour|child labor]], and [[human trafficking]].<ref>{{cite web|url=https://sftool.gov/plan/545/social-sustainability|title=Social Sustainability – GSA Sustainable Facilities Tool|website=sftool.gov|publisher=U.S. [[General Services Administration]]|access-date=2016-03-11}}</ref> Incorporation of these considerations is increasing, as consumers and procurement officials demand documentation of a business's compliance with national and international initiatives, guidelines, and standards.<ref>{{cite web|url=https://sftool.gov/plan/546/responsible-business-initiatives-guidelines-standards|title=Responsible Business Initiatives, Guidelines, and Standards – GSA Sustainable Facilities Tool|website=sftool.gov|publisher=U.S. [[General Services Administration]]|access-date=2016-03-11|archive-date=2017-10-12|archive-url=https://web.archive.org/web/20171012094924/https://sftool.gov/plan/546/responsible-business-initiatives-guidelines-standards|url-status=dead}}</ref> Many industries have organizations dedicated to verifying ethical delivery of products from start to finish,<ref>{{Cite web|url=https://sftool.gov/plan/541/verifying-delivery-sustainable-products-services|title=Verifying Delivery of Sustainable Products and Services – GSA Sustainable Facilities Tool|website=sftool.gov|publisher=U.S. [[General Services Administration]]|access-date=2016-03-11|archive-date=2019-04-20|archive-url=https://web.archive.org/web/20190420072356/https://sftool.gov/plan/541/verifying-delivery-sustainable-products-services|url-status=dead}}</ref> such as the [[Kimberley Process Certification Scheme|Kimberly Process]], which aims to stop the flow of conflict diamonds into international markets, or the [[Fair Wear Foundation]], dedicated to sustainability and fairness in the garment industry.

Initiatives in sustainability encompass "green" topics, as well as social sustainability. Tao ''et al''. refer to a variety of "green" business practices including green strategy, green design, green production and green operation.<ref>Tao, Z., A. L. Guiffrida, and M. D. Troutt, "A green cost based economic production/order quantity model", in ''Proceedings of the 1st Annual Kent State International Symposium on Green Supply Chains'', Canton, Ohio, US, 29–30 July 2010</ref> There are however many different ways in which sustainability initiatives can be implemented by a company.

====Improving operations====
An organization can implement sustainability initiatives by improving its operations and manufacturing process so as to make it more aligned with environment, social, and governance issues. Johnson & Johnson incorporates policies from the Universal Declaration of Human Rights, International Covenant on Civil and Political Rights and International Covenant on Economic, Social and Cultural Rights, applying these principles not only for members of its supply chain but also internal operations. Walmart has made commitments to doubling its truck fleet efficiency by 2015 by replacing 2/3rds of its fleet with more fuel-efficient trucks, including hybrids. Dell has integrated alternative, recycled, and recyclable materials in its products and packaging design, improving energy efficiency and design for end-of-life and recyclability. Dell plans to reduce the energy intensity of its product portfolio by 80% by 2020.<ref name="theguardian.com">{{Cite news|url=https://www.theguardian.com/sustainable-business/blog/best-practices-sustainability-us-corporations-ceres|title=Best practices in sustainability: Ford, Starbucks and more|last=Confino|first=Jo|date=2014-04-30|work=The Guardian|access-date=2019-08-12|language=en-GB|issn=0261-3077}}</ref>

====Board leadership====
The board of a company can decide to lower executive compensation by a given percentage, and give the percentage of compensation to a specific cause. This is an effort which can only be implemented from the top, as it will affect the compensation of all executives in the company. In Alcoa, an aluminum company based in the US, "1/5th of executive cash compensation is tied to safety, diversity, and environmental stewardship, which includes greenhouse gas emission reductions and energy efficiency" (Best Practices). This is not usually the case for most companies, where we see the board take a uniform step towards the environment, social, and governance issues. This is only the case for companies that are directly linked to utilities, energy, or material industries, something which Alcoa as an aluminum company, falls in line with. Instead, formal committees focused on the environment, social, and governance issues are more usually seen in governance committees and audit committees, rather than the board of directors. "According to research analysis done by Pearl Meyer in support of the NACD 2017 Director Compensation Report shows that among 1,400 public companies reviewed, only slightly more than five percent of boards have a designated committee to address ESG issues." (How compensation can).<ref>{{Cite web|url=https://www.pearlmeyer.com/knowledge-share/article/how-compensation-can-support-improved-environmental-and-social-governance|title=How Compensation Can Support Improved Environmental and Social Governance|date=2017-03-30|website=Pearl Meyer|language=en|access-date=2019-08-12}}</ref><ref name="theguardian.com"/>

====Management accountability====
Similar to board leadership, creating steering committees and other types of committees specialized for sustainability, senior executives are identified who are held accountable for meeting and constantly improving sustainability goals.<ref name="theguardian.com"/>

====Executive compensation====
Introducing bonus schemes that reward executives for meeting non-financial performance goals including safety targets, [[greenhouse gas emissions]], reduction targets, and goals engaging stakeholders to help shape the companies public policy positions. Companies such as Exelon have implemented policies like this.<ref name="theguardian.com"/>

====Stakeholder engagement====
Other companies will keep sustainability within its strategy and goals, presenting findings at shareholder meetings, and actively tracking metrics on sustainability. Companies such as PepsiCo, Heineken, and FIFCO{{clarify|What is FIFCO? Please also replace this jargon acronym with the full term the other times it appears in the article|date=April 2018}} take steps in this direction to implement sustainability initiatives. (Best Practices). Companies such as Coca-Cola have actively tried improve their efficiency of water usage, hiring 3rd party auditors to evaluate their water management approach. FIFCO has also led successfully led water-management initiatives.<ref name="theguardian.com"/>

====Employee engagement====
Implementation of sustainability projects through directly appealing to employees (typically through the human resource department) is another option for companies to implement sustainability. This involves integrating sustainability into the company culture, with hiring practices and employee training. General Electric is a company that is taking the lead in implementing initiatives in this manner. Bank of America directly engaged employees by implement LEED (leadership in Energy and Environmental Design) certified buildings, with a fifth of its building meeting these certifications.<ref name="theguardian.com"/>

====Supply chain management====
Establishing requirements for not only internal operations but also first-tier suppliers as well as second-tier suppliers to help drive environmental and social expectations further down the supply chain. Companies such as Starbucks, FIFCO and Ford Motor Company have implemented requirements that suppliers must meet to win their business. Starbucks has led efforts in engaging suppliers and local communities where they operate to accelerate investment in sustainable farming. Starbucks set a goal of ethically sourcing 100% of its coffee beans by 2015.<ref name="theguardian.com"/>

====Transparency====
{{Main|Transparency (behavior)}}
By revealing decision-making data about how sustainability was reached, companies can give away insights that can help others across the industry and beyond make more sustainable decisions. Nike launched its "making app" in 2013 which released data about the sustainability in the materials it was using. This ultimately allows other companies to make more sustainable design decisions and create lower impact products.<ref name="theguardian.com"/>