Corporate Code of Ethics

Purposes

A corporate code of ethics (sometimes contrasted with a professional code) has five general purposes.

The first is communicating the organisation’s values into a succinct and sometimes memorable form. 

This might involve defining the strategic purposes of the organisation and how this might affect ethical attitudes and policies.

Second, the code serves to identify the key stakeholders and the promotion of stakeholder rights and responsibilities. 

This may involve deciding on the legitimacy of the claims of certain stakeholders and how the company will behave towards them.

Third, a code of ethics is a means of conveying these values to stakeholders.

It is important for internal and external stakeholders to understand the ethical positions of a company so they know what to expect in a given situation and to know how the company will behave. This is especially important with powerful stakeholders, perhaps including customers, suppliers and employees.

Fourth, a code of ethics serves to influence and control individuals’ behaviour, especially internal stakeholders such as management and employees. 

The values conveyed by the code are intended to provide for an agreed outcome whenever a given situation arises and to underpin a way of conducting organisational life in accordance with those values.

Fifth, a code of ethics can be an important part of an organisation’s strategic positioning. 

In the same way that an organisation’s reputation as an employer, supplier, etc. can be a part of strategic positioning, so can its ethical reputation in society. Its code of ethics is a prominent way of articulating and underpinning that.