Codes of Practice
In recent years large businesses have adopted ethical codes of practice. These lay down how employees in a business respond to situations where ethical issues arise. Ethical codes will differ from one business and one industry to another. However, they may contain statements about:
- Environmental responsibility
- Dealing with customers and suppliers in a fair and honest manner
- Competing fairly and not engaging in practices such as collusion or Destroyer pricing
- The workforce is responding fairly to their needs
Ethical objectives: Ethical codes of practice may develop from ethical objectives of business. Ethical objective may be explicit. For example, a large business may have as its stated objective that:
- It will not test products on animals
- It will deal with suppliers fairly
- It will not accept bribes from customers
Explicit objectives would have been carefully thought out. Partly this is because the business could get bad publicity if it went against its stated objectives. However, most businesses have implicit ethical objectives. Most businesses aim to deal fairly with customers, for example. However, implicit ethical objectives are not written down. Instead, they form part of the corporate culture of the organisation. They’re part of the unwritten rules about how the business deals with stakeholders, such as customers, suppliers and workers.
Corporate Social Responsibility (CSR):
Some large businesses have responded to concerns about corporate social responsibility, their responsibility not just to shareholders, but all stakeholders, by auditing relevant activities. These audits may then be made available to the public in a CSR report comma in the same way that the financial accounts of the company are published. Audits involves inspecting evidence against established standards. Auditors can then say that the evidence presented by the business is true and fair.
In accounting, standards for accounting audits are set by accounting bodies such as the accounting Standards Board. In contrast, social environmental auditing is voluntary and there is nobody that draws up rules about how ordered should take place and how it should be presented, companies are free to choose what standards should be measured against and who the auditors will be. Indeed, the vast majority of businesses do not undertake any social or environmental accounting.
Businesses that do compile social environmental audits use a wide range of measures, which differ from business to business. An Oil Company, for example, may measure the number of oil spills for which is responsible for. This would not be appropriate for a drinks company, which might use the indicators such as levels of Air Pollution created by breweries and distilleries. Social and environmental audits may include some of the following:
- Employment indicators
- Human rights indicator
- The communities in which the business operates
- Business integrity and ethics
- Product responsibility
- The environment