Chapter 06 · Governance & regulationGovernance, Ethics & Risk
Business ethics
Definition
The study and practice of moral principles and standards governing conduct in business: what companies and the people within them ought to do, beyond what the law requires. It encompasses questions of fairness, honesty, accountability and responsibility toward stakeholders, and emerged as a distinct field in the 1960s amid rising expectations of corporate social conduct.
References
Definition as moral principles guiding conduct; beyond-legal-obligation character; 1960s origins; core principles (accountability, transparency, fairness); CSR relationship.
Overview
What it means
Business ethics supplies the "why" beneath sustainability's "what": principles such as accountability, transparency and fairness translate into codes of ethics, compliance programmes, whistleblowing channels and governance controls. It differs from law (ethics exceed legal floors) and partially overlaps CSR (ethics concern right conduct; CSR concerns societal contribution).
Ethical failures — fraud, corruption, greenwashing — are treated as governance risks with material financial consequences.
How it is used
Companies operationalise business ethics through codes of conduct, ethics training, ombuds functions and board oversight; ESG "G" metrics, anti-corruption frameworks (UN Global Compact Principle 10, ISO 37001) and investor stewardship assess ethical culture.
Why it matters
Every sustainability commitment ultimately depends on ethical execution; business ethics is the discipline that asks whether conduct matches claims — the front line against greenwashing and corporate hypocrisy.