Company Code of Ethics: what it is and why

Ethics in the general sense is an independent philosophical science of morality and moral behavior. Ethics studies human attitudes towards morality itself, norms of behavior, and the definition of these norms. At different times, in different countries, ideas about moral norms have differed significantly.

For example, in Muslim countries, it is considered unethical for a woman to sit at a table with men. In Japan, it is considered uncivilized to talk in public transportation. In Germany and Sweden, it is not customary to meet people on the street. In Sweden, it is also considered unacceptable to violate the three-meter distance in public transportation. You should not take an empty seat next to an unfamiliar passenger. In Belgium, it is considered impolite to give compliments. There are many examples of this. The same can happen in the workforce of institutions and enterprises. The concepts of morality and ethical norms can differ significantly in different cultures and in the minds of different people, and the practice of formulating and presenting these ethical norms in certain documents, moral (ethical) codes, has emerged.

Thus, a code of ethics is a set of moral principles, norms and rules of conduct for a person or group of persons united by a common goal or common features (common profession, occupation, field of activity, business line, etc.). Codes of ethics are standards that describe a common system of values and ethical norms that managers and employees of institutions, companies, and enterprises must adhere to. Codes also formulate in writing the ethical principles of management’s (administration’s, leadership’s) responsibility towards their employees.

When drafting a code, the goal should be to reflect the real situation and specifics of the enterprise or institution where the code is to be adopted. Codes are used mainly as corporate governance tools. They define the ethics of relations both within the enterprise, institution, company (between employees and between employees and management) and the company’s relations with clients, partners, contractors and other stakeholders. The code of ethics creates a special responsibility for one’s own actions and inactions, and determines the assessment of such actions in terms of relations in the team and in society based on compliance with the moral norms and principles they share.

What regulates the code of ethics?

      The requirements for ethical behavior of persons are contained in the Law of Ukraine “On Prevention of Corruption” (Articles 37, 38, 63).

The Law of Ukraine “On Insurance” defines the procedure for approving and controlling the code of conduct (ethics), the policy of identifying, preventing and managing conflicts of interest in the insurer (Article 25, part 7, clause 13).

Article 5 of the Law of Ukraine “On Financial Services and Financial Institutions” contains norms and requirements for managers and employees of financial and/or support services providers, including standards of business conduct and professional ethics.

A code of ethics is not mandatory. The law does not provide for sanctions for its absence, but the presence of such an internal document enhances the company’s reputation and builds trust.

Types of the code of ethics

  1. Code of professional ethics (doctor, journalist, psychologist, accountant, lawyer, judge, prosecutor, etc.). These codes have signs of institutionalization and describe a system of common values and rules for these and other professionals and officials that provide for the principles of social responsibility. The purpose of a code of professional ethics is to establish ethical norms and rules of professional behavior for professionals to perform their professional activities with dignity, as well as to promote the authority and trust of citizens as potential and actual consumers of their services. Codes of ethics for doctors, psychologists and other “auxiliary professions”, in addition to all of the above, contain norms that guarantee highly professional, humane, and moral activities of employees, depending on their specialization and activities. Codes of ethics for professionals such as prosecutors, police officers, investigators, and lawyers contain provisions with specific moral standards that are unique to this field, and their codes also contain requirements to act in the public interest and strictly adhere to the constitutional principles of the rule of law and legality.
  2. Corporate Code. This is a set of rules, regulations and principles that define the ethics of mutual relations within the company, especially between shareholders (owners of additional or limited liability companies), as well as the company’s mutual relations with top management, partners, contractors and other stakeholders.
  3. Professional code. It is developed to describe the goals of an enterprise (company, institution), taking into account the specifics of particular enterprises, to create a corporate atmosphere and interaction of employees, to determine ethical recommendations in the decision-making process.
  4. Code of business ethics. It primarily concerns the ethics of commercial, financial and consulting companies. The Code of Business Ethics is the basis for determining ethical requirements in the private business sector. It contains standards for conducting business negotiations, storing commercial and insider information, and peculiarities of behavior of accounting and audit professionals in the course of their professional activities.
  5. Code of conduct. It provides relevant recommendations and precisely defines the criteria of ethical behavior specific to a particular profession. Codes of professional ethics provide solutions to specific problems that may arise in the respective industries.
  6. Code of Conduct. It regulates moral relations of people in the labor sphere. Professional ethics studies: relations in labor collectives and each specialist individually; moral qualities of the specialist’s personality that ensure the best performance of professional duties; relationships within the professional team.

The Code of Ethics in Practice in Ukraine

      Let’s take the example of the Code of Ethics of the National Police of Ukraine, which regulates the behavior of police officers and aims to increase the level of trust in the police. The main principles include:

  • Respect for human rights and freedoms: police officers are obliged to respect and protect the rights and freedoms of every person, regardless of nationality, race, religion, gender or political views;
  • Honesty and integrity: police officers shall act honestly, disinterestedly and in good faith;
  • Professional competence: police officers are obliged to constantly improve their knowledge and skills, act professionally and responsibly;
  • Transparency and openness: police officers should be open and transparent in their profession and avoid conflicts of interest;
  • Respect for the law: police officers shall act within the law and avoid abuse of power;

  This Code sets high standards of behavior and ethical norms for all police officers aimed at protecting the rights of citizens and ensuring law and order.

A code of ethics is a fundamental document for any organization or professional community, as it sets out the principles and standards of conduct that all members of that community must adhere to. The importance of a code of ethics lies in ensuring responsibility and trust between employees, clients and partners, preventing conflicts and abuse, and maintaining professional standards and quality of work. In addition, the code of ethics serves as a moral guide, helping employees to make difficult decisions with ethical implications. Thus, the code of ethics contributes to creating a favorable climate for the development and prosperity of the organization.

/ / /

X