Ethics is knowing the difference between

BUSINESS ETHICS
what you have a right to do and what is
right to do." - Potter Stewart

SUBMITTED BY -
HARSHITA MILVANIYA (21/COM/042)
MOLIKA BATRA (21/COM/076)
NEHA (21/COM/081)
NEHA SOLANKI (21/COM/082)

SUBMITTED TO –
MRS. SHWETA SHARDA
 INTRODUCTION
Business Ethics is a field of study that deals with the ethical and moral principles,
policies, and values that govern the way companies and individuals engage in business
activity. It goes beyond legal requirements to establish a code of conduct that drives
employee behaviour at all levels and helps build trust between a business and its
customers.
It Is relevant to the habits of individuals and the entire organization. It discusses issues
of right and wrong that arise while conducting business. Business ethics also plays a
crucial role in the standard of living of people. It led to the demand for equal rights of
workers and the establishment of government agencies recognizing the importance of
labour unions. It promotes integrity and openness in the workplace, which are
important ingredients of team building. It helps leaders overcome complex conflicts
surrounding what is right and wrong during times of changes.
Moreover, it ensures ethical treatment of employees in matters concerning evaluation,
hiring, firing, and disciplining. If the employer fails to comply with such guidelines, then
he can be sued for breach of contract. Thus, the gap between actual practice and stated
corporate culture can actually usher in both ethical and legal implications.

CONCEPT MAP OF ETHICAL CODES OF CONDUCT THEMES

Neha Solanki
 EVOLUTION
Business ethics in India have been evolving over time and have been influenced by
various factors. Here are some key points:
1. Historical Influence: Indian business ethics have roots in the country’s ancient
scriptures and philosophical traditions. The concept of ‘Dharma’ or duty, which
includes ethical and moral duties, has been a guiding principle in Indian
businesses.

2. Council For Fair Business Practices (CFBP): The CFBP, founded by leading
industrialists in 1966, considers itself to be the pioneer and custodian of ethics
in India. It organizes annual ethics seminars where industry leaders discuss the
importance of fair business practices

3. Role of Ethics Officer: There’s a debate on whether having a Chief Ethics Officer
is necessary. Some believe that ethics and morality are innate and the market
capitalization of a company depends on how fair it is in its dealings. Others
argue that an Ethics Officer would operate more like a guide, ensuring the
company adheres to ethical practices.

4. Perception of Business Ethics: There’s a common perception that businesses

cannot be run ethically under current conditions, leading to the belief that most
businessmen would be essentially unethical. However, this perception may stem
from a lack of clarity about the meaning of ethics

5. Global Influence: With globalization, the distinction between corruption-of-the-

poor and corruption-of-the-rich needs to be made. Unethical business practices
became a recognized phenomenon during the second World War.

6. Future Trends: Business ethics, climate change, and women empowerment are
expected to be the buzzwords in the corporate world for the next 25 years.

One notable case that significantly brought business ethics into focus in India
was the Satyam scandal in 2009. Satyam Computer Services, one of India’s
largest IT companies, was involved in a massive financial fraud orchestrated by
its founder and then-chairman, Ramalinga Raju.

Raju admitted to inflating the company’s profits and assets, deceiving investors,
employees, and regulators. The scandal not only shook the confidence of
stakeholders but also raised serious concerns about corporate governance and
ethical standards in Indian businesses.

The Satyam scandal prompted the Indian government and regulatory bodies to
strengthen corporate governance norms. Reforms were introduced to enhance
transparency, accountability, and ethical practices within companies. This
incident served as a catalyst for increased awareness and emphasis on business
ethics in the Indian corporate landscape.

Neha Solanki
 Comparison between India and Developed
nations: A Statistical View
Table 1
Code of Conduct Concept Frequencies by Country
(Data of 2011)
Concept % of India Companies % of U.S. Companies Difference
Conflict of Interest 100% 100% 0%
Confidentiality 100% 100% 0%
Public Representation 56% 58% -2%
Use of Company Assets 94% 96% -2%
Adherence to Law 96% 98% -2%
Gifts & Entertainment 92% 96% -4%
Workplace Health & Safety 66% 74% -8%
Insider Trading 76% 98% -22%
Penalties for Violation 68% 90% -22%
Protect Environment 46% 70% -24%
Disclosure & Transparency 62% 90% -28%
Defines List of Relatives 66% 26% 40%
Discrimination/Harassment 44% 88% -44%
Political Activities 26% 82% -56%
Accurate Record Keeping 32% 94% -62%
Free and Fair Competition 32% 94% -62%
Whistle Blower Protection 34% 98% -64%
Applicable to All 32% 100% -68%
Must Report on Others 22% 94% -72%
Anonymous Reporting 6% 88% -82%

Neha
 Table 2
Research conducted on the prevalence of business codes
(Data of 2004)
Most recent % of codes of conduct
Country Researcher Research method followed
United
States 1999 Weaver et al. Survey of Fortune 1000 78%
with a response rate of
26%
Canada 2002 KPMG Canada Survey of largest 800 77%
companies and 200 public
sector organizations with
a
response rate of 13%
Japan 1997 Nakano Survey of largest 2199 37%
companies with a
response
rate of 7.2%
India 2002 KPMG India Survey of largest 800 78%
companies with a
response
rate of 20%
South Africa 2002 KPMG Survey of 1026 public and 71%
private South Africa
organizations with a
response
rate of 16%
1996 Farrell and
Australia Cobbin Survey of largest 537 42%
companies with a
response
rate of 42%
1999 London
England Business Survey of largest 350 78%
companies with a
School and Arthur response
Andersen rate of 12%

Neha
 CASE STUDIES

1.CASE STUDY RELATED TO ENVIRONMENT

H&M, one of the largest multinational fast fashion companies in the world,
was producing 3 billion garments a year by 2020. In 2019, its revenue was
around US$ 22 billion, and its unsold inventory amounted to US$ 4 billion.
During the year, there were many reports that the unused clothes from
H&M were burned and used as fuel to run a power plant in Sweden. Many
clothes were incinerated or found their way to landfills.
H&M along with Zara, Gap, and Shein and other fast fashion companies
were mainly responsible for the huge amounts of clothing waste. Every
second, a truckload of clothes was either burnt or buried in landfills.
Studies showed that the fashion industry was responsible in large part to
microplastics entering the oceans.
Karl-Johan Persson, Chairman and former CEO of H&M, focused on reducing
the impact the clothes were generating. He was looking at a circular model,
where the clothes could be reused or disposed of responsibly. He was also
looking at making the company climate positive by 2040, and switching
completely to sustainable fabrics by 2030, and he made the UN Sustainable
Development Goals a part of the company’s strategy. Helena Helmersson,
who became CEO of H&M in 2019, was the sustainability head of the
company prior to taking up the CEO role.
H&M took several initiatives in this direction. It started using sustainable
and recycled materials for some of the clothing and accessory lines, began
collecting used clothes, and came out with a line of compostable clothing.
The Persson family, which owned the largest share in H&M, launched the
H&M Foundation in 2012. The foundation collaborated with Hong Kong
Research Institute of Textiles and Apparel to come up with a technology
that recycled blended textiles made of cotton and polyester. H&M also
came up with a technology called Loop that transformed old clothes into
new ones. At the same time, H&M continued to produce millions of
garments every year, creating a huge environmental footprint. Observers
said that the company’s circular solutions were minuscule compared to the
pollution and waste it created and that the company was incentivizing
disposal. They suggested that H&M needed to change its business model,
and should stop relying on increased volumes. However, cutting down
production would mean loss of jobs and livelihoods in third world
countries. At the same time, H&M needed to keep up with competitors, who
were bringing out more styles at a faster pace and lower cost.

Molika Batra
2.CASE STUDY RELATED TO EMPLOYEE
In November 2013, the managing editor of Indian weekly news magazine
Tehelka, Shoma Chaudhury (Shoma), was shocked when she received an e-
mail from her subordinate and woman journalist, Nina, accusing Tarun
Tejpal (Tarun), founder and Editor-in-Chief of Tehelka, of sexually
assaulting her on two occasions during THiNK Fest 2013. In the e-mail, the
victim provided a detailed and graphic account of the alleged sexual assault
and demanded an official written apology from Tarun, an
acknowledgement of the assault to be circulated among the staff and
bureau of Tehelka, and the setting up of an anti-sexual harassment cell at
Tehelka to probe the matter.

Though known for her feminist leanings, Shoma’s handling of the situation
came in for severe criticism from various quarters, with critics calling her
response legally questionable, inadequate, and flawed. She was criticized
for her delay in setting up an independent committee to look into the
matter and for allegedly trying to cover up the issue. In fact, she faced more
criticism than Tarun, the perpetrator of the assault. According to Shoma,
her integrity was subsequently repeatedly questioned by people from her
fraternity and by the public at large. Defending herself, she said her actions
were based on solidarity and feminist principles. Eventually, Shoma
resigned 10 days into the crisis. The case allows for the discussion of key
questions, such as – Was Shoma made a scapegoat by the media? What was
at stake for her? Were her actions justified? What could she have done
differently?

3.CASE STUDY RELATED TO MANAGEMENT

Enron Corporation: Enron, once considered one of the largest energy
companies globally, collapsed in 2001 due to widespread accounting fraud
and ethical misconduct.
Top executives, including CEO Jeffrey Skilling and CFO Andrew Fastow,
were involved in deceptive accounting practices, inflating profits and hiding
debt to maintain stock prices artificially high.
Management manipulated financial statements, misled investors and
regulators, and engaged in insider trading to enrich themselves at the
expense of shareholders and employees.
The scandal led to thousands of job losses, significant financial losses for
investors, and the dissolution of Arthur Andersen, Enron's auditing firm. It
also prompted reforms in corporate governance and accounting practices.

Molika Batra
4.CASE STUDY RELATED TO CUSTOMER
The case highlights governance issues at Indian FinTech unicorn BharatPe
following the controversy involving its co-founder Ashneer Grover (Grover).
BharatPe was a Quick Response (QR) code-based payment app that allowed
merchants and retailers to make digital payments for free.
The governance issues at BharatPe emerged after an audio clip came to
light that purportedly had Grover abusing an employee from Kotak
Mahindra Bank for declining to finance his personal investment in Nykaa
IPO. Uday Suresh Kotak (Uday), Chairman and Managing Director of Kotak
Bank, alleged that Grover had used abusive languages toward the bank’s
employees. Following the legal battle between him and Uday, Grover
proceeded on leave up to the end of March. Grover was also on the radar
of the news and media for promoting a toxic culture at the company and
for his rude behaviour on Shark Tank India, a TV show that involved
entrepreneurs pitching their business models.

BharatPe came under intense investor scrutiny ahead of its plan to launch
its IPO. Amid growing investor concern over the company’s internal
governance issues, BharatPe engaged risk advisory firm Alvarez and Marsal
(A&M) to review the company’s internal processes and systems. A&M
observed instances of financial irregularities and issues related to
operational matters at BharatPe.

5.CASE STUDY RELATED TO STAKEHOLDERS

The case discusses the challenges faced by Masayoshi Son (Son), founder and CEO of
Japanese multinational investment management company SoftBank Group Corp.
(SoftBank), in running the company. Son also came under immense scrutiny from
SoftBank’s investors after the company’s venture capital arm Vision Fund recorded losses
of US$32 billion for the financial year ended March 31, 2023. He was also criticized by
SoftBank’s investors as he had made colossal investments in companies which were
recording huge losses. His increasing stake in SoftBank, which went from 26.7% in March
2019 to 34.2% in September 2022, also left investors concerned, as they felt that Son
could wield more control than before over decisions relating to mergers, buybacks, asset
sales, and corporate bylaws and give him the power to pass any special resolution before
the shareholders.

Son was also criticized by corporate governance experts for mixing personal interest with
company responsibilities as he had acquired stakes in several investment funds owned
by SoftBank in a bid to increase his remuneration. Critics also questioned Son for not
having a succession plan in place as he stated that he would continue leading the
company even after his late sixties.

Molika Batra
 CONCLUSION
Ethics is like the first line of defense against corruption, while law enforcement is more
like a fix-it solution after things have gone wrong. Good corporate governance isn't just
about following government rules; it's also about having the right values and ethics that
guide how companies do business. This builds trust between companies and everyone
they work with. When companies have good governance practices, it doesn't guarantee
they won't fail, but it helps prevent shady practices and sudden, big failures.

Making ethics work in a company means aligning its vision, mission, values, and code
of conduct. This brings many benefits. To make sure employees follow the
organization's codes and values, it's important to keep reinforcing strong values.
Companies struggle with getting employees to really embrace their codes and values.
The key is to have the right mix of attitude and organization structure to create the
right ethical environment.
Ethics is not just about following rules; it's about doing what's right even when no one
is watching. When companies prioritize ethics and values, they build a strong
foundation of trust with their stakeholders. This trust is crucial for long-term success
and sustainability.

Harshita Milvaniya
 References
https://www.researchgate.net/

WWW.ICAINSTITUTE.ORG

https://www.icmrindia.org/casestudies/Case_Studies.asp?cat=Business%20Ethics

https://www.britannica.com/event/Enron-scandal