Ethic is a branch of social science. It deals with moral principles and social values. it helps fe classify, what is good and what is bad? It tells that to do right things and avoid doing bad things. The worg ‘ethics’ is derived from the Latin word ‘ethicus’ and the Greek word ‘ethikos’, meaning character g, manners. This meaning can also be extended to imply systematizing, defending and recommending ‘concents of right end wrong behavior. Ethics is thus said to be the science of moral, moral principle ang recognized rules of eanduct (The concept ethics separates good and bad, right and wrong, fair and unfair, moral and immoral and proper and improper human action. In short, ethics means a code of conduct. It tells a person how to behave with another person. So the businessmen must give a regular supply of best quality aoodsL 4 6. 7 8 a 10. 11, eC ETNE is ane INDAMENTAL PRINCIPLES OF ETHICAL AND GOVERNANCE ISSUES ‘Autonomy: Respecting the autonomy of individuals involves recognizing their right to make their own choices and decisions based on their values, preferences, and beliefs. This principle emphasizes informed consent and the importance of allowing individuals to exercise their free will Beneficence: The principle of beneficence requires individuals to promote the well-being and interests of others. This involves taking actions that lead to positive outcomes, help others, and contribute to their overall welfare. Non-Maleficence: This principle emphasizes the duty to do no harm. Individuals are required to prevent harm and minimize potential risks, ensuring that their actions do not cause unnecessary suffering or negative consequences. Justice: The principle of justice revolves around fairness and equal treatment. It involves distributing benefits and burdens equitably, addressing inequalities, and upholding the rights of all individuals. Veracity: Veracity refers to the principle of honesty and truthfulness. Individuals are expected to communicate truthfully, avoid deception, and provide accurate information in all interactions. Fidelity: Fidelity, or loyalty, centers on keeping commitments and honoring obligations. This principle underscores the importance of maintaining trust in relationships and fulfilling promises. Confidentiality: The principle of confidentiality involves respecting the privacy and confidentiality of information shared by individuals. Professionals and organizations must safeguard sensitive information and only share it when necessary and with proper consent. Integrity: Integrity emphasizes consistency between one's values, words, and actions. Individuals with integrity act in ways that are consistent with their moral principles and demonstrate honesty and moral courage. Respect for Persons: This principle recognizes the inherent worth and dignity of every individual. It involves treating others with respect, regardless of their background, beliefs, or circumstances. Common Good: The common good principle focuses on promoting the well-being of the entire community or society as a whole. It emphasizes decisions and actions that contribute to the greater good and collective welfare. Utility: The utility principle, often associated with utilitarianism, aims to maximize overall happiness or utility. Decisions are evaluated based on their potential to generate the greatest benefit for the greatest number of people.i jing the fundam« 12. Rights: The rights-based principal centers on recognizing and upholding ental right u& 3. 5. 2 10. it se rights, ensuri and freedoms of individuals. Decisions should-pot infringe upon the: ig) UtiINg that individuals are treated with dignity and fairnes: EDEN ENR UTE ETHICAL ISSUES IN FINANCIAL ise from the responsibility of professionals ang Ethical issues in financial management arise FRC organizations to make financial decisions that are morally sound and oe = interests FF stakeholders. Financial decisions can have far-reaching consequences fr individ 7 ations, and society at large. Here are some common ethical issues in financial m: 1 Financial Fraud and Misrepresentation: Intentional misrepresentation of financia, information, manipulation of financial statements, or fraudulent activities can deceive investors, creditors, and other stakeholders. Such actions can lead to legal consequences and reputationa, damage. Insider Trading: Using non-public information to trade securities can provide individuals with unfair advantages in the stock market. Insider trading undermines market integrity and fairness and can lead to legal penalties. Conflict of Interest: Financial professionals and organizations must manage conflicts of interest to ensure that personal or professional interests do not compromise their fiduciary duty to clients, investors, or stakeholders. Executive Compensation: Ethical concerns may arise when executive compensation is excessively high or not tied to organizational performance. Misaligned incentives can incentivize executives to prioritize short-term gains over long-term sustainable growth. Tax Avoidance vs. Tax Evasion: Decisions about tax practices can raise ethical concerns, While legitimate tax avoidance strategies are legal and within the bounds of the law, tax evasion. deliberately misrepresenting or concealing information to reduce tax liability—is illegal and unethical. Risk Management and Disclosure: Ethical fi disclosing risks associated with investments or fi accurate information for decision-making. Predatory Lending: Financial i advantage of vulnerable individu: Practices can lead to financial nancial management involves transparently nancial products to ensure that investors have institutions engaging in Predatory lending practices take als by offering loans with high interest rates and fees. Such hardship and personal distress. . . Organizations are increasingly held accountable for their impact on the environment and society, Ethical financial management involves fniesin earn and Reporting: Accurate credit scoring and reporting are essential for fair lending practices. Manipulating credit scores o, i ead to Providing inz an leat unjust treatment of borrowers, Shasta jnkerineation 2 Pay Equity and Wage Discrimination, to issues of pay equity and wage discri regardless of gender, eth # Ethical considerati mination. En: ity, or other factors, is vit; ions in financial management ext suring fair compensation for all emplo ‘al.41, Use of High-Risk Financial Instruments: Some financial instruments and products can carry high levels of risk, Ethical financial management involves disclosing risks associated with such products and ensuring that investors understand potential downsides. 12. Socially Responsible Investing: Investors increasingly seek opportunities that align with their ethical values. Ethical financial management involves offering investment options that meet environmental, social, and governance (ESG) criteria. An agency relationship is a legal and fiduciary relationship between two parties, where ‘one pay (the agent) acts on behalf of and under the control of the other party (the principal). This relationship ; is established when the principal delegates authority to the agent to perform certain tasks or make decisions on their behalf. Agency selationships are common in various contexts, including buses, Jaw, real estate, finance, and more. \ } Transaction Cost Theory, developed by Nobel laureate economist Oliver E. Williamson, is an economic theory that explains how the costs associated with transactions affect the choice between using market mechanisms (buying or selling in the open market) and internal organizational structures (hierarchical control). This theory provides insights into why firms exist, how they are structured, and how they make decisions about organizing their operations,CONCEPT OF GOVERNANCE Governance refers to the processes, structures, and mechanisms through which individuals and erganizations make decisions, implement policies, and manage resources. It encompasses a wide range of activities and practices that aim to ensure accountability, transparency, fairness, and effective management in various contexts, including governments, businesses, non-profit organizations, and other institutions. Governance can take various forms depending on the context. For instance, it could refer to how a country is governed (political governance), how a company is managed (corporate governance), how an international organization operates, or how a community organization functions. Regardless of the context, the fundamental goal of governance is to facilitate responsible decision making and the effective management of resources to achieve desired outcomes while upholding principles of accountability, transparency, and fairness. CORPORATE GOVERNANCE eee Corporate governance refers to the system of rules, practices, processes, and structures by which a company is directed, controlled, and operated. It outlines the relationships and responsibilities among @ company's shareholders, board of directors, management, and other stakeholders. The primary objective of corporate governance is to ensure that a company is managed in a way that i ethical, accountable, transparent, and aligned with the best interests of all stakeholders. |NANCE STRUCTURES Governane structures refer to the frameworks and mechanisms through which organizations are Ee controlled, and operated. These structures determine how decisions are made, authority is tei and accountability Is established within an organization, Different governance structures tan organization's efficiency, effectiveness, and ability to achieve its objectives. Here are jovernance structures: gorributeds yn Iinpac some cor 070 wlorarchical Governance: In a hierarchical governance structure, decision-making authority is concentrated at the top of the organizational hierarchy. Orders flow down from top management, and information is. communicated upward. This structure is typical in traditional organizations and is characterized by clear lines of authority and a well-defined chain of command. 2, Decentralized Governance: In contrast to hierarchical governance, decentralized governance disperses decision-making authority across various levels or units within an organization. Decentralization can lead to quicker responses to local issues, increased employee ‘empowerment, and enhanced flexibility. 3, Matrix Governance: A matrix governance structure combines aspects of both hierarchical and decentralized structures. Employees report to both functional managers (based on their expertise) and project managers (based on the project they are working on). This structure is suitable for organizations with multiple projects or product lines. 4. Flat Governance: In a flat governance structure, there are minimal levels of hierarchy, and decision-making authority is shared across a smaller number of management layers. This structure promotes open communication, faster decision-making, and a reduced sense of bureaucracy. 5. Network Governance: Network governance involves collaborating with external partners, suppliers, customers, and stakeholders to achieve organizational goals. The organization functions as a network of interconnected entities, sharing resources and expertise. 6. Advisory Boards and Committees: Organizations often establish advisory boards or committees composed of experts, industry leaders, or stakeholders who provide advice, insights, and guidance to the organization's leadership. These bodies contribute to strategic decision- making. 7. Shareholder Governance (Corporate Governance): Corporate governance focuses on the relationship between a company's management, board of directors, and shareholders. It ensures that the interests of shareholders are protected and that management acts in the best interests of the organization. Nonprofit Governance: Nonprofit organizations have governance structures that typically involve @ board of directors responsible for overseeing the organization's mission, financial health, and compliance with regulations. 9, Government Governance: Government organizations have unique governance structures that involve elected officials, civil servants, and regulatory bodies. These structures vary depending on the type of government (e.g., federal, state, local) and the country’s legal and political systems.. ; ati by a democrauc structure, ive Governance: Cooperative organizations are governed , eens fe Jecting representatives to serve on with members actively participating in decision-making and el the board of directors. ; involves involving employees, ion-making process, promoting inclusivity and 411. Participatory Governance: Participatory governance stakeholders, and relevant parties in the decisi diverse perspectives. 12. Virtual Governance: Virtual organizations and remote teams may utilize vi structures, relying on digital tools and communication platfo decisions. tual governance rms to coordinate activities and Types of governance poli 1. Code of Conduct and Ethics Policy This policy outlines the expected standards of behavior and ethical principles that all employees, officers, and stakeholders of the organization are required to adhere to. It covers topics such as honesty, integrity, conflicts of interest, anti-corruption, and respect for diversity. 2. Conflict of Interest Policy This policy provides guidelines for identifying, disclosing, and managing conflicts of interest that may arise when an individual's personal interests conflict with their responsibilities to the organization, 3. Whistleblower Protection Policy A whistleblower policy establishes mechanisms for employees and stakeholders to report suspected unethical behavior, violations of laws, or other wrongdoing without fear of retaliation. 4, Data Privacy and Security Policy In today's digital age, this policy outlines how the organization collects, stores, processes, and protects sensitive information and data, ensuring compliance with data protection laws and regulations. 5, Risk Management Policy This policy defines the organization's approach to identifying, assessing, mitigating, and managing risks across various operational areas, inciuding financial, operational, reputational, and regulatory risks. 6. Board of Directors Governance Policy For organizations with a board of directors, this policy outlines the roles, responsibilities, and expectations of board members, including matters related to meetings, committees, and fiduciary duties. 7. Disclosure and Transparency Policy This policy emphasizes the organization's commitment to transparent communication with stakeholders, including investors, customers, employees, and the public. It guides the disclosure of relevant information in a timely and accurate manner.pliance Policy 5. com ‘a compliance policy ensures that the organization follows all applicable laws, regulations, and industry standards. It establishes procedures for monitoring compliance and addressing any violations. 9, Anti-Bribery and Anti-Corruption Policy This policy outlines the organization's stance against bribery, corruption, and unethical practices, and provides guidance on how to prevent and report such activities, 40, Social Responsibility Policy Organizations committed to social responsibility establish policies that address their impact on society, the environment, and the communities they serve. These policies guide sustainable practices and philanthropic initiatives. 44. Environmental Sustainability Policy This policy outlines the organization's commitment to environmentally responsible practices, such as reducing carbon emissions, conserving resources, and minimizing waste. 42. Financial Reporting and Accounting Policy For publicly traded companies, this policy ensures accurate financial reporting and compliance with accounting standards, promoting transparency and integrity in financial disclosures. 13, Human Resources Policies These policies cover various aspects of the employment relationship, including hiring, compensation, benefits, performance evaluations, and employee development. 44. Health and Safety Policy Organizations prioritize the health and safety of employees and stakeholders through this policy, which outlines measures to prevent accidents, injuries, and occupational health risks. 45. Social Media and Online Conduct Policy This policy guides employees’ behavior on social media and online platforms to ensure that their online presence aligns with the organization's values and protects its reputation Se PROTONS Sane SOCIAI AND ENVIRONMENTAL ISSUES __ Social and environmentalissues encompass a wide range of challenges that affect society andthe i. These issues have significant implications for individuals, communities, economies, and whole. Addressing social and environmental issues requires collective effort, innovative sponsible practices. Here are some key social and environmental issues: natural worl the planet asa solutions, andres Social Issues and Income * reeeas ‘guch as healthcare, creating more equitable societies. Inequality: Poverty and income inequality lead to disparities in access to education, and housing. Addressing these issues is crucial for2 3. 7 eens vrei osues ial for promoting econom “Access to Education: Ensuring quality education for all is essential for P mig te 7 it silty. development, reducing poverty, and fostering social mobility seorevertable tnessesanddeatng Healthcare Disparities: Healthcare inequalities contri ues ee Saran ; Universal access to healthcare services and affordable trea! See eeeties im edicatn it I‘ jowerment: Gen 7 Gender Inequality and Women's Emp’ bee aT eereeeiere employment, and political representation persist in nowy parts of the promote gender equality and empower women and girls. sy or att Racial and Ethnic Discrimination: Discrimination based on ae h fy lead to systemic injustices and limit opportunities for marginalized g Human Rights Violations: Protecting human rights is essential to ensure that eae treated with dignity and respect, regardless of their background or circum: * Social Justice and Equity: Advocating for social justice involves addressing systemic biases, promoting equal treatment, and creating inclusive societies where everyone has an opportunity ‘tothrive. Migration and Refugees: Migration and refugee crises often result from conflicts, environmental disasters, and economic challenges. Finding sustainable solutions to provide safe havens and opportunities for displaced populations is crucial. Youth Unemployment: High rates of youth unemployment can lead to economic instability and social unrest. Creating job opportunities and skills development for young people is important for sustainable growth. 1. 2. 3. 4. Climate Change: Climate change poses one of the most significant threats to the planet, torising temperatures, sea level rise, extreme weather events, and disruptions to ecosyst: Biodiversity Loss: Loss of biodiversity threatens ecosystems, food security, and the balance of nature. Conservation efforts are needed to protect species and habitats. Deforestation and Habitat Destruction: Deforestation contributes to habitat loss, soil erosion, and climate change. Sustainable forestry practices and habitat Preservation are essential. leading ems, Water Scarcity and Pollution: Water scarcity and pollution endanger ecosystems and human health. Sustainable water management and pollution control are critical, Air Pollution: Air pollution from industrial activities, transportation, and other sources contributes to respiratory diseases an le : id climate change. ‘Transitioning to cleaner energy sources ‘and reducing emissionsis important. Waste Management and Plastic Pollution: harm marine life and ecosystems, Improper waste disposal and plastic pollution single-use plastics are key priorities, Implementing effective waste management and reducing . Practices, urbanization, and industrialization can 1 reducing the land's productivity, Ocean Conservation: Protectin '9 Oceans and m: odin i serving marine ecosystems, seafood ress arine biodiversity is essential for preserv! urces, and mitigating climate change. [ >pu e wit a holistic view of an organization's performance, strategy, e It goes beyond traditional financial reporting by incorporating both financial and non-financial ‘ime. ap0SE OF AN INTEGRATED REPORT ‘an integrated report serves as a comprehensive communication tool that provides stakeholders governance, and value creation over ipformation, including environmental, social, and governance (ESG) factors. The purpose of an integrated reportis to: L 3. 5 2 Enhance Transparency and Accountability: Integrated reports provide a clear and transparent overview of an organization's performance, activities, risks, and opportunities. This transparency fosters accountability to stakeholders and encourages organizations to be more open about their impact on various aspects of society and the environment. Provide a Complete Picture: By including financial, operational, and ESG-related information, an integrated report offers a comprehensive view of the organization's overall performance and how different factors interact to create value. Facilitate Informed Decision-Making: Stakeholders, including investors, customers, employees, regulators, and communities, need accurate and relevant information to make informed decisions. An integrated report helps stakeholders understand the organization's strategy, risks, and value creation processes. Support Long-Term Sustainability: Integrated reporting encourages organizations to consider both short-term financial performance and long-term sustainability. By highlighting non- financial impacts and ESG considerations, organizations can focus on creating value that is sustainable over time. Promote Consistency and Alignment: Integrated reporting promotes alignment between an organization's strategy, governance, and performance. It helps organizations ensure that their actions are consistent with their mission, values, and long-term goals. Demonstrate Accountability for ESG Factors: As stakeholders increasingly focus on environmental and social issues, integrated reports provide a platform for organizations to demonstrate how they are addressing ESG challenges, managing risks, and contributing to Positive societal outcomes. Attract and Retain Investors: Investors are increasingly interested in organizations that demonstrate a commitment to sustainable practices and responsible governance. An integrated report can attract socially responsible investors who consider ESG factors in their investment decisions. Enhance Communication and Engagement: An integrated report encourages organizations to engage with stakeholders and respond to their concerns. By addressing a broad range of stakeholders’ interests, organizations can build trust and strengthen relationships. Highlight Innovation and Value Creation: Integrated reporting allows organizations to showcase innovative strategies and initiatives that create value beyond financial results, such a5 technological advancements, employee well-being programs, and sustainable supply chain Practices.ith global repor, rts often align wi POrtn Integrated repOr™ ramework and the Sustainabit provide guidelines for reporting oy ie rks: 10. Align with Reporting Framewo! ae frameworks like the International Integrated Rene an Accounting Standards Board (SASB) standards, financial and non-financial performance. The content of an integrated report typically includes: 1. Introduction and Overview | ) i the report. a) Executive Summary: A concise overview of the key points covered in the rep‘ ion's size, industry, . 5) Organizational Profile: Basic information about the organization's size, industry, geographica, Presence, and key stakeholders. 2, Strategy and Governance : 7 a) Vision, Mission, and Values: The organization's core purpose, long-term goals, and Guiding Principles, 4) Governance Structure: Information about the board of directors, executive team, governance practices. © Strategy: An explanation of theo long-term plans. and rganization’s strategic objectives, competitive positioning, and 3. Value Creation @) Business Model: How the o1 relationships with stakeholders. b) Value Chain Analysis: A breakdown of the organization's activitic distribution, and end-use. ganization creates value through its products, services, and ies from sourcing to production, 4. Performance and Results 2) Financial Performance: Key financial metrics, such as revenue, profit, and cash flow. 6) Non-Financial Performance: Metri ics related to environment ‘such as energy ‘consumption, employe tal, social, and governance factors, ee diversity, and commu nity engagement. 5. Risks and Opportunities a) Risk Management: financial, Operational, b) Opportunities: Positive factors ti poe hat could enhance the Organization's performance of Identification and assessment of key ri a i Si 'Y risks the or es, including , and ESG-related risks. nereten ic 6. Materiality Analysis ication of stakeholders, including EsG issues,jer Engagement Yr, stakehole ganization engages with various stakeholders, such as customers, employees, How the of Jnvestors, regulators, and communities. ovation and Research 8 nn .d projects related to innovation, research and development, and technological Initiatives an a) advancements. 9, Human Capital a 3) Workforce Information: Details about the organization's employees, including diversity, 1g, and development. Programs and initiatives that support employee health, safety, and trai b) Employee Well-bein: work-life balance. 40. Environmental Stewardship a) Environmental Performance: Information about the organization's environmental impacts, such as carbon emissions, water usage, and waste management. b) Sustainability Initiatives: Projects and efforts to reduce the organization's environmental footprint. 14. Social Impact a) Community Engagement: Activities and investments in local communities, social initiatives, and philanthropy. 6) HumanRigh # Policies and practices related to respecting and protecting human rights. 12, Governance and Ethics a) Ethical Conduct: Information about the organization's ethical standards, anti-corruption measures, and compliance with regulations. b) Board Composition: Details about board members, their qualifications, and their role in governance. 13. Future Outlook a) Forward-Looking Statements: Insight into the organization's future plans, strategies, and anticipated challenges. 14. Assurance and Verification a) Independent assurance or verification of the report's content to enhance credibility and trustworthiness. 15. Appendices and References a) Additional data, charts, and tables that provide more in-depth information. ») References to relevant frameworks, standards, and regulations used in the report