Why is a code of ethics important to stakeholders?
A code of ethics provides stakeholders with a written promise of the firm’s behavior. Although not a legally binding document, a code of ethics outlines to everyone who has a vested interest in the firm what the firm’s ethical philosophy is pertaining to what is acceptable and what is unacceptable behavior. In addition, a code of ethics allows current and potential employees a window into the beliefs of the top level managers. What is included and maybe more importantly what is excluded from the code of ethics can give employees insight into how management views themselves and the world. For potential employees, a code of ethics could be considered one of the initial pieces of information that will be interpreted by the individual before he or she considers working for that firm. The local community is very interested in a firm’s code of ethics to see what the firm’s beliefs are related to areas such as toxic dumping, releasing of chemicals and other environmental issues. Governments view the code of ethics as an opportunity to ensure the firm’s ethical standards are in line with the government’s legal standards. Suppliers would review the code of ethics to understand whether this firm could be considered a viable long-term business partner. Customers would examine the code of ethics to determine whether they are protected against product defects or other safety concerns.
