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1. Codes of Ethics
1. Codes of Ethics:
- Internal to a business (Magna)
- Industry-Wide (Forestry)
- More serious, more detailed
- Consequences for violation
- Disciplinary process
- Legalized, formalized
Properties of Code of Ethics:
- Deontological + Rules (Duty-based + Results)
Example: Code of Ethics and Conduct for Stock Brokers.
Insider Trading: When corporate executives trade the stocks of their own company. (When it
comes to the stock market, government wants it to be as fair and transparent as possible)
Example: The Institute of Chartered Accountants of Ontario: Rules of Professional Conduct.
“Puffery”: Self-promotion through advertising to “puff yourself up”. Canadian lawyers are
forbidden from making TV ads to promote themselves, in contrast to US TV networks. Example: Professional Engineers Act (Must pass technical tests, ethics test, prove good
The Takeaway: Code of Ethics are often detailed and lengthy
Code of Ethics (Common Elements)
*Note*: Use these as the duties for deontology argument on the exams.
1. Obey all relevant laws
2. No disgracing the business, organization or profession
3. Competence & Non-impairment
4. Diligence / Hard-working-ness
5. Honesty & Full Disclosure
6. No Conflicts of Interest (Unless full disclosure & universal consent of “stake-holders”)
7. Trustworthiness & Confidentiality
8. Respect / Collegiality towards colleagues, peers & clients
(Professionals Codes also have:)
9. Some Reference to Upholding a Public Good (e.g. lawyers -> justice, doctors -> health,
engineers -> public safety)
10. “Advance the Profession”: i.e., A) Mentor & develop juniors and B) Take advantage of
opportunities to enhance public esteem of profession
11. Reference to a Disciplinary Mechanism & Duty to Report all Ethical Violations to such.
Aside: Shareholder vs. Stakeholder:
- Shareholder: people who hold shares in the company
- Stakeholder: anyone who are affected by decisions made by the company
Very different between the business side and profession side
- In-house legal counsel
- recommend to CEO
- take an ethics course
- pay a fine
- in some cases, termination of employment
- Not all businesses have codes of ethics (Though all large public companies have them) Profession:
- Formal / Quasi-Legal
- “Self-Regulating”: (because engineers should know how to govern engineers, but not doctors)
- Bodies of Expertise that determines detailed ethics (C.M.A., P.E.O., L.S.U.C)
- Exams a code of ethics
- Grant / revoke license (Generally a criminal record would fail the good character test)
- Ethics Committee: 9 Senior members:
1. Initiated by some complaint
2. Fact-Finding Session (without players, dismissed if no grounds are found)
3. “Trial”: Lawyers are present
4. “Sentencing Phase” → Dismiss
5. Options & Punishment (e.g. rewrite ethics exam, pay for the cost of the “trial”,
temporary / permanent suspension of license)
Pros & Cons of Codes of Ethics (CoE):
CONs -> LADD PROs
1. “Rigid Rule-Worship” 1. May not always be crystal-clear or
2. Serious Problem Interpreting Rules: motivating, but sometimes it might be;
Vagueness (e.g. “personal honour”, “treat therefore still worthwhile.
everyone with respect”) 2. Floor / Ceiling: CoE can articulate the
3. CoE doesn’t contain anything that’s not ideals & expectations of a business /
already in ordinary morality. profession (which is inspiring / motivating).
4. Purpose of CoE? LADD: “These things Floor - minimum expectations; Ceiling -
are exercises of public relations, done in the maximal inspiration.
interest of the business / profession” (KPMG: 3. Give self-regulating bodies a way to kick
Over 85% of CEOs said they adopted CoE for people out
business interest) 4. Communication: Convey to outsiders what
5. Codes of Ethics are useless: A) ethical they can expect from insiders.
people don’t need a code of ethics to know 5. (Response to CON#3) Crucial thing that
what to do, B) unethical people won’t follow CoE do is to capture additional obligations