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Corporate ethics is also known as business ethics. It is the study and evaluation of decision making by the corporations according to moral concepts and judgments. Corporate ethics deals with issues such as the company’s responsibility to be honest with its customers, the company’s responsibility to preserve the environment, and protect employee rights. It is not that easy to give a simple definition for corporate ethics but the jurisprudents define corporate ethics as the application of a moral code of conduct to the strategic and operational management of a business.

Corporate social responsibility is one thing that every company has. Schedule VIII prescribes the activities to be included under the Corporate Social Responsibility are discussed below:

  1. Eradicating extreme hunger and poverty
  2. Promotion of education
  3. Promoting gender equality and empowering women
  4. Reducing child morality and improving maternal health
  5. Combating human immune deficiency viruses, acquired immune deficiency syndrome, and other diseases
  6. Ensuring environmental sustainability
  7. Social business projects
  8. Employment enhancing vocational skills
  9. Contributing any amount to the prime minister’s national relief fund or any other fund set up by the central government or the state government for socio economic development.

As soon as a company incorporated and registered acquires corporate personality, it is a legal person and different from its shareholders or members. Today thousands of companies have been doing crores of businesses throughout the world. The assets and turnovers of some of the companies or MNCs have been higher than their respective country’s budget. The main motto of every corporation is to do business and achieve high profits but most of these corporate companies don’t follow corporate ethics or does not have corporate social responsibility.

For example, there are many companies that don’t disclose all their product details to their customers. For example, cosmetic products like some creams which say that if you use that cream, your skin whitens and doesn’t have acne on your face, etc. but after customers actually using the products they don’t see any of those benefits from using that particular cream. This is a clear example of the violation of the corporate ethics. Therefore, the corporations are liable to follow the corporate ethics. The very least a corporation can do is, to be honest about their product and what it does each day.

The penalties by way of huge amount of fines and imprisonments are imposed against the directors by the Companies Act, 2013 and the laws relating to the administration of the companies. Still the governments are not able to control the companies from doing the acts which are unlawful.

Corporate ethics is towards people, consumers, religions, employees, social accountability. Let us discuss all these in detail:

Corporate ethics towards the people:

Of course, it is an admitted fact that the primary object of a corporation or a company is to earn profits. However, corporations should conduct their business in a healthy manner. There are several examples which show that some of the corporate companies have behaved very badly and neglected their duties towards people. Due to some of the company’s negligence major gas leaks such as Bhopal gas leak case, oleum gas leak case, etc. have taken place and many people died, some of them are injured severely but the appropriate compensations to the victims are not paid in time by the companies. Even after three decades, the victims of Bhopal gas leak, oleum gas leak cases are not paid the appropriate compensation. There is so much poverty and hunger across the world but the greed for huge profits for the companies has not changed them. Corporate ethics must be followed by every corporation or company.

Corporate ethics towards the consumers:

Consumers are the persons who buy the company’s products from which they achieve profits. If their product is sold among the consumers or customers then their product is a hit and they get profits. So here, it means that they have to be honest with the consumers and disclose all the details of their product because it is the consumers who are developing your company. For example, previously it was detected that there is a lot of lead content in Maggie and food safety authorities have banned Maggie for some years and now it has rebooted itself into a new one and took re-entry into the market. Corporate ethics must be followed by every corporation to supply hygienic foods and goods. In the case of Maggie, the Nestle company has paid a lot of compensation and they had lost so much of amount. None of this would have happened if they follow corporate ethics and think about their customer’s health.

Corporate ethics towards the religions:

A few foreign manufacturers of good printed the photos of gods, goddesses, national leaders, etc. on certain goods like underwear, bras, shoes, shirts, etc. humiliating the religious and national feelings of the Indians is not a good corporate ethics.

For example Lord Ganesh’s photo on the Kiwi Boot Polish Boxes etc. the corporate ethics must be followed by every manufacturer not to do such humiliating and offensive acts.

Corporate ethics towards its own employees:

Every corporation must treat its employees in harmonious terms because they are the foundation of every industry. Even though there are labour laws that govern management and workmen relations. The laws and rules are different from ethics.

Corporate ethics towards society and Social accountability:

It is relating the communication between the social and environmental effects of a company’s economic actions to the society at large.


The directors of the companies need to balance the ultimate principle against the practical, and there is a need to get a reasonable profit for the shareholders of the company or corporation. Corporate ethics is nothing but honesty in business practices, safety in the workplace, and larger environmental and social issues, if you follow all these then your company is successful.

However, the corporate ethical issues in business have become more complicated because of the global and diversified nature of the companies. Hence there is a need for companies to follow corporate ethics and not to violate them because if they follow corporate ethics, profits automatically will be earned by the companies.


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