1.2 Areas of application of corporate ethics

Corporate ethics is a form of applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole.

In the increasingly conscience-focused marketplaces of the 21st century, the demand for more ethical business processes and actions is increasing. Simultaneously, pressure is applied on industry to improve corporate ethics through new public initiatives and laws. Businesses can often attain short-term gains by acting in an unethical fashion; however, such behaviors tend to undermine the economy over time.

Corporate ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values. Historically, interest in corporate ethics accelerated dramatically during the 1980s and 1990s, both within major corporations and within academia.

Finance

Fundamentally, finance is a social science discipline. The discipline borders behavioral economics, sociology, economics, accounting and management. It concerns technical issues such as the mix of debt and equity, dividend policy, the evaluation of alternative investment projects, options, futures, swaps, and other derivatives,  portfolio diversification  and many others. Finance is often mistaken to be a discipline free from ethical burdens. The 2008 financial crisis caused critics to challenge the ethics of the executives in charge of U.S. and European financial institutions and financial regulatory bodies. Finance ethics is overlooked for another reason—issues in finance are often addressed as matters of law rather than ethics.

Ethical Issues in Finance:

Importance of Financial Statements:

In ethical reporting of finance, financial statements play an important role.

* The internal financial reporting has to be fair and honest.

* To run a business ethically, it is necessary to have trustworthy internal auditing system.

The steps that a company's management should take into account for true, fair and reliable management accounts are:

1. Determining the key elements of the business like the objectives of the firm and see how they are defined and measured.

2. Making sure that the funds are allocated to different activities on the basis of their importance.

3. Frame rules that have a positive effect on business activities. It is important to ensure that each project or department is allotted its fair share of funds and that the projected earnings of the project or the department are in accordance with the funds allocated to it.

Fairness in trading practices, trading conditions, financial contracting, sales practices, consultancy services, tax payments, internal audit, external audit and executive compensation also fall under the umbrella of finance and accounting.^[40][75] Particular corporate ethical/legal abuses include: creative accounting, earnings management, misleading financial analysis insider trading,securities fraud, bribery/kickbacks and facilitation payments. Outside of corporations, bucket shops and forex scams are criminal manipulations of financial markets.

Human resource management

Human resource management occupies the sphere of activity of  recruitment selection, orientation, performance appraisal, training and development, industrial relations and health and safety issues. Corporate Ethicists differ in their orientation towards labor ethics. Some assess human resource policies according to whether they support an egalitarian workplace and the dignity of labor.

Issues including employment itself, privacy, compensation in accord with comparable worth, collective bargaining (and/or its opposite) can be seen either as inalienable rights or as negotiable. Discrimination by age (preferring the young or the old), gender/sexual harassment, race, religion, disability, weight and attractiveness. A common approach to remedying discrimination is affirmative action.

Potential employees have ethical obligations to employers, involving intellectual property protection and whistle-blowing.

Employers must consider workplace safety, which may involve modifying the workplace, or providing appropriate training or hazard disclosure.

Larger economic issues such as immigration, trade policy, globalization  and trade unionism affect workplaces and have an ethical dimension, but are often beyond the purview of individual companies.

Sales and marketing

Marketing of age only as late as 1990s. Marketing ethics was approached from ethical perspectives of virtue or virtue ethics,  deontology,  consequentialism,  pragmatism and relativism.

Ethics in marketing deals with the principles, values and/or ideals by which marketers (and marketing institutions) ought to act. Marketing ethics is also contested terrain, beyond the previously described issue of potential conflicts between profitability and other concerns. Ethical marketing issues include marketing redundant or dangerous products/services transparency about environmental risks, transparency about product ingredients such as genetically modified organisms possible health risks, financial risks, security risks, etc., respect for consumer privacy and autonomy, advertising truthfulness and fairness in pricing & distribution.

According to Borgerson, and Schroeder (2008), marketing can influence individuals' perceptions of and interactions with other people, implying an ethical responsibility to avoid distorting those perceptions and interactions.

Marketing ethics involves pricing practices, including illegal actions such as price fixing and legal actions including price discrimination and price skimming. Certain promotional activities have drawn fire, including green washing, bait and switch, shilling, viral marketing, spam (electronic), pyramid schemes and multi-level marketing. Advertising has raised objections about attack ads, subliminal messages, sex in advertising and marketing in schools.