Details – expert information

Ethical Business Practice & Regulation

The Essence of Ethical Business Practice

EBP seeks to create an environment where employees can:

  • Do the right thing, based on the ethical values promoted by their company;
  • Recognize ethical dilemmas and be trained to resolve them;
  • Be open and honest, to speak up and learn from mistakes.

For organisations, this ethical culture serves to increase trust amongst their employees, regulators and other counterparts. It constitutes the necessary basis to engage with regulators and public authorities.

The Essence of Ethical Business Regulation (EBR)

Ethical Business Practice works side by side with Ethical Business Regulation. EBR can be regarded as a relationship between a business and a regulator, in which the business produces evidence of its on-going commitment to EBP and the regulator recognises and encourages that commitment.2

One of the objectives of EBR is thus to enable both business and regulators to benefit from a relationship based on mutual trust: in an ethical business culture, the objectives of internal compliance and external regulation converge.

EBR relationship involves regulators and business as trusted sparring partners, understanding the others' position and priorities. This implies having a culture of information sharing.

EBR encompasses the design and implementation of a regulatory system based on the following principles:

  • Business commitment to fair and ethical behaviour;
  • An open and learning culture, not seeking to blame;
  • A collaborative culture;
  • Proportionate responses in case of law infringements.

[2] C. Hodges & R Steinholtz, ‘Ethical Business Practice and Regulation: A Behavioural and Values-Based Approach to Compliance and Enforcement’, Hart 2017, p. 149-155)

Advantages of EBR

For governments:

  • Promoting a business-friendly environment by reducing burden on them;
  • Saving public resources by encouraging greater self and co-regulation;
  • Achieving shared outcomes, growth and innovation;
  • Reducing compliance and enforcement legislations.

For business:

  • Better performance in terms of compliance and risk reduction;
  • Improving relationships with regulators and enforcers by pursuing desired and common objectives, rather than adversarial outcomes.
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