Business Ethics: The Key to Sustainable Success

What is business ethics? Are professionals and executives truly aware of what it entails and how it influences business success?

“Upright, in accordance with morality”; “A set of moral rules that govern a person’s behavior in any area of life.” The word ethics itself is difficult to define and can be confusing. Many people believe it is purely subjective and inherent to the individual, but nothing could be further from the truth. When we add the economic or financial aspect, discussing business ethics becomes even more complex, highlighting the importance of addressing this topic to clarify key concepts and terms that should be essential in any organization and for every professional.

What is Business Ethics?

Business ethics has become increasingly important for companies and organizations following major crises such as the real estate collapse a decade ago. At that time, banks and financial institutions were criticized for ignoring ethical values and moral principles by granting mortgages indiscriminately, leaving many individuals and families unable to pay, losing their homes and savings.

Today, many executives and business leaders do take ethics into account. A Deloitte survey provides data that encourages reflection:

• 91% of Spanish executives consider ethics and integrity “relevant.”
• 70% of companies include it in their strategic objectives.
• Around 50% have a team responsible for these ethics strategies within the business.

At this point, it is important to define what business ethics means. The Foundation for Ethics in Business and Organizations (ÉTNOR) defines it as “the discovery and application of values and norms shared by a pluralistic society in the unique context of business.” In other words, it involves adapting these principles to economic activity and ensuring that business operations do not negatively affect societal welfare, with the economic returns also contributing to social and environmental benefits, among others.

What is Ethics in Business?

Business ethics ensures that economic activity respects the moral principles of society. Today, it is especially important because the world changes quickly, and it can be easy to be unsure about what should or should not be done. How should one act? How can ethics in business be defined for each specific situation?

1. Understand the society in which the company operates, including the sector, country, and any markets it may enter.
2. Determine which moral values and principles are key and could interact with the company’s economic activity.
3. Set boundaries that must not be crossed and ensure the entire workforce is aware of them.

Business ethics must be internalized by every individual on the team. This also applies to partners, intermediaries, and other companies that the brand collaborates with or interacts with.

Principles of Business Ethics

As noted earlier, business ethics encompasses the values and principles that guide a company’s decisions, actions, and behaviors, whether in SMEs or large corporations. These principles apply both internally, through HR policies that safeguard employee rights, and externally, by addressing the impact of the company’s economic activities.

• Integrity: transparency and honesty with employees as well as customers, audiences, and the broader community.
• Respect: keeping promises, learning from mistakes, correcting errors when necessary, and stopping initiatives if appropriate.
• Fairness: equitable treatment of employees and clients/users of the company’s products or services.
• Transparency: linked to integrity, clearly and honestly communicating the impacts of actions and accepting consequences, even when they are not favorable.
• Responsibility: responsibly managing company operations and accepting the outcomes of decisions.
• Sustainability: ensuring balanced growth and considering external impacts on people, the environment, and the community.

Benefits of Business Ethics

Emphasizing business ethics brings several benefits that enhance brand image. The main advantages of incorporating ethics in business include:

• Positive reputation.
• Improved company image.
• Satisfied employees aligned with the company’s values.
• Increased performance and productivity.
• Builds trust, attracting more clients and fostering strong business relationships.
• Talent retention, as employees highly value ethical practices.

Positive Examples of Business Ethics

Finally, the best way to understand what business ethics is, how it works, and how it is applied in practice is through concrete examples.

IKEA

The Swedish furniture and home decor company exemplifies business ethics. Environmental respect is a key focus, using sustainable materials and promoting recycling. IKEA also promotes equality within the company and supports the development of local communities.

Google

The Internet giant champions user privacy and transparency. It invests part of its revenue in sustainable activities, such as renewable energy projects, to reduce environmental impact.

The Body Shop

The cosmetics and personal care company has long opposed animal testing for beauty products. Sustainability defines the brand, using recyclable materials and promoting fair trade.

Those interested in learning more about the value of business ethics in today’s economic context can explore the program offered at EAE Barcelona. The Global Master in Sustainability and CSR equips students with the tools to implement business policies that respect society, the environment, and natural resources.