Business ethics are moral and socially acceptable principles that guide the way a corporate operates. To formally define "Business ethics (also corporate ethics) is a form of applied ethics or professional 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 entire organizations." The role of these ethics is to regulate areas and behavior beyond governmental control, mostly about non-economic concerns. Businesses are expected to be sensitive towards the expectations of its various stakeholder groups – communities, employees, investors, customers, contractual and female workers etc. Also, after the recent financial crisis of 2008, the need for corporates to behave ethically has been underscored more often.
These set of principles reflects the philosophy of business, of which one aim is to determine the fundamental aims of a company. It implicitly involves formulation of systematized governance structures, procedures and practices that ensure ethical conduct at all levels. It is the responsibility of the corporate ethics board to prevent particular corporate and legal abuses including insider trading, securities fraud, bribery/kickbacks etc. Fairness in trading practices, production, packaging, collective bargaining, consulting services, tax payments, employees' compensation is to be ensured. Proper compliance with all the applicable governmental and regulatory rules is observed and any lapse or lack of proper understanding of a guideline must be resolved with utmost priority Strong emphasis is given on transparent communication assuring access to information about corporate's decisions that impact relevant stakeholders. These ethics advocate that there should be a truthful discharge of responsibility on financial and other mandatory disclosures.
It is highly recommended to form a formal Ethics Board committee which is empowered to investigate all matters of suspected violation of ethical standards of the company, including decisions taken by its top management. This in turn consists of writing a Code of Conduct and Ethics Manual which helps to communicate to stakeholders key principles and commitments to which they should strictly adhere to. The manual also helps in dealing with cases of conflicts of interest.
Thus, business ethics act as fundamental codes which help the corporate sector become a responsible actor of the society.