What is ethics?

Ethics are a system of moral principles and a branch of philosophy which defines what is good for individuals and society.

At its simplest, ethics is a system of moral principles. They affect how people make decisions and lead their lives.

Ethics is concerned with what is good for individuals and society and is also described as moral philosophy.

The term is derived from the Greek word ethos which can mean custom, habit, character or disposition.

Ethics covers the following dilemmas:

how to live a good life

our rights and responsibilities

the language of right and wrong

moral decisions - what is good and bad?

Our concepts of ethics have been derived from religions, philosophies and cultures. They infuse debates on topics like abortion, human rights and professional conduct.

Approaches to ethics

Philosophers nowadays tend to divide ethical theories into three areas: metaethics, normative ethics and applied ethics.

Meta-ethics deals with the nature of moral judgement. It looks at the origins and meaning of ethical principles.

Normative ethics is concerned with the content of moral judgements and the criteria for what is right or wrong.

Applied ethics looks at controversial topics like war, animal rights and capital punishment

Importance of ethics

Primarily it is the individual, the consumer, the employee or the human social unit of the society who benefits from ethics. In addition ethics is important because of the following:

1. Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be such himself and to work for an organization that is fair and ethical in its practices.

2. Creating Credibility: An organization that is believed to be driven by moral values is respected in the society even by those who may have no information about the working and the businesses or an organization. Infosys, for example is perceived as an

organization for good corporate governance and social responsibility initiatives. This perception is held far and wide even by those who do not even know what business the organization is into.

3. Uniting People and Leadership: An organization driven by values is revered by its employees also. They are the common thread that brings the employees and the decision makers on a common platform. This goes a long way in aligning behaviours within the organization towards achievement of one common goal or mission.

4. Improving Decision Making: A man’s destiny is the sum totals of all the decisions that he/she takes in course of his life. The same holds true for organizations. Decisions are driven by values. For example an organization that does not value competition will be fierce in its operations aiming to wipe out its competitors and establish a monopoly in the market.

5. Long Term Gains: Organizations guided by ethics and values are profitable in the long run, though in the short run they may seem to lose money. Tata group, one of the largest business conglomerates in India was seen on the verge of decline at the beginning of 1990’s, which soon turned out to be otherwise. The same company’s Tata NANO car was predicted as a failure, and failed to do well but the same is picking up fast now.

6. Securing the Society: Often ethics succeeds law in safeguarding the society. The law machinery is often found acting as a mute spectator, unable to save the society and the environment. Technology, for example is growing at such a fast pace that the by the time law comes up with a regulation we have a newer technology with new threats replacing the older one. Lawyers and public interest litigations may not help a great deal but ethics can.

Ethics tries to create a sense of right and wrong in the organizations and often when the law fails, it is the ethics that may stop organizations from harming the society or environment.

Values, attitudes and beliefs in Ethics

Belief:A belief is an idea that a person holds as being true.A person can base a belief upon certainties (e.g. mathematical principles), probabilities or matters of faith.A belief can come from different sources, including: a person’s own experiences or experiments the acceptance of cultural and societal norms (e.g. religion) What other people say (e.g. education or mentoring).A potential belief sits with the person until they accept it as truth, and adopt it as part of their individual belief system.Each person evaluates and seeks sound reasons or evidence for these potential beliefs in their own way.Once a person accepts a belief as a truth they are willing to defend, it can be said to form part of their belief system.

Values:Values are stable long-lasting beliefs about what is important to a person. They become standards by which people order their lives and make their choices.A belief will develop into a value when the person’s commitment to it grows and they see it as being important.It is possible to categorise beliefs into different types of values – examples include values that relate to happiness, wealth, career success or family. A person must be able to articulate their values in order to make clear, rational, responsible and consistent decisions.

Attitude:Attitudes are the mental dispositions people have towards others and the current circumstances before making decisions that result in behaviour. People primarily form their attitudes from underlying values and beliefs.However, factors which may not have been internalised as beliefs and values can still influence a person’s attitudes at the point of decision-making. Typical influences include the desire to please, political correctness, convenience, peer pressure, and psychological stressors.

Situational analysis of ethical problems

Situation analysis of ethical problems teaches that ethical decisions should follow flexible guidelines rather than absolute rules, and be taken on a case by case basis. When faced with an ethical issue, it is important to remember that there is seldom only one correct way in which to act.

Recognising that there is an ethical question: requires you to think about how you should act and what you should do in a given

situation could relate to a situation and/or a decision that you make, which could be potentially

damaging to a client or a stakeholder could involve a choice between a good and a bad outcome – e.g. a situation where

Immigration New Zealand would decline your client’s visa application because of certain information that the client has disclosed to you, but of which Immigration New Zealand is unaware.

Understanding the facts of the situation: requires you to consider how you can learn more about the situation including making

enquiries and finding additional facts to ensure you have the best possible understanding of the situation.

Understanding the options available to you: requires you to identify and understand each option available to you requires you to take into account any legislative requirements, professional standards

(such as the Code), immigration law and instructions, as these may influence your options.

Understanding the consequences of the options: requires you to work out how different parties will be affected by each option - these

parties can include the client, stakeholders within the New Zealand immigration system, your employer and other advisers

requires you to be aware that your overriding duty is always to act in the lawful and legitimate interests of your client

requires you to ask yourself some searching questions, for example: If I am going to act in a way that is adverse to my client’s interests in any way, am I

justified in doing so? Which option will produce the most good for my client even if it will upset another

person or cause me discomfort or loss? Will this require me to act in a way that will harm someone else or go against my

personal beliefs or ethics? Is there a way to act that will not damage my client’s interests but will reduce or

prevent harm to another person or institution? Is there a way to act that will not damage my client’s interests and will allow me to act

in the way I believe is consistent with the type of adviser that I want to be?

Testing the option you plan to take: requires you to consider the possible effects of all the different options requires you to reflect on and thoroughly review the option that you plan to take – in doing

so, you should ask yourself the following questions: Am I feeling uncomfortable with what I am about to do? If so, why am I feeling uncomfortable about this option? Why am I making this decision? Would I be happy if this was done to me? Would I be happy explaining this to different parties within the New Zealand immigration

system and explaining why I did what I am planning to do?

Explaining the option you have decided on to those affected and to other interested parties: requires you to act in a way that your client, or another party, may not like or may find

difficult to understand requires you to be able to justify your actions in a logical and straightforward manner - if

you cannot explain your actions, then it is more likely that you are acting on the basis of your feelings or prejudices

will often require you to have kept excellent records that note the essentials of what the issue was, what you did to resolve it, the options you considered and how you communicated your decision to those affected.

Acting on the chosen option: requires you to consider how you will go about implementing your decision requires you to actually carry through with the action you decided to take.

Reflecting on the outcome: requires you to assess how your decision turned out and what you learnt from this specific

situation - to objectively evaluate what has happened and whether the option you took worked.

Social responsibility of a business

Major responsibility of business towards different sections of society are as : 1. Employees, 2. Owners, 3. Consumers, 4. Government, 5. Shareholders, 6. Community, 7. Environment!

Business depends on society for inputs like money, men, and skills and also for market where products have to be sold to the customers. The business depends on society for existence, sustenance and encouragement.

Being so much dependent on society, business also has a definite responsibility towards different segments of society. Though profit making is one of main objectives of business but it has to satisfy employees, consumer, government, community, shareholders also.

1. Employees:No Enterprise can succeed without the whole-hearted cooperation of the employees. Responsibility of business towards employees is in the form of training, promotion, proper selection, fair wages, safety, health, worker’s education, comfortable working conditions, participation management etc.

The employees should be taken into confidence while taking decisions affecting their interests. The workers should be offered incentives for raising their performance. Mental, physical, economic and cultural satisfaction of employees should be taken care of. If business looks after the welfare of employees then they will also work whole heartedly for the prosperity of business.

The committee that conducted ‘social audit’ of TISCO (Tata Iron and Steel Company) observes, “not only should the company carry out its various obligations to the employees as well as the larger community as a matter of principle, but this has also led to a higher degree of efficiency in TISCO works and an unparalleled performance in industrial peace and considerable team spirit and discipline which have all resulted in high productivity and utilisation of capacity.”Thus, by discharging its responsibility to employees the business advances its own interests.

‘TATAS’ have been the first to enforce certain laws in favour of employees. Similarly Godrej & Boyce, Shriram Industries and TVS groups are also good employers. Financial position of company and economic conditions of nation should be taken into consideration while spending on labour welfare during performance of responsibility towards employees.

2. Owners:Business is accountable towards owners as well as managing business profitably, ensuring fair and regular return on capital employed, consolidating financial position of business, guaranteeing capital appreciation so as to enable the owners to withstand any business contingencies.

3. Consumers:Responsibility of business towards consumer extends to: (i) Product:Quality goods should be produced and supplied. Distribution system should make goods easily available to avoid artificial scarcities and after sales service should be prompt. Buying capacity and consumer preferences should be taken into consideration while deciding the manufacturing policies. The care must be exercised in supplying the goods of quality which has no adverse effect on the health of consumers.

(ii) Marketing:To avoid being misled by wrong claims about products through improper advertisements or otherwise, the consumer should be provided full information about the products including their adverse effects, risks and care to be taken while using the products.

Consumers all over the world are, by and large, dissatisfied because the performance of businessman is far from satisfactory. Consumer is not the king in our country but a vehicle used by businessmen for driving towards the goal of profit maximisation.

As a result of which the concept of ‘consumerism’ has come up to protect the rights of consumers. Even the government is interfering in a big way to protect the interests of consumers.

4. Government:A number of legislatives are formed from time to time by the government for proper regulation and control of business. Businessmen should comply with all legal requirements, execute government contracts, pay taxes honestly and in time, make services of executives available for government, suggest measures and send proposals to enact new laws for the business.

A number of taxes are imposed on business for collecting revenue. Businessmen should pay various taxes in time and help government in collecting funds. They should not resort to tax evasions rather declare their incomes honestly and correctly.

But series of raids conducted on business houses clearly show that businessmen have failed to discharge their responsibility towards government.

5. Shareholders:Shareholders who are the owners of business should be provided with correct information about company to enable them to give them true and fair position of the company to enable them to decide about further investments.

Company should provide a fair return on the investment made by shareholders. If shareholders do not get proper dividend then they will hesitate to invest additional funds in the concern. Shareholders should be kept fully informed about the working of the company for healthy growth of the business. The Companies Act 1956 also requires company to give full disclosure in the published statements.

Company should strengthen the share prices by its growth, innovation and diversification. At the same time shareholders shall also offer wholehearted support and co-operation to the company to protect their own interests.

6. Community:Responsibility of business towards community and society includes spending a part of profits towards civic and educational facilities. Every industrial undertaking should take steps to dispose of Industrial wastes in such a way that ecological balance is maintained and environmental pollution is prevented.

Rehabilitating the population displaced by business units should also De part of responsibly of business? Business houses should set up units at those places where sufficient space is available for housing colonies of workers. The promotion of small scale industries will help not only nation but will also help in building up a better society.

7. Environment:Business should protect the environment which has acquired great importance all over the world. Business can discharge the responsibility of protecting environment in following way:

(i) Preservation of Natural Resources:Scarce natural resources should be used very carefully as these are depleting at a very fast rate. The alternative sources can also be found out to save natural resources like to save forests alternative to wood and pulp can be found, the use of coal can be reduced by alternative source of energy.

(ii) Pollution Control:Appropriate steps should be taken to prevent environmental pollution and to preserve ecological balance. The industrial waste should be disposed off carefully or if possible can be recycled to minimise pollution. The toxic wastes, excessive noise, chemical pesticides, automobile exhaust etc. need to be checked from time to time.

Ethics at workplace

Workplace ethics and behavior are a crucial part of employment, as both are aspects that can assist a company in its efforts to be profitable. In fact, ethics and behavior are just as important to most companies as performance as high morale and teamwork are two ingredients for success. Every business in every industry has certain guidelines to which its employees must adhere, and frequently outline such aspects in employee handbooks.

BehaviorAll companies specify what is acceptable behavior, and what is not, when hiring an employee. Many even summarize expected conduct in job descriptions or during the interview process. Behavior guidelines typically address topics, such as harassment, work attire and language. Workers who don’t follow codes of conduct may receive written and verbal warnings, and ultimately be fired.

IntegrityA key component to workplace ethics and behavior is integrity, or being honest and doing the right thing at all times. For example, health care employees who work with mentally or physically challenged patients must possess a high degree of integrity, as those who manage and work primarily with money. Workers with integrity also avoid gossip and sneakiness while on the job.

AccountabilityTaking responsibility for your actions is another major factor when it comes to workplace ethics and behavior. That means showing up on scheduled workdays, as well as arriving on time and putting in an honest effort while on the job. Workers who exhibit accountability are honest when things go wrong, then work toward a resolution while remaining professional all the while.

TeamworkA vital aspect of the workplace is working well with others. That includes everyone from peers to supervisors to customers. While not all employees will always like each other, they do need to set aside their personal or even work-related differences to reach a larger goal. In many instances, those who are not considered “team players” can face demotion or even termination. On the other hand, those who work well with others often can advance on that aspect alone, with teamwork sometimes even outweighing performance.

CommitmentEthical and behavioral guidelines in the workplace often place a high amount of importance on dedication. Although possessing the necessary skills is essential, a strong work ethic and positive attitude toward the job can carry you a long way. Plus, dedication is often viewed in the business world as “contagious,” meaning employees who give a strong effort can often inspire their co-workers to do the same.

The Benefits & Importance of Ethics in the Workplace

Workplace ethics are significant to your business and provide numerous benefits.

Asset ProtectionA strong ethical culture within your business is important in safeguarding your assets. Employees who abide by your workplace ethics would be able to protect and respect your business’s assets. For example, they would avoid making personal long distance calls using the business’s lines. Workers can only respect company property when you treat them with respect and dignity, which makes them feel proud to be working for your business. Ensure that your workers perform in an environment with integrity and strong ethics. It increases employee pride and discourages them from stealing supplies or equipment.

Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be such himself and to work for an organization that is fair and ethical in its practices.

Productivity and TeamworkWorkplace ethics is integral in fostering increased productivity and teamwork among your employees. It helps in aligning the values of your business with those of your workers. Achieving this alignment requires that you encourage consistent dialogue regarding the values of your business, which enhances community, integrity and openness among employees. Ethics enable your workers to feel a strong alignment between their values and those of your business. They show such feelings through increased productivity and motivation.

Public ImageYou earn a lot of respect and cultivate a strong image in the public domain when you make ethical choices. For instance, you can fulfill your corporate social responsibility by reducing waste discharge from your business. The public would consider your business to be operating with honor and integrity while valuing people over profits. Building a strong public image through ethical conduct also earns you more clients. Customers would develop trust in you and do business with your organization.

Decision-MakingEthical conduct in the workplace encourages a culture of making decisions based on ethics. It also enhances accountability and transparency when undertaking any business decisions. During turbulent times, a strong ethical culture guides you in managing such conflicts by making the right moves. It can help you to introduce change successfully in your organization, which can be a challenge. Ethical conduct within the business sensitizes you and your staff on how to act consistently even in difficult times.

Long Term Gains: Organizations guided by ethics and values are profitable in the long run, though in the short run they may seem to lose money. Tata group, one of the largest business conglomerates in India was seen on the verge of decline at the beginning of 1990’s, which soon turned out to be otherwise. The same company’s Tata NANO car was predicted as a failure, and failed to do well but the same is picking up fast now.

Unethical behaviour in workplace

Unethical behavior in the workplace can be defined as any action that does not conform with the standards of conduct established by the organization. Unethical behavior can occur in the relationships between employees, in the way an employee goes about his business or how he uses company resources. Unethical behavior can even break the law in some situations.

Inappropriate Computer UseEmployees may use company computers to engage in unethical behavior. For example, an employee who is not permitted to use the Internet for personal reasons commits an unethical act by shopping online while at work. Random Internet surfing takes away from the time she spends on work-related activities. Employees sometimes use company email to spread inappropriate websites or videos to co-workers, some of which could be deemed offensive by the recipients.

Time MisuseUnethical behavior can include "stealing" time from the company, as the company is compensating employees and receiving no productivity in return. In addition to time spent on aimless Internet surfing, time misuse can consist of extending breaks beyond the allotted time, congregating around the water cooler or engaging in lengthy gossip sessions during working time, falsifying time sheets, coming into work late or leaving early and running personal errands while traveling on company business.

Sexual Harassment and BullyingAn employee could commit unethical behavior by sexually harassing co-workers. This could involve making lewd comments, touching inappropriately or making unwanted sexual advances. Bullying typically involves attempting to intimidate a co-worker by making demeaning comments about him, spreading gossip or even making verbal or physical threats. In general, a bully attempts to make the workplace as uncomfortable as possible for a co-worker. In some cases, ongoing bullying can escalate into violence in the workplace.

Illegal ActsSome unethical acts can also be illegal. For example, an employee who has access to a company's financial records, such as a bookkeeper or accountant, could use her access and expertise to embezzle company funds. An employee having access to personnel files, such as a human resources representative, could commit identity theft and use employees' Social Security numbers to raid bank accounts or fraudulently obtain credit cards. In cases such as the 2001 Enron scandal, top company executives used questionable accounting practices to manipulate the company's stock price for their own financial gain.

What Is Corporate Governance?

Corporate governance refers to the set of systems, principles and processes by which a company is governed. They provide the guidelines as to how the company can be directed or controlled such that it can fulfil its goals and objectives in a manner that adds to the value of the company and is also beneficial for all stakeholders in the long term. Stakeholders in this case would include everyone ranging from the board of directors, management, shareholders to customers, employees and society. The management of the company hence assumes the role of a trustee for all the others.

Principles of Corporate Governance

Stakeholder interests should be recognized by corporate governance. In particular, taking the time to address non-shareholder stakeholders can help your company establish a positive relationship with the community and the press.

Shareholder recognition is a key in maintaining a company’s stock price. More often than not, however, small shareholders with little impact on the stock price are brushed aside to make way for the interests of majority shareholders and the executive board. Good corporate governance seeks to make sure that all shareholders get a voice at general meetings and are allowed to participate.

Board responsibilities must be clearly outlined to majority shareholders. All board members must be on the same page and share a similar vision for the future of the company.

Ethical behaviour violations in favour of higher profits can cause massive civil and legal problems down the road. Underpaying and abusing outsourced employees or skirting around lax environmental regulations can come back and bite the company hard if ignored. A code of conduct regarding ethical decisions should be established for all members of the board.

Business transparency is the key to promoting shareholder trust. Financial records, earnings reports and forward guidance should all be clearly stated without exaggeration or “creative” accounting. Falsified financial records can cause your company to become a Ponzi scheme, and will be dealt with accordingly.

Risk Mitigation: Corporate governance is of paramount importance to a company and is almost as important as its primary business plan. When executed effectively, it can prevent corporate scandals, fraud and the civil and criminal liability of the company. It also enhances a company’s image in the public eye as a self-policing company that is responsible and worthy of shareholder and debt-holder capital. It dictates the shared philosophy, practices and culture of an organization and its employees. A corporation without a system of corporate governance is often regarded as a body without a soul or conscience. Corporate governance keeps a company honest and out of trouble. If this shared philosophy breaks down, then corners will be cut, products will be defective and management will grow complacent and corrupt. The end result is a fall that will occur when gravity – in the form of audited financial reports, criminal investigations and federal probes – finally catches up, bankrupting the company overnight. Dishonest and unethical dealings can cause shareholders to flee out of fear, distrust and disgust.

CORPORATE GOVERNANCE BEST PRACTICES

Right-sized governance practices will positively impact long-term corporate performance – but companies must design and implement those that both comply with legal requirements and meet their particular needs. Here are the top 5 corporate governance best practices that every Board of Directors can engage – and that will benefit every company.

1. Build a strong, qualified board of directors and evaluate performance. Boards should be comprised of directors who are knowledgeable and have expertise relevant to the business and are qualified and competent, and have strong ethics and integrity, diverse backgrounds and skill sets, and sufficient time to commit to their duties. How do you build – and keep – such a Board?

o Identify gaps in the current director complement and the ideal qualities and characteristics, and keep an "ever-green" list of suitable candidates to fill Board vacancies.

o The majority of directors should be independent: not a member of management and without any direct or indirect material relationship that could interfere with their judgment.

o Develop an engaged Board where directors ask questions and challenge management and don't just "rubber-stamp" management's recommendations.

o Educate them. Give new directors an orientation to familiarize them with the business, their duties and the Board's expectations; reserve time in Board meetings for on-going education about the business and governance matters.

o Regularly review Board mandates to assess whether Directors are fulfilling their duties, and undertake meaningful evaluations of their performance.

2. Define roles and responsibilities. Establish clear lines of accountability among the Board, Chair, CEO, Executive Officers and management:

o Create written mandates for the Board and each committee setting out their duties and accountabilities.

o Delegate certain responsibilities to a sub-group of directors. Typical committees include: audit, nominating, compensation and corporate governance committees and "special committees" formed to evaluate proposed transactions or opportunities.

o Develop written position descriptions for the Board Chair, Board committees, the CEO and executive officers.

o Separate the roles of the Board Chair and the CEO: the Chair leads the Board and ensures it's acting in the company's long-term best interests; the CEO leads management, develops and implements business strategy and reports to the Board.

3. Emphasize integrity and ethical dealing. Directors must declare conflicts of interest and refrain from voting on matters in which they have an interest. They must adopt a general culture of integrity in business dealing and comply with laws and policies without fear of recrimination. To create and cultivate this culture:

o Adopt a conflict of interest policy, a code of business conduct, setting out the company's requirements and process to report and deal with non-compliance, and a Whistle-blower policy.

o Make someone responsible for oversight and management of these policies and procedures.

4. Evaluate performance and make principled compensation decisions. The Board should:

o Set directors' fees that will attract suitable candidates.o Establish measurable performance targets for executive officers (including the

CEO), regularly assess and evaluate their performance against them and tie compensation to performance.

o Establish a Compensation Committee comprised of independent directors to develop and oversee executive compensation plans (including equity-based ones like stock option plans).

5. Engage in effective risk management. Companies should regularly identify and assess the risks they face, including financial, operational, reputational, environmental, industry-related, and legal risks:

o The Board is responsible for strategic leadership in establishing the company's risk tolerance and developing a framework and clear accountabilities for managing risk. It should regularly review the adequacy of the systems and controls management puts in place to identify, assess, mitigate and monitor risk and the sufficiency of its reporting.

o Directors are responsible to understand the current and emerging short and long-term risks the company faces and the performance implications. They should challenge management's assumptions and the adequacy of the company's risk management processes and procedures.

Role of board of directors

The Board assumes the following duties and responsibilities, some of which are initially reviewed and recommended by the applicable Committee of the Board to the full Board for approval:

A. Strategy and budget1. Ensuring a strategic planning process is in place and approving, on at least an annual

basis, a Business Plan which takes into account, among other things, the longer term opportunities and risks of the business;

2. Approving the Corporation’s annual operating and capital budgets;3. Reviewing operating and financial performance results in relation to the Corporation’s

Business Plan and budgets;

B. Governance1. Developing the Corporation’s approach to, and disclosure of, corporate governance

practices, including developing a “Statement of Corporate Governance Principles and Guidelines” setting out the Board’s expectations and responsibilities of individual Directors.

2. Approving the nomination of Directors to the Board, as well as:a. Ensuring that a majority of the Corporation’s Directors have no direct or

indirect material relationship with the Corporation and are independent.b. Developing appropriate qualifications/criteria for the selection of Board

members, including criteria for determining Director Independence;c. Appointing the Board Chair and members of each Committee of the Board, in

consultation with the relevant Committee of the Board;3. Determining who among the members of the Audit Committee of the Board qualify

as an Audit Committee Financial Expert, pursuant to applicable legislation, regulation and listing requirements;

4. Providing an orientation program for new Directors to the Board and continuing education opportunities for all Directors;

5. Assessing annually the effectiveness and contribution of the Board and the Board Chair.

6. Developing written position descriptions for the Board Chair and the Chair of each Committee of the Board;

C. Chief Executive Officer, Officers and Compensation and Benefits Policies1. Appointing the Chief Executive Officer and all other Officers of the Corporation;2. Together with the Chief Executive Officer, developing a written position description

for the role of the Chief Executive Officer;3. Developing the corporate goals and objectives that the Chief Executive Officer is

responsible for meeting and reviewing the performance of the Chief Executive Officer against such corporate goals and objectives;

4. Approving the Corporation’s compensation policy for Directors;

5. Approving the Corporation’s compensation and benefits (including pension plans) policy or any changes thereto for Officers and approving, by the independent Directors, all forms of compensation for the Chief Executive Officer, as well as: monitoring and reviewing, as appropriate, the administration, funding and

investment of the Corporation’s pension plans; appointing, or removing, the custodian, trustee, or investment manager(s) for the

Corporation’s pension plans and fund(s);6. Satisfying itself as to the integrity of the Chief Executive Officer, other  Officers and

senior management personnel and that the Chief Executive Officer, other Officers and senior management personnel create a culture of integrity throughout the organization;

7. Providing stewardship in respect of succession planning, including the appointment, training and monitoring of the Chief Executive Officer, other Officers and senior management personnel;

D. Risk Management, Capital Management and Internal Controls1. Identifying and assessing the principal risks of the Corporation’s business, and

ensuring the implementation of appropriate systems to manage and mitigate these risks;

2. Ensuring full and complete disclosure of how the board oversees risk;3 Ensuring the integrity of the Corporation’s internal control system and management

information systems and the safeguarding of the Corporation’s assets;4. Reviewing, approving and, as required, overseeing compliance with the Corporation’s

Disclosure Policy by Directors, Officers and other management personnel and employees;

5. Reviewing, approving and overseeing the Corporation’s disclosure controls and procedures;6. Reviewing and approving the Code of Business Conduct of the Corporation with the

purpose of promoting integrity and deterring wrongdoing, and encouraging and promoting a culture of ethical business conduct and as required, overseeing compliance with the Corporation’s Code of Business Conduct by Directors, Officers and other management personnel and employees;

E. Financial Reporting, Auditors and Transactions1. Reviewing and approving, as required, the Corporation’s financial statements and

related financial information;2. Appointing, subject to approval of shareholders, (including terms and review of

engagement) and removing of the shareholders’ auditor;3. Appointing (including responsibilities, budget and staffing) and removing of the

Corporation’s internal auditor;4. Delegating (to the extent permitted by law) to the Chief Executive Officer, other

Officers and management personnel appropriate powers to manage the business and affairs of the Corporation;

Role of CEOConstantly Improve

The CEO must have the oath "If you can't do it better, why do it?" It under-scores the drive to become an ever better and bigger company.

Mastering Science &Technology

The CEO must put the science and technology to work to create solutions for the customers and for society

Integrity

The CEO must believe that his promise is his most vital product - 'our word is our bond'. The relationships that are critical to the company's success depend entirely on maintaining the highest ethical and moral standards. As a vital measure of integrity, the company will ensure the health and safety of its communities, and protect the environment in all it does.

Respect for People

The CEO must believe in the inherent worth of people and should honour its relationships with those who let it be part of their world.

The company's stake-holders are the engines of value creation; their imagination, determination, and dedication are essential to growth. The company will work to celebrate and reward the unique backgrounds, view-points, skills, and talents of everyone. Respect for people is measured by how the company treats them, by the contributions that flow from the company diversity, by the productivity of the company's relationships, and by a job well done, no matter what the job. The company communities are the neighbors; their acceptance of the company is vital to its ability to operate.

The customers are the company's partners in creating value; their loyalty is its greatest reward. The share-holders are the beneficiaries of the company's success; their on-going commitment to the company is based on returning to them superior profits over time.

The company's respect for people also extends to the consumers whose lives it touches. The company will strive to answer people's most vital needs: for food, water, shelter, transportation, communication, health and medicine.

Unity

The CEO must think like this, "We are one company, one team." The company believes that succeeding as one enterprise is as important as succeeding independently. Balancing empowerment and interdependence makes the company strong.

As one company, impact on the world is far greater than the impact of any one of its parts. The company's stake-holders will work together, building relationships to create ever-greater value for the customers and consumers the company serves. Outside-in Focus The company

believes that growth comes from looking at opportunity through the eyes of customers and all those it serves. Taking an "outside-in" view ensures that the company's efforts are always relevant and that the company's unique talents are applied to "real world" opportunities. The company will see through the eyes of those whose lives the company affects, identifying unmet needs and producing innovative and lasting solutions. The company will bring to this task all of its experience and knowledge as the unique individuals the company are.

Agility

The CEO believes its future depends on speed and flexibility - mental, emotional and physical. Responding resourcefully to society's fast-changing needs is the only road to success. The company will meet the forces of change with power and grace. The company will make course corrections that demonstrate flexibility as well as courage, and that highlight the company's ability to keep itself aligned with a world in motion.

Innovation

The CEO believes that meaningful, productive change - solving problems - only comes by looking at challenges and opportunities from new angles and exercising the company's curiosity.

In the name of innovation, the company will make science a way of living. The company will not only master the science of the physical world, but the science of the mind and heart. The company's job is to unlock answers that make a fundamental difference to people's lives. The company will use technology to help lead society forward. The company will conceive, design, engineer, and execute solutions that remove barriers to human potential and productivity.

Role of various committees in corporate governance

Audit Committee:   The Audit Committee of the Board, provides reassurance to the Board on the existence of an effective internal control environment that ensures:

Efficiency and effectiveness of operations, both domestic and overseas; Safeguarding of assets and adequacy of provisions for all liabilities; Reliability of financial and other management information and adequacy of

disclosures; Compliance with all relevant statutes.

The Audit Committee is empowered, pursuant to its terms of reference, to: Investigate any activity within its terms of reference and to seek any information it

requires from any employee; Obtain legal or other independent professional advice and to secure the attendance of

outsiders with relevant experience and expertise, when considered necessary.

Remuneration CommitteeThe Remuneration Committee of the Board, recommends to the Board the compensation terms of Executive Directors and the senior most level of management immediately below the Executive Directors. This Committee also has the responsibility for administering the Employee Stock Option Schemes of the Company. Remuneration strategy should aim at attracting and retaining high calibre talent. The remuneration policy, therefore, must be market-led and should takes into account the competitive circumstance of each business so as to attract and retain quality talent and leverage performance significantly.

Security holders Relationship Committee: To oversee redressal of shareholder and investor grievances, and, approve sub-division / consolidation / issue of duplicate share certificates, transmission of shares and issue & allotment of shares upon exercise of Options under the Company's Employee Stock Option Schemes.

Nomination & Compensation Committee: To recommend to the Board

(i) nominations for membership of the CMC (Corporate Management Committee) and the Board, and oversee succession for the senior most level of management below the Executive Directors and

(ii) Compensation terms for Executive Directors and the senior most level of management below the Executive Directors.

CSR and Sustainability Committee: To review, monitor and provide strategic direction to the Company's CSR and sustainability practices towards fulfilling its objectives. Terms of Reference of the Board Committees shall include:

Objectives, Role, Responsibilities Authority / Powers Membership & Quorum Chairmanship Tenure Frequency of Meetings

Investor grievance committee: The Investors Grievance Committee of the Board, under the nomenclature ‘Investor Services Committee’, oversees redressal of shareholder and investor grievances, and, inter alia, approves sub-division / consolidation / transmission of shares, issue of duplicate share certificates and issue & allotment of shares upon exercise of Options by employees under the Company’s Employee Stock Option Schemes.

Recommendation of various reports

Securities and Exchange Board of India constituted a Committee on Corporate Governance under the Chairmanship of Mr Kumar Mangalam Birla. The committee observed that there are companies, which have set high standards of governance while there are many more whose practices are matters of concern. There is increasing concern about standards of financial reporting and accountability especially after losses are suffered by investors and leaders in the recent past, which could have been avoided with better and more transparent reporting practices. Companies raise capital from market and investors suffered due to unscrupulous managements that performed much worse than past reported figures. Bad governance was also exemplified by allotment of promoters’ share at preferential prices disproportionate to market value, affecting minority holders’ interests. Many corporates did not pay heed to investors’ grievances. While there were enough rules and regulations to take care of grievances, yet the inadequate implementation and the absence of severe penalty, left much to be desired.

The Kumar Mangalam Committee made mandatory and non-mandatory recommendations. Based on the recommendations of this Committee, a new clause 49 was incorporated in the Stock Exchange Listing Agreements (“Listing Agreements”). The important aspects, in brief, are:

(iii) Board of Directors are accountable to shareholders. (iv) Board controls are laid down code of conduct and accountable to

shareholders for creating, protecting and enhancing wealth and resources of the Company reporting promptly in transparent manner while not involving in day to day management.

(v) Classification of non-executive directors into those who are independent and those who are not.

(vi) Independent directors not to have material or pecuniary relations with the Company/subsidiaries and if had, to disclose in Annual Report.

(vii) Laying emphasis on calibre of non-executive directors especially independent directors.

(viii) Sufficient compensation package to attract talented non-executive directors.

(ix) Optimum combination of not less than 50% of non-executive directors and of which companies with non-executive Chairman to have atleast one third of independent directors and under executive Chairman atleast one half of independent directors.

(x) Nominee directors to be treated on par with any other director, (xi) Qualified independent Audit committee to be setup with minimum of

three all being non-executive directors with one having financial and accounting knowledge.

(xii) Corporate governance report to be part of Annual Report and disclosure on directors’ remuneration etc., to be included.

Naresh Chandra Committee recommendations relate to the Auditor-Company relationship and the role of Auditors. Report of the SEBI Committee on Corporate Governance recommended that the mandatory recommendations on matters of disclosure of contingent liabilities, CEO/CFO Certification, definition of Independent Director, independence of Audit Committee and independent director exemptions in the report of the Naresh Chandra Committee, relating to corporate governance, be implemented by SEBI.

Narayana Murthy Committee recommendations include role of Audit Committee, Related party transactions, Risk management, compensation to NonExecutive Directors, Whistle Blower Policy, Affairs of Subsidiary Companies, Analyst Reports and other non-mandatory recommendations.

Code of conduct

Every organisation is committed to conducting its affairs ethically and lawfully. The Code of Conduct establishes policies and procedures that are intended to guide employees, officers, and directors in the performance of their duties and responsibilities and ensure compliance with the Company's commitment to ethical and lawful conduct.

Basic Policies: 1. Compliance with Laws. The Company will conduct its business and affairs in compliance with all laws, rules, and regulations and in accordance with the Company's high ethical standards.

2. Work Environment. The Company will maintain a safe and drug-free work place that is free from discrimination and harassment based on race, color, creed, religion, sex, age, disability, national origin, ancestry, citizenship, armed forces service, marital or veteran status, sexual orientation, or any other impermissible factor.

3. Manufacturing Products. The Company is committed to producing products that are safe and effective. In manufacturing its products, the Company will comply with all applicable laws and regulations, including those relating to the environment and occupational health and safety.

4. Competitive Practices. The Company will compete for all business opportunities vigorously, fairly, ethically and legally. The Company will comply with all antitrust and other laws regulating competition and trade in each country where it conducts business and will not discuss pricing, cost, production plans, business strategies, or any other proprietary or confidential information with its competitors.

5. Marketing and Sales. The Company will represent its products and services accurately and will comply with applicable regulatory and legal requirements governing the marketing and sale of its products and services.

6. Recording and Reporting Information. In recognition of the fact that accurate information is essential to the Company's ability to satisfy legal and regulatory obligations, all employees and directors will record and report all information accurately and honestly. No employee or director will sign or submit, or permit others to sign or submit on behalf of the Company, any document or statement that he or she knows or has reason to believe is false.

7. Payments. The Company and its employees and directors will not make any improper payments to government or non-government officials, employees, customers, persons, or entities, nor will the Company or its employees and directors request or accept any improper payment from suppliers, customers, or anyone seeking to do business with the Company.

8. Fair Dealing. Each employee and director will deal fairly with the Company's customers, suppliers, competitors, independent auditors and other employees and will not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing or practice.

9. Confidential Information. No employee or director will use, for his or her own personal gain, or disclose to any third party, any confidential or proprietary information that he or she obtained as a result of his or her employment with or relationship to the Company. Confidential or proprietary information includes all non-public information that might be of use to competitors or harmful to the Company and its customers if disclosed. No employee or director will buy, sell, or deal in the Company's stock based on non-public information.

10. Political Contributions. The Company will make no corporate political contributions to parties or individuals, even where such contributions may be legal, but encourages employees and directors to participate in community affairs and to exercise citizenship responsibilities.

11. Corporate Opportunities. Employees and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. Employees and directors are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of corporate property, information, or position, (b) using corporate property, information, or position for personal gain, or (c) competing with the Company.

12. Conflicts of Interest. No employee or director will engage in any activity or have any outside interest that might deprive the Company of his or her loyalty, interfere with the satisfactory performance of his or her duties, make it difficult to perform his or her duties for the Company objectively and effectively, or be harmful or detrimental to the Company. Employees and directors must immediately disclose in writing any actual or potential conflict of interest that they may have to the President or executive in charge of the applicable division, subsidiary or operating unit, or to the Chief Executive Officer of the Company, for resolution. A conflict of interest occurs when a person's private interest interferes or appears to interfere in any way with the Company's interests and may also arise when an employee or

director or a member of his or her family receives improper personal benefits as a result of his or her position with the Company.

Ethics in international scenario:

Business ethics are the accepted principles of right or wrong governing the conduct of business people. An ethical strategy is a strategy or course of action that does not violate these accepted principles.

Many of the ethical issues and dilemmas in international business are rooted in the fact that political systems, law, economic development, and culture vary significantly from nation to nation. In the international business setting, the most common ethical issues involve

Employment practices: Ethical issues associated with employment practices abroad include - When work conditions in a host nation are clearly inferior to those in a multinational’s home nation, what standards should be applied? - While few would suggest that pay and work conditions should be the same across nations, how much divergence is acceptable?

Human rights: Questions of human rights can arise in international business because basic human rights still are not respected in many nations - Rights that we take for granted in developed nations, such as freedom of association, freedom of speech, freedom of assembly, freedom of movement, and freedom from political repression are by no means universally accepted. The question that must be asked of firms operating internationally is: ‘What is the responsibility of a foreign multinational when operating in a country where basic human rights are trampled on?’

Environmental regulations: Ethical issues arise when environmental regulations in host nations are far inferior to those in the home nation - Developing nations often lack environmental regulations, and according to critics, the result can be higher levels of pollution from the operations of multinationals than would be allowed at home. Environmental questions take on added importance because some parts of the environment are a public good that no one owns, but anyone can despoil - The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation

Corruption: Corruption has been a problem in almost every society in history, and it continues to be one today. International businesses can, and have, gained economic advantages by making payments to government officials. The United States passed the Foreign Corrupt Practices Act to fight corruption - Outlawed the paying of bribes to foreign government officials to gain business. In 1997, the trade and finance ministers from the member states of the Organization for Economic Cooperation and Development (OECD) followed the U.S. lead and adopted the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions - Obliges member states to make the bribery of foreign public officials a criminal offense

Moral obligation of multinational corporations: Multinational corporations have power that comes from their control over resources and their ability to move production from country to country. Moral philosophers argue that with power comes the social responsibility for corporations to give something back to the societies that enable them to prosper and grow.

Social responsibility refers to the idea that businesspeople should consider the social consequences of economic actions when making business decisions

Advocates of this approach argue that businesses need to recognize their noblesse oblige (benevolent behavior that is the responsibility of successful enterprises)

Ethical Dilemma in a cross cultural Set up

International companies are confronted with a variety of decisions that create ethical dilemmas for the decision makers. “Right- wrong”,”just-unjust” derive their meaning and true value from the attitudes of a given culture. Some ethical standards are culture-specific, and one should not be surprised to find that an act that is considered quite ethical in one culture may be looked upon with disregard in another.

Ethical issues concerning bribes

International businesses may be faced with a difficult situation of being involved in corruption without even knowing it sometimes. In some cultures it is acceptable to offer bribes to get a certain business transaction done. Bribery may come in many forms such as money, flowers, gifts, favors and entertainment. Giving any sort of bribe is illegal and unethical in the United States and the UK. However, in some countries there is no other way of getting any business done other than offering bribes. Also, giving a gift in appreciation to someone is considered as a bribe in United States, but it is a normal act in Romania, and a business expense which can be written off in Germany or part of a prime cost in Japan. In Romania, bribery is by law illegal.

Ethical issues and political affairs

In many countries, political officials are deeply involved in commercial businesses. You may not even be able to work there without knowing someone in the government. In a country where the government is heavily corrupted, the officials expect to be befriended and bribed. International businesses could gain advantages by offering bribes to government officials. However, it puts other companies at a disadvantage and is an unfair practice of business.

Ethical issues concerning illegal activities

When working in another country, it might be easy to forget your moral standards and fall into the greed of making profit without any limitations. Sometimes if people aren’t held responsible for their actions, it could make them become careless about other countries’ resources, environment and people. Polluting the country’s environment, not following

standard employment practices, and evading taxes are all unethical and illegal. However, when everyone else around you is doing all these illegal activities you feel like you will never be held accountable for your actions if you also commit these acts.

What we must realize is that what may be deemed ethical in our own country is not necessarily deemed as ethical in another country. This often makes conducting global business quite hard. At one time, because we did not have the Internet, it was more of a question of not accidentally disrespecting on another’s customs and traditions. However, today, there is much more at stake. You must also not trample all over other businesses – or countries – ethical code, while you remain true to your own businesses or country’s ethical code.