Ethical Governance

Ethical governance refers to a comprehensive framework based on moral values, driven by honesty, integrity, and doing what is right in all scenarios. This type of governance includes values like compassion and social justice to establish a set of rules and principles that organizations follow.

Companies invest in, involve themselves in, and participate only in activities that set strong examples of good conduct and policies. This approach helps them establish a solid corporate culture, which is reflected in their responsible and sustainable business practices. Ethical governance applies to and resonates with all customers, stakeholders, employees, staff, and other board and key members of the organization.

Ethical governance defines the highest standards of personal and professional behavior, as well as the code of conduct within an organization. In simple terms, it encompasses procedures, cultures, processes, frameworks, and systems based on integrity, honesty, strong morals, and values. This ensures that a corporation is not only legally compliant but also morally sound by implementing the highest standards of behavior. Ethical governance plays a crucial role in an organization's success and long-term growth. It fosters happy employees, satisfied customers, higher productivity, and maximizes profits, thereby enhancing the company's market status, reputation, and goodwill.

Every organization has some form of governance and strives to create good corporate governance. However, there are times when people face ethical dilemmas, especially in decision-making, where the distinction between right and wrong is unclear. These are the times when ethical governance is essential.

Critical ethical business practices include data protection, diversity, equity, best labor practices, environmental sustainability, and inclusion. Alongside these practices are ethical values such as leadership, honesty, teamwork, loyalty, charity, kindness, fairness, integrity, and accountability. Ethical governance aligns with both legal and moral aspects in decision-making and administration. This is why it has become an integral part of modern corporate and work culture, offering intangible values and adding an extra layer of professionalism.

According to the Council of Europe, the principles of ethical governance are:

1. Objectives - Every law, system, framework, rule, and regulation should be based on legitimacy, considering the interests of all stakeholders.
2. Fair Conduct of Participation and Elections - Everyone should be included in the decision-making process regardless of their status, and decisions should reflect the common interest.
3. Transparency - Organizations must ensure a high degree of transparency, providing access to information and keeping communication open across all levels.
4. Competence and Capacity - Organizations should motivate employees to improve their performance, competency, and skills over time.
5. Innovation - Organizations should be open to change and welcome new ideas, technologies, and solutions, which reflects positively on organizational culture.
6. Rule of Law - All rules and regulations should have proper legal implications and be enforced impartially.
7. Efficiency and Effectiveness - Resources should be optimally utilized, and performance management systems should ensure that organizational objectives and long-term goals are met.
8. Long-Term Vision and Sustainability - Organizations should operate with a long-term vision, focusing on sustainable growth and development and considering future generations in current policies.
9. Ethical Conduct - All members should follow an ethical code of conduct, avoiding corruption, violence, abuse, and conflicts of interest.
10. Human Rights, Social Cohesion, and Cultural Diversity - Organizations should promote diversity, ensure the protection of human rights, and eliminate any form of discrimination.
11. Financial Management - Effective financial management drives better operations, cost management, and service provision, with a focus on estimating and mitigating financial risks.
12. Accountability - A culture of accountability should be fostered, where every member takes responsibility for their actions, and effective remedies are implemented to resolve issues.

Here are two examples of ethical governance -

Example #1

Suppose an office has a heavy workload and tight deadlines, and there is a system that allows employees to take separate days off for festivals or work from home, recognizing the importance of cultural and household rituals. Every employee is treated equally, with no partiality. Whenever employees raise work or management issues, they are heard by top management and resolved with the rights and interests of all employees in mind.

Employees are retained and motivated to perform better, avoiding malicious practices. Women's safety and mental health issues are addressed, and a team of counselors is available alongside the human resource department to support employees in expressing their views. The company fosters a culture of well-integrated people working together harmoniously, reflecting honesty and integrity at work, which is rewarded and appreciated.

These practices, though seemingly small, collectively form ethical governance. They demonstrate that professionalism and sustainable growth can be achieved through high morals and values. Such a culture not only benefits employees but also effectively attracts more customers and prospective employees.

Example #2

At an event hosted by the China Public Diplomacy Association, Chinese officials expressed their views on the ethical governance of artificial intelligence. They acknowledged that while AI offers enormous opportunities for humanity, there is a critical need to establish rules and ethical standards to ensure that AI does not pose a threat to humanity.

A senior official highlighted that AI technology can be used to address global issues such as climate change, sustainable development, and biodiversity conservation. However, it is also crucial to collectively prevent and combat the malicious misuse of AI by extremist forces, terrorists, and other criminal organizations. Establishing ethical governance is essential to achieving this goal.

The importance of ethical governance includes the following:

• Ethical governance promotes positive behavior and a good attitude towards work and professionalism among employees and all organization members.
• It reflects the culture a company practices in its office and workspace.
• Ethical governance helps people avoid involvement in malicious activities, corruption, and unethical behavior.
• It educates and raises awareness about morals, values, and honesty at work, coupled with integrity, compassion, social justice, and responsibility.
• Over time, ethical governance adds value and character to the organization's brand, market reputation, and goodwill.

Although in modern terminology, both good and ethical governance are becoming synonymous, there are critical differences between them:

• Ethical governance displays high standards of morality, justice, goodness, and integrity within an organization. In comparison, good governance refers to implementing an effective and efficient governing system based on a social contract, protecting the rights of all parties involved.
• While good governance is about doing the right thing, ethical governance goes a step further by doing the right thing at all times, emphasizing morals and values over mere legal compliance, systems, and policies.
• Good governance involves establishing a system where top management listens to employees. In contrast, ethical governance focuses on enforcing regulatory systems, ensuring the absence of corruption, and prioritizing social justice.