Module-1 Ethics Programme: Ethics Officer

 

Unlike many Chief Executive Officer roles, the Chief Ethics Officer—also known under numerous other titles, including Chief Trust Officer and Chief Ethics and Compliance Officer—doesn’t have a consistent job description. Much of the time, particularly in finance, the role comes from a need to ensure compliance with federal regulations and other rules designed to prevent monetary misdeeds, such as money laundering and insider trading.

But a few forward-looking companies are turning to the position, regardless of specific title, to help steer corporate values more broadly and oversee everything from fair trade discussions to, more recently, ensuring AI algorithms are unbiased.

In law a man is guilty when he violates the rights of others. In ethics he is guilty if he only thinks of doing so” — Immanuel Kant, German philosopher

Companies, for instance, are very particular about diversity and inclusion. The Ethics Officer serves as the organization's internal control point for ethics and improprieties, allegations, complaints, and conflicts of interest and provides corporate leadership and advice on corporate governance issues.  The ethical officers  are responsible for managing their organizations ethics and legal compliance programs.

 

The Ethical officers  are usually responsible for:

1.      Assessing the needs and risks that an organization-wide ethics program must address

2.      Developing and distributing a code of conduct of ethics

3.      Conducting training programs for employees

4.      Establishing and maintaining a confidential service to answer employees' questions about ethical issues

5.      Making sure that the company is in compliance with government regulation

6.      Monitoring and auditing ethical conduct

7.      Taking action on possible violations of the company's code

8.      Reviewing and updating the code

Technology giants Apple and Google have often had questions raised about the ethicality of their business practices. The former for not doing enough to improve workers’ conditions at its suppliers’ manufacturing units in China, and the latter for using its position as the dominant search engine to thwart competition.

So it did not come as much of a surprise to many when the two were recently in the news for avoiding paying taxes in the US on billions of dollars of profits by creating subsidiaries in countries like Ireland. Apple chief executive Tim Cook has called for reforms in the tax system and said Apple pays every single dollar it owes.

It may turn out that Apple and Google did nothing illegal but just took advantage of the loopholes in different countries’ tax structures. This issue fits into the debate of “legal vs ethical”, according to W Michael Hoffman, executive director of the Centre for Business Ethics at Bentley University in the US, adding that matters like this are to be addressed by a company’s ethics committee or chief ethics officer. “If a particular thing is not prevented by law, you need to think whether it will set a bad precedent or what would happen if it was reported by the media,” he says.

Another such example is a chemical company discharging effluents withouttreating them when the law doesn’t prevent it. Legally, the company may be fine but is failing in its responsibility toward the environment, says Hoffman. Among the prominent global companies which have chief ethics officers are construction and engineering company Bechtel Corporation, Prudential Financial and retailer Best Buy.

Ethics Officer – Indian Corporates

While in countries like the US, chief compliance officers’ role has been expanded to include matters of ethics, in India they are still largely concerned with legal matters. In some cases, the company secretary is also the chief compliance officer. But experts say there is certainly a need for ethics officers. A chief ethics officer is similar to an auditor who ensures that certain lines are not crossed

Though business ethics are largely universal, cross-cultural differences result in a lack of universal understanding of ethics. Thus, in India with many cultures, don’t understand what is legal may not necessarily be ethical. That’s why companies need ethics officers,

If the tax episode of Apple and Google rekindled the ethics debateglobally, Ranbaxy Laboratories’ $500-million settlement for charges related to drug safety and falsifying data has done the same in India. Experts believe such instances only highlight the need for companies to give more than cursory attention to ensuring propriety in the workplace. Ethics officers are still a rarity among companies in India. Though every large company has a detailed code of conduct, it seldom resonates beyond the paper it is on.

In companies like Tata Teleservices and Tata Steel, the managing director is also the chief ethics officer. Tata Tele, which was given a clean chit by the Central Bureau of Investigation in the 2G spectrum scam in June 2011, appointed Rakesh Sharma as chief ethics counsellor a few months later.Some Tata group companies like Tata Sons, Tata Steel and Tata Teleservices are among the few which have ethics officers in India. For instance Tata Sons, the main holding company of the group, in February appointed Mukund Rajan as chief spokesperson, brand custodian and chief ethics officer for the group(June 2013).“Given the intrinsic linkage of the [Tata] brand with the value system which determines the group’s high standards of ethical conduct, the brand custodian has been entrusted with the role of the chief ethics officer of Tata Sons,” says a statement from the company’s external communications agency Rediffusion, in response to ET Magazine’s queries.

The reporting system — run by a third party, and completely independent of the company — allows an individual within or outside the company to report any concerns with absolute assurance of confidentiality.

There are also companies like Wipro and Vedanta which have chief sustainability officers who look at initiatives related to the environment and corporate social responsibility.

Wind turbine maker Suzlon, which has operations in 33 countries, till two years ago used to have regional ethics officers who reported to a global ethics officer. But now it has two central ethics committees, one for India and the other for all international regions. These committees have personnel for human resources, finance and other key departments.

State-owned companies have chief vigilance officers who oversee tenders and compliance.  In the wake of privatization, getting down the government stake below 51 percent ownership will require amendments in the laws and will also ensure that these companies move beyond the remit of oversight agencies like the Central Vigilance Commission and the Comptroller & Auditor General.

As on March 31, 2012, there were 260 CPSEs compared to 248 in 2010-11. The total employee strength in CPSEs declined to 13.98 lakh (excluding contractual and casual labours) in 2011-12 compared to 14.40 lakh in 2010-11.

The Reserve Bank of India is observing the Vigilance Awareness Week with the theme “Vigilant India, Prosperous India” from October 27 to November 02, 2020. Various events are being organised at Central Office and Regional Office levels. As a part of upholding the spirit of “Vigilant India, Prosperous India”, the Reserve Bank of India today organised panel discussions on two related topics, viz. “Strengthening Preventive Vigilance – a Tool for Good Governance” and “Leveraging Technology for Vigilance Oversight”

Such programmes keep public awareness about maintaining higher standards in ethics and goveranance in a diverse culture of India.