Lesson 2: Ethics
Lesson 2 examines the principles of ethics in a business context. It opens with a general definition of ethics, then
explores international business ethics and the United Nations Global Compact, ethics in the workplace (corporate
codes of conduct, whistleblowing, professional standards, responsible investing, and corporate governance), and
closes with a framework for resolving ethical issues by identifying and weighing the interests of affected
stakeholders.
⭐ 2.0 Introduction
What is Ethics?
KEY DEFINITION ⭐
Ethics is morality and reflects the moral views of individual people and of society. Ethics is very
subjective, as each person will have a different view on what constitutes “right and wrong”
behaviour.
Ethics looks at principles of fairness. Ethics is not law and therefore will not be enforced by the
courts.
Ethics does, however, have the power to promote changes to the law. As society's views on an issue change,
people will put pressure on the government to make changes to an old law that no longer represents the
current beliefs of the people.
⭐ 2.1 International Business Ethics
International business ethics is very relevant when looking at the situation of Canadians doing business outside
of Canada.
The Global Marketplace
Historical reasons why a Canadian company would want to operate in a developing country include:
• Cheap labor and wages.
• No or less unions.
• No or less health and safety regulations to deal with.
• Better tax treatment.
• No or less environmental protection to deal with.
• An abundance of inexpensive raw materials, available to be exploited.
Stricter Laws at Home vs. Weaker Laws in Developing Countries ⭐
As a general rule, the laws in a developed country such as Canada will be stricter than the laws in a developing
country. Legally, a Canadian company operating in a developing country must comply with the laws of the host
country where it is operating.
KEY CONCEPT ⭐
Question: if the laws of the host country provide weaker protection for workers and the
environment than the laws of Canada, can the Canadian company, in good conscience, merely
comply with the weaker laws of the host country?
, Legally: yes — a company must comply with the laws of the country where it is doing business.
Ethically: no — merely complying with weaker local laws is not necessarily the ethical standard to
follow.
United Nations Global Compact (UNGC)
KEY DEFINITION ⭐
The United Nations Global Compact (UNGC) is a convention that encourages businesses operating
in developing countries to voluntarily adopt socially responsible policies and to apply ethical
standards of operation which exceed the legal requirements of the host countries in which the
companies are operating.
The UNGC promotes replacing the historical approach of maximizing short-term profits with policies that
promote long-term value. Long-term value includes reducing pollution to protect the environment for future
generations, and educating and improving the social and economic conditions of the local workforce.
⭐ 2.2 Voluntary Compliance with Ethical Standards
The United Nations Global Compact consists of 10 principles, grouped into four categories: human rights,
labour/workforce rights, environment, and anti-corruption.
Principles 1–2: Human Rights ⭐
• Principle 1: Businesses should support and respect the protection of internationally proclaimed human
rights (the same types of issues addressed in the Quebec Charter of Human Rights — protection of
fundamental freedoms and prevention of discrimination).
• Principle 2: Make sure that businesses are not complicit in human rights abuses — even if not directly
violating human rights, a business may be complicit by acquiescing to or facilitating a violation, including
violations by its subcontractors.
Principles 3–6: Rights of the Workforce ⭐
• Principle 3: Uphold the freedom of association and the effective recognition of the right to collective
bargaining — the company should recognize workers' rights to unionize.
• Principle 4: The elimination of all forms of forced and compulsory labour — workers should work because
they want to, not because they are forced or coerced or afraid to leave.
• Principle 5: The effective abolition of child labour — in the ideal world, children under the age of 18 should
be in school. Where a child must work to bring in family revenue, the company should try to structure a
study-work day, ideally providing the educational facilities itself.
• Principle 6: The elimination of discrimination in respect of employment and occupation — companies must
be aware of historical tribal, ethnic, or religious animosities in a developing country and try to ensure
discrimination does not occur in hiring and promotion, including ensuring access to work for women where
it may otherwise be restricted.
Principles 7–9: Protecting the Environment ⭐
• Principle 7: Businesses should support a precautionary approach to environmental challenges.
• Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility.
Lesson 2 examines the principles of ethics in a business context. It opens with a general definition of ethics, then
explores international business ethics and the United Nations Global Compact, ethics in the workplace (corporate
codes of conduct, whistleblowing, professional standards, responsible investing, and corporate governance), and
closes with a framework for resolving ethical issues by identifying and weighing the interests of affected
stakeholders.
⭐ 2.0 Introduction
What is Ethics?
KEY DEFINITION ⭐
Ethics is morality and reflects the moral views of individual people and of society. Ethics is very
subjective, as each person will have a different view on what constitutes “right and wrong”
behaviour.
Ethics looks at principles of fairness. Ethics is not law and therefore will not be enforced by the
courts.
Ethics does, however, have the power to promote changes to the law. As society's views on an issue change,
people will put pressure on the government to make changes to an old law that no longer represents the
current beliefs of the people.
⭐ 2.1 International Business Ethics
International business ethics is very relevant when looking at the situation of Canadians doing business outside
of Canada.
The Global Marketplace
Historical reasons why a Canadian company would want to operate in a developing country include:
• Cheap labor and wages.
• No or less unions.
• No or less health and safety regulations to deal with.
• Better tax treatment.
• No or less environmental protection to deal with.
• An abundance of inexpensive raw materials, available to be exploited.
Stricter Laws at Home vs. Weaker Laws in Developing Countries ⭐
As a general rule, the laws in a developed country such as Canada will be stricter than the laws in a developing
country. Legally, a Canadian company operating in a developing country must comply with the laws of the host
country where it is operating.
KEY CONCEPT ⭐
Question: if the laws of the host country provide weaker protection for workers and the
environment than the laws of Canada, can the Canadian company, in good conscience, merely
comply with the weaker laws of the host country?
, Legally: yes — a company must comply with the laws of the country where it is doing business.
Ethically: no — merely complying with weaker local laws is not necessarily the ethical standard to
follow.
United Nations Global Compact (UNGC)
KEY DEFINITION ⭐
The United Nations Global Compact (UNGC) is a convention that encourages businesses operating
in developing countries to voluntarily adopt socially responsible policies and to apply ethical
standards of operation which exceed the legal requirements of the host countries in which the
companies are operating.
The UNGC promotes replacing the historical approach of maximizing short-term profits with policies that
promote long-term value. Long-term value includes reducing pollution to protect the environment for future
generations, and educating and improving the social and economic conditions of the local workforce.
⭐ 2.2 Voluntary Compliance with Ethical Standards
The United Nations Global Compact consists of 10 principles, grouped into four categories: human rights,
labour/workforce rights, environment, and anti-corruption.
Principles 1–2: Human Rights ⭐
• Principle 1: Businesses should support and respect the protection of internationally proclaimed human
rights (the same types of issues addressed in the Quebec Charter of Human Rights — protection of
fundamental freedoms and prevention of discrimination).
• Principle 2: Make sure that businesses are not complicit in human rights abuses — even if not directly
violating human rights, a business may be complicit by acquiescing to or facilitating a violation, including
violations by its subcontractors.
Principles 3–6: Rights of the Workforce ⭐
• Principle 3: Uphold the freedom of association and the effective recognition of the right to collective
bargaining — the company should recognize workers' rights to unionize.
• Principle 4: The elimination of all forms of forced and compulsory labour — workers should work because
they want to, not because they are forced or coerced or afraid to leave.
• Principle 5: The effective abolition of child labour — in the ideal world, children under the age of 18 should
be in school. Where a child must work to bring in family revenue, the company should try to structure a
study-work day, ideally providing the educational facilities itself.
• Principle 6: The elimination of discrimination in respect of employment and occupation — companies must
be aware of historical tribal, ethnic, or religious animosities in a developing country and try to ensure
discrimination does not occur in hiring and promotion, including ensuring access to work for women where
it may otherwise be restricted.
Principles 7–9: Protecting the Environment ⭐
• Principle 7: Businesses should support a precautionary approach to environmental challenges.
• Principle 8: Businesses should undertake initiatives to promote greater environmental responsibility.
