Glossary term
Code of Ethics
Subject: Governance, Ethics, Conduct and Whistleblowing
Also known as: Ethics Code, Statement of Values
A code of ethics is a document stating the values and principles an organisation or profession commits to, such as honesty, fairness and respect, to guide decisions where no specific rule applies.
Explanation
Where a code of conduct lists rules, a code of ethics describes what the organisation stands for. It is usually short, written at a high level and approved by the board. Typical principles are integrity, respect, accountability, fairness and honesty with customers. Professions have their own: accountants, auditors, lawyers and doctors each follow a code issued by their professional body, and members can be disciplined for breaching it. Inside a company, the code anchors training, the tone set by senior leaders and the questions staff ask when a situation is unclear, such as whether a decision could be defended in public. Many organisations merge the two documents into one, but the distinction is useful: values guide, rules bind. In a gap between rules, staff with no stated values have nothing to test a choice against.
Example
An internal audit team's code of ethics commits it to objectivity. A senior auditor is asked by the finance head, a close friend, to soften a finding on weak payment approvals. No written rule covers the request, but the principle of objectivity leads her to report the finding unchanged and tell the audit committee about the request.
Not to be confused with
- Code of Conduct
- A code of conduct gives detailed rules and sanctions. A code of ethics gives the broader values those rules rest on.