Ethics and Compliance are Complementary

By Christian Hainsch


Compliance and ethics are not two sides of the same coin, but they build on and complement each other.


It is often said that ethics begins where compliance ends. This is not wrong in principle, but not necessarily correct either.


Ethics and ethical behavior must be part of a company's compliance philosophy, but they also apply outside of compliance. Ethics and the values that result from them are a cornerstone of corporate action. Ethical considerations are part of the corporate strategy, ethical guidelines play a role in sales and every entrepreneur who wants to remain on the market in the long term and sustainably must align his production with ethical considerations.


Compliance needs ethics to provide a complete picture. If compliance is limited to the mere observance of laws and regulations, or the monitoring of their observance, then compliance becomes nothing more than a bureaucratic act. If, on the other hand, compliance takes on board the important influences of ethics, it becomes a meaningful tool for corporate management and thus influences the development of the company. 

To better illustrate the interaction between ethics and compliance, here are some examples of how and where ethical questions appear in compliance.


You will see that ethical issues can be manifold in companies, especially in the area of compliance. Here are some examples:


1. Corruption and bribery avoidance: How can we ensure that our employees and business partners do not pay or receive bribes?


2. Data protection: How do we handle sensitive customer and employee data to protect privacy while maintaining necessary business processes?


3. Environmental Impact: How do we minimize the environmental impact of our business practices and products, and how transparent are we about our sustainability efforts?


4. Human rights: How do we ensure that our supply chain does not commit human rights violations, and how do we handle complaints about violations?


5. Working conditions: How do we ensure fair wages, safe working conditions and equal opportunities for all employees?


6. Conflicts of interest: How do we address potential conflicts of interest that may arise when employees need to balance personal interests with their professional obligations?


7. Compliance training: How effective are our training programs in ensuring that all employees understand and follow company policies and legal requirements?


8. Whistleblower protection: How do we protect employees who report ethical breaches from retaliation and how do we promote a culture of openness and reporting of misconduct?


9. Transparency in reporting: How transparent are we about our business and financial reporting, especially when it comes to complex tax structures or financial transactions?


10. Business relationships: How do we deal with business relationships based on personal relationships or connections and how do we prevent possible allegations of nepotism?


11. Responsibility to shareholders: How do we ensure that our business decisions are in the best interests of shareholders and long-term shareholder value?


12. Societal Engagement: What is the company's role in society and how can we help to be socially responsible and support communities?


These questions may vary depending on the industry, size and region of the company, but they represent only a sample of the many ethical challenges that companies may face in terms of compliance and ethical behavior. It is important that companies develop and implement clear policies and mechanisms to address these issues in order to act ethically and in compliance with the law.


Did you discover a topic where you want to have the questions answered for your organization. 


I am supporting you as Ethics Advisory for Business and Leadership, helping you to develop the answers. 


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