The Advantages of Being Ethical
The benefits of adopting ethics in business are more important than ever before in maintaining a sustainable and profitable business. It is no longer acceptable for a business to operate in an entirely self-interested manner, having no regard to the impact it has on the local community. In the modern commercial environment there is a strong emphasis on businesses meeting their legal guidelines and ethical obligations. Trading in an ethical and socially-conscious manner will benefit businesses off all sizes on a number of levels.
One of the major advantages of business ethics is the opportunity to foster a sense of goodwill among the general public toward your business. Customers are increasingly concerned with using products produced in an environmentally sustainable manner and where the producers are paid a fair wage for their work — for example, fair trade coffee. Being seen as meeting your social and societal obligations will ingratiate your business to the public and attract socially responsible consumers.
In most cases, it will be important to shareholders that your business is managed in an ethical fashion. Transparent accounting practices and an engaging, consultative relationship with your shareholders will encourage confidence in your business. Investors will be more willing to put capital into a business that they can see is ethically managed, because there is less chance that the business will be founded on unsafe practices. Ethically-minded investors may also be unwilling to invest in a business that they see as socially or environmentally irresponsible.
Advantages of business ethics can extend beyond moral obligation; they can also benefit a company's bottom line. Ethical behavior can serve to differentiate your brand from those of your competitors if you operate in an oversubscribed market, offering you a competitive edge. Identifying your product and business practices as being founded on strong ethical principles makes your product or service more attractive to consumers — a good example of this model would be the Body Shop, a cosmetics company whose products are not tested on animals.
A powerful argument in favor of running your business in an ethical manner, aside from the financial benefits that can be gained, are the moral obligations your business has toward the community. A successful business takes from the community in the form of profits, which are distributed among its employees, directors and shareholders in wages and dividends. As an integral part of society, the business has a moral obligation to behave in an ethical manner toward employees and third parties, and to be conscious of its environmental impact.
The knock-on effects of adopting a strong ethical ethos will benefit a business. Honest, open accounting practices will help build a stronger financial base for the company and may help avoid lawsuits or sanctions for malfeasance. The knock-on effect of fairly compensating employees and meeting your tax liabilities will be a prosperous, more robust local economy, which will benefit everyone in the long run.