In a recent paper titled Why Business Ethics Matter to Your Bottom Line, the ICAA argued sustainable business practices require long-term perspective to generate revenue.
The paper emphasised the importance of chief executive officers (CEOs) establishing an ethical management framework that encourages and rewards positive behaviour – while exposing and penalising inappropriate behaviour.
It argued that boards of directors should encourage CEOs to manage their organisations' cultures by “ensuring that remuneration packages reward culture builders and not just bottom line inflators".
The ICAA stated that executive objectives could be aligned with the collective interests of an organisation by developing incentives that promote long-term accountability.
It also recommended regular ethical cultural reviews as a way of ensuring effective risk management.
According to the paper, external regulatory reform is important in encouraging self-regulation. It referred to examples of legislative framework such as the US Federal Sentencing Guidelines for Organisations in 1991 and the Sarbanes-Oxely Act in 2002, which it argued successfully forced businesses to self-regulate.
The report also said this helped “deter unethical behaviour and move leaders from passive bystanders to active advocates for an ethical workplace culture".
The ICAA believes organisational integrity can only be achieved in a culture including a system of ethical decision making, where people understand the impact of their actions on stakeholders, according to the paper.
The paper also argued this is vital to ensuring the marketplace continues to exist for the benefit of all participants, and delivers positives outcomes for wider society.
It also said industry bodies play a role in this, with the paper stating bodies should “conduct relevant field research to identify systemic sources of unethical behaviour in each sector and then build sound metrics and initiatives designed to raise industry standards".
