How non-executive directors can foster ethical business practices

Ethical business practices are crucial to the success and sustainability of any company. Today’s consumers, employees and investors are increasingly concerned about ethical corporate behaviour. Non-executive directors (NEDs) play a critical role in ensuring that businesses maintain high ethical standards and operate in a responsible manner.

1. Independence and objectivity

Because NEDs are typically not involved in a company’s day-to-day operations, they can offer independent, objective input to discussions and decisions, and challenge assumptions. This can be particularly important in the realm of ethics and corporate social responsibility. For example, if the board is considering a new policy or initiative, a non-exec with experience in a related area may be able to provide valuable insights and advice, helping to ensure that the company’s actions are ethical and responsible.

2. Monitoring and accountability

NEDs play a crucial role in monitoring a company’s performance and ensuring that it is operating in an ethical and responsible manner. They can review policies and procedures, monitor compliance with laws and regulations, and review sustainability and corporate social responsibility practices. By providing independent oversight, NEDs can help to hold the company accountable for its actions and ensure that it is acting responsibly.

3. Encouraging ethical behaviour

NEDs can help set the tone for ethical behaviour within a company and encourage employees to act in an ethical and responsible manner. By providing a role model for ethical behaviour and ensuring that the company’s policies and procedures support such behaviour, NEDs can help to create a culture of ethics and responsibility within the company.

4. Addressing ethical concerns

NEDs can help to address ethical concerns that may arise within a company. They can investigate potential breaches of ethics and help to resolve any ethical dilemmas. Their independent stance means they can ensure that a company addresses ethical concerns in a fair and transparent manner, thus maintaining its reputation and credibility.

To allow NEDs to play their part in ensuring ethical business practices, companies must provide them with the resources and support they need, including:

• education and training on ethics and corporate social responsibility
• access to relevant information
• enough time and resources to carry out their responsibilities.

Companies should also be transparent about their efforts to promote ethical behaviour, and report regularly on their progress.

By adhering to these guidelines, businesses can enhance their reputation, build trust with customers and employees, and contribute to a more sustainable and responsible business environment.

To learn more, email me or call me on 020 7099 2621.