"Research finds that relying on regulations to determine your policies and procedures can result in ethical blindspots, or situations where people might think if there is not a rule for something, that it's permissible. After years of shifting towards values and culture-based compliance, leadership might be heading the opposite direction."
"By instead tying corporate rules to values, such as protecting vulnerable communities, leaders can demonstrate that 'doing what's right' is not subject to regulatory ebbs and flows. A number of organizations have moved from a code of conduct to a code of ethics."
"Some governments are tightening oversight, while others are relaxing enforcement. Companies may focus on strictly following the law, thinking that it doesn't make sense to go beyond regulatory expectations. But being compliant doesn't mean you're being ethical."
Ethical business standards are increasingly uncertain as global regulations and ESG frameworks evolve. Companies often assume legal compliance equals ethical behavior, but this creates dangerous blind spots. Three key risks emerge: over-reliance on hard compliance, which treats regulations as the sole measure of ethics; insufficient values-based culture; and regulatory inconsistency across regions. When organizations tie policies only to laws rather than corporate values, employees may assume anything not explicitly prohibited is acceptable. This approach fails particularly in areas like supply chain ethics, where regulatory reductions don't eliminate actual risks. Leaders must shift from compliance-focused codes of conduct to values-based codes of ethics, helping employees understand the principles behind rules and maintaining ethical standards regardless of regulatory fluctuations.
Read at Fast Company
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