Increasingly, companies are producing what are known as ‘codes of conduct’ or codes of ethics’

Increasingly, companies are producing what are known as ‘codes of conduct’ or codes of ethics’. The OECD defines such codes as ‘commitments voluntarily made by companies, associations or other entities, which put forth standards or principles for the conduct of business activities in the market place.’ However, there are other definitions that add further dimensions to this simple definition. One function of codes has been assumed to be that they ensure a company’s commitment to corporate social responsibility. However, other views suggest that codes of conduct are better considered as management tools, risk reduction strategies or even marketing tools. These functions can, of course, overlap. For example, a commitment to corporate social responsibility may help to reduce risks facing a company and may appeal to the ethical investor or consumer. Alternatively, however, tension might exist between these functions. For example, attending to corporate social responsibility might hinder what management might do in terms of generating profit for shareholders.

With the above in mind, your task is to produce an essay that addresses the following:

In terms of corporate governance, is a commitment to corporate social responsibility in a company’s code of conduct useful from the perspective of:

    1. Shareholder interests?

    2. Other stakeholder interests?

Your answers, showing why and/or why not useful need to be argued and supported by evidence taken from appropriate readings. This will require you to engage with questions relating to what codes of conduct are and what they seek to do, as well as to specifically consider the degree to which a corporate social responsibility function of a code of conduct might serve, or alternatively threaten, the interests of the two groups identified. Consequently, these interests will also need to be identified, drawing on the wider readings and discussions from the module.

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