The Institute of Directors (IoD) has launched a new code of conduct aimed at promoting ethical behavior among business leaders, in a bid to restore public trust in the wake of several high-profile corporate scandals.
The IoD, which is referred to as the 'Consortium of Chairs', has developed this guidance to help rebuild business reputation and instill ethical practices in the boardroom. The move comes in response to high-profile corporate failures at the Post Office, Carillion and BHS, which have severely damaged the public's perception of business leadership.
Jonathan Geldart, Director General of the Institute of Management, commented: “Sometimes, business decision-makers fall short of what society expects. Those at the top may lose touch with what really matters, which is the need to demonstrate exemplary values and integrity in each of their decisions.” As a result, in recent years we have observed corporate scandals, which have had a negative impact on the appreciation of business leadership.
The Post Office scandal, involving Horizon IT, led to the wrongful conviction of hundreds of subpostmasters for theft and false accounting, representing the largest miscarriage of justice in British legal history. The collapse of Carillion, the UK's largest industrial failure, was caused by mismanagement and questionable accounting practices, resulting in the loss of 3,000 jobs and the delay of more than 450 public sector projects. The demise of BHS, once owned by Sir Philip Green, has put thousands of jobs and pensions at risk, with a parliamentary inquiry branding it “the unacceptable face of capitalism”.
The IoD Code includes principles such as demonstrating exemplary standards of personal conduct, acting with honesty and integrity, adhering to strong moral values, communicating openly and honestly, taking personal responsibility for actions, and treating people without discrimination or bias. The code is currently open for consultation and is designed to be a voluntary commitment rather than an additional layer of compliance.
The code was developed by a committee chaired by Lord MacNicol of West Kilbride, a trade unionist and former General Secretary of the Labor Party. MacNicol acknowledged that the guidelines in the Code were “matters of common sense,” but stressed that they could serve as a valuable reference for managers facing stressful decisions, allowing them to consider “what would the responsible manager do in this situation?”
By implementing this Code of Conduct, the Department aims to promote a culture of ethical behavior and accountability within the business community, helping to prevent future scandals and restore public confidence in corporate governance.
