buisness ethics by AnandAnandK

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									                             PROJECT REPORT ON



            ―A STUDY ON ETHICS IN FINANCE AND SOCIETY‖



                            BY:

                                  MR. ANAND.K.

                         REG NO: C002BB2325AG0AB



                                M B A 4THTRISEM

                      GEMS B SCHOOL

                                     MYSORE

                 SUBMITTED TO SOUTH ASIA UNIVERSITY

             UNDER THE GUIDENCE OF BEEMESH (FACULTY)




                                        Certificate

 This is to certify that the Project work ―Study on Ethics in finance and society‖ is
          submitted to the college by the Candidate Mr ANAND K bearing
RegNOC002BB2325AG0AB. is the product Of bonafide project carried out by the
                  candidate under my supervision in business ethics.




                                                  (GUIDE )
                                                     Beemesh,                          Professor
                                                     of business ethics

                                                     Great Eastern Management School

                                                       Mysore.




ABSTRACT



The social characteristics of 809 couples attending a sex preselection clinic have been studied.
Their ethnic origins were: Indian 57.8%, European 32.0%, Chinese 3.6% and others 6.8%. The
average number of boys and girls per family was 0.09 and 2.70 respectively for couples wanting
a boy, and 2.46 and 0.14 for those wanting a girl. The average age of the wives was 34.0 years.
These figures were not significantly different in any ethnic subgroup. Out of all the couples,
80.6% stated that they would have had another baby even had sex preselection not been on offer;
37.5% of the couples interviewed have been treated so far. The figures among those treated are
substantially the same as those for the whole group. Asian and Middle Eastern couples
overwhelmingly wanted boys, whereas European couples showed a slight preference for girls.
These results suggest that, given certain guidelines, sex selection is unlikely to lead to a serious
distortion of the sex ratio in Britain and other Western societies, but may need careful monitoring
in other parts of the world


The ―Ibercorp affair‖ was front-page news in Spain at various times between 1992 and 1995. In
itself, there was nothing particularly new about it: a newly formed financial group engaged in
legally and ethically reprehensible behaviour that eventually came to light in the media, ruining
the company (and the careers of those involved). What aroused public interest at the time was the
fact that it involved individuals connected with Spanish public and political life, the media and
certain business circles. Above all, it demonstrated the personal, economic, social and political
consequences of a business culture based on the pursuit of easy profits at any price (what came
to be known as the cultura del pelotazo or ―get rich quick culture‖). Again, this is all too familiar
in business ethics. But it served to goad Spanish society into a rejection of such behaviour. This
article describes the facts and their ethical implications.

Why are ethics important?

Recent events in corporate America have demonstrated the destructive effects that occur when
the leadership of a company does not behave ethically. One might wonder why highly educated,
successful, and business savvy corporate professionals at Enron, Tyco, WorldCom, and Adelphia
got themselves into such a big mess. The answer lies in a profound lack of ethics.

Running a business ethically is good for business. However, "business ethics" if properly
interpreted means the standards of conduct of individual business people, not necessarily the
standards of business as a whole.

Business leader are expected to run their business as profitably as they can. A successful and
profitable business in itself can be a tremendous contributor toward the common good of society.
But if business leaders or department managers spend their time worrying about ―doing good‖
for society, they will divert attention from their real objective which is profitability and running
an efficient and effective organization.

Applying ethics in business makes good sense. A business that behaves ethically induces other
business associates to behave ethically as well. If a company (or a manager) exercises particular
care in meeting all responsibilities to employees, customers and suppliers it usually is awarded
with a high degree of loyalty, honesty, quality and productivity. For examples, employees who
are treated ethically will more likely behave ethically themselves in dealing with customers and
business associates. A supplier who refuses to exploit its advantage during a seller's market
retains the loyalty and continued business of its customers when conditions change to those of a
buyer's market. A company that refuses to discriminate against older or handicapped employees
often discovers that they are fiercely loyal, hard working and productive.

It is my firm belief that a ―good man or woman‖ who steadfastly tries to be ethical (i.e. to do the
―right thing", to make appropriate ethical decisions, etc.) somehow always overtakes his immoral
or amoral counterpart in the long run. A plausible explanation of this view on ethical behavior is
that when individuals operate with a sense of confidence regarding the ethical soundness of their
position, their mind and energies are freed for maximum productivity and creativity. On the other
hand, when practicing unethical behavior, the individual finds it necessary to engage in
exhausting subterfuge, resulting in diminished effectiveness and reduced success.

The best way to promote ethical behavior is by setting a good personal example. Teaching an
employee ethics is not always effective. One can explain and define ethics to an adult, but
understanding ethics does not necessarily result in behaving ethically. Personal values and
ethical behavior is taught at an early age by parents and educators.

I am quite certain that well-educated business professional like Kenneth Lay, Martha Stewart,
Dennis Kozlowski or the former CEO of General Motors who received a multi-million dollar
salary and bonus package in 1987 at a time when the company was closing plants and was laying
off thousands of people know and understand ethics. They either were too far removed from the
―nitty gritty‖ that ethical standards did not resonate with them or they simply did not care.

People at the top of an organization are expected to share the burden of cost reductions and belt-
tightening during difficult times. Senior executives of companies who freeze their salaries or take
a personal pay cut in a problematic year rather than lay off employees to cut costs deserve our
utmost respect. However, this does not mean that a company should lose flexibility in adjusting
its cost structure during bad economical times, replace old factories by new ones, or change
technology in ways that would require fewer people to do the work. Decisions like that should be
made with empathy and support (financially) to those who will be affected by it.




Why Are Ethics Important?
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Why Are Ethics Important?

Why are ethics important?

Recent events in corporate America have demonstrated the destructive effects that occur when
the leadership of a company does not behave ethically. One might wonder why highly educated,
successful, and business savvy corporate professionals at Enron, Tyco, WorldCom, and Adelphia
got themselves into such a big mess. The answer lies in a profound lack of ethics.

Running a business ethically is good for business. However, "business ethics" if properly
interpreted means the standards of conduct of individual business people, not necessarily the
standards of business as a whole.
Business leader are expected to run their business as profitably as they can. A successful and
profitable business in itself can be a tremendous contributor toward the common good of society.
But if business leaders or department managers spend their time worrying about ―doing good‖
for society, they will divert attention from their real objective which is profitability and running
an efficient and effective organization.

Applying ethics in business makes good sense. A business that behaves ethically induces other
business associates to behave ethically as well. If a company (or a manager) exercises particular
care in meeting all responsibilities to employees, customers and suppliers it usually is awarded
with a high degree of loyalty, honesty, quality and productivity. For examples, employees who
are treated ethically will more likely behave ethically themselves in dealing with customers and
business associates. A supplier who refuses to exploit its advantage during a seller's market
retains the loyalty and continued business of its customers when conditions change to those of a
buyer's market. A company that refuses to discriminate against older or handicapped employees
often discovers that they are fiercely loyal, hard working and productive.

It is my firm belief that a ―good man or woman‖ who steadfastly tries to be ethical (i.e. to do the
―right...




Code of Ethics in Finance




A finance code of ethics help specialists act professionally and responsibly in business deals.

A finance code of ethics informs professionals about rules and operating procedures that they
must follow to comply with industry standards, corporate policies and government requirements.
Ethics rules vary depending on role, industry, company size and transaction. Some professionals
(such as public accountants) must meet annual minimum ethical requirements to maintain active
licenses.
     Purpose
1.   A finance code of ethics helps top management avoid significant legal problems or regulatory
     fines. Requiring finance employees to adhere to a code of ethics ensures that they abide
     by laws and regulations applicable in the industry in which a firm operates. For example, an
     insurance company may require its accounting, finance and investment staff to take annual ethics
     classes or attend industry conferences to learn about latest developments in state insurance laws.
     Function
2.   In practice, a finance code of ethics typically prevents employees from engaging in illegal
     activities or act unprofessionally. An employee who is uncertain whether an activity or a
     transaction is legal may read ethical requirements and act according to them. For example, a
     trader at a bank or a hedge fund may review the firm's ethics code to ensure that it is not illegal
     to provide information to a relative after a company releases its quarterly earnings information.
     Significance
3.   Ethics codes are important in the finance industry because they typically affect how a
     professional performs duties, interacts with a client or reports financial information. For
     example, U.S. regulations require a public accountant to maintain ethical values when auditing a
     company listed on a securities exchange. These regulations are essentially guidelines adopted by
     the Public Company Accounting Oversight Board (PCAOB) and approved by the Securities and
     Exchange Commission (SEC).
     Types
4.   There is a variety of ethics codes affecting how finance professionals engage
     in business activities. A regulated specialist, such as a certified public accountant (CPA) or a
     chartered financial analyst (CFA), must meet governmental requirements. Other positions, such
     as certified internal auditors (CIA), may not be regulated but still require professionals to meet
     minimum ethical standards. For example, the Institute of Internal Auditors (IIA) requires
     members to comply with internal audit ethical standards such as independence and objectiveness.
     Misconceptions
5.   A finance code of ethics helps an employee perform duties professionally and competently but
     does not prevent the employee from litigation. For example, a public accountant or a trader
     cannot claim innocence by showing compliance with ethical requirements; that employee still
     has to abide by regulations and laws to avoid lawsuits or regulatory fines. For example, a public
     accountant reviewing a company's controls may discover that the treasurer is secretly stealing
     money. The accountant must follow applicable laws and ethical standards in reporting this
     activity.
Ethical Issues For Financial Advisors


The collapse of Enron and Worldcom brought ethical concerns to the forefront of public
scrutiny. Their demise caused thousands of Enron and Worldcom employees to lose all of their
retirement savings, and provided a wake-up call to investors across the country who held their
entire retirement savings in a single stock. The failure to educate those employees about the
importance of diversification was perhaps more than mere corporate or fiduciary oversight. (To
learn more about these ethical issues, see What Enron Taught Us About Retirement Plans.)

These headline-grabbing collapses are just two examples of how our modern maze of business
models, methods of practice and investment strategies has substantially blurred traditional ethical
boundaries. Even scrupulously honest financial planners can now face real dilemmas when
trying to do the right thing for their clients. Read on as we explore some common dilemmas
investment professionals face, and help provide guidance on how you can tackle them.

Uncharted Territory
A generation ago, both the tax code and the financial products and services available were
simpler than they are today. For example, if someone wanted to buy stock, a stockbroker would
place the trade. If someone needed permanent life coverage, a whole life policy was issued. But
now, planners must decide if this traditional approach is better, or whether the client would be
better off buying any number of the diverse modern products available.

The modern maze means every financial planner faces an ethical dilemma when trying to do the
right thing for a client.

The new rules of ethics for CFPs®
In light of these dilemmas, the Certified Financial Planner® Board of Standards has issued a
substantial revision and upgrade of the ethical requirements that it expects from its certificants.
Some of these new requirements include:
      Putting the client's interests ahead of the CFP® certificant's interests at all times and in all
        situations. This is conceptually a step up from the previous standard of "reasonable and
        prudent professional judgment" that was formerly in the code. The change essentially
        raises the code of conduct for any issue or situation that is not considered to be within the
        bounds of financial planning services, per se, to a level just below that of a fiduciary. (To
        learn more, see Is Your Broker Acting In Your Best Interest?)

      All financial planning services must now be accorded the care of a true fiduciary, as
       opposed to merely acting in the client's best interest. This also constitutes a major step up
       in terms of responsibility, as fiduciaries have a strict set of rules and guidelines that must
       be followed at all times. For clients, this means that their planners are held to a higher
        legal standard of care than before. (For a breakdown of what's expected of a fiduciary,
        see Meeting Your Fiduciary Responsibility.)
Fees vs. Commissions
Regardless of what legal or moral standard they are held to, one of the biggest ethical dilemmas
planners face is choosing a method of compensation. The methods of compensation for both
sales-driven practitioners and planners are often interchangeable, since each can charge either
fees or commissions for their services (provided that they are licensed to do so). However, this
flexibility can often present a moral dilemma for planners who must choose one method of
compensation over the other. (For more, see Understanding Dishonest Broker Tactics.)

A fee-based planner, one who charges clients based on a percentage of their assets, will increase
his or her compensation simply by making the client's assets grow. If the planner charges the
client a fee of 1% of assets under management, then the annual fee collected from a $100,000
portfolio will be $1,000. Therefore, if the planner is able to make the portfolio grow to $150,000,
his or her compensation will increase accordingly. This type of compensation could motivate the
planner to employ more aggressive investment strategies than a traditional commission-based
broker.

A commission-based planner, on the other hand, is compensated for each transaction, regardless
of portfolio gains or losses. These brokers face the temptation to generate transactions as a means
of revenue, even if they manage to avoid the technical definition of "churning".

In this sense, each type of compensation presents its own set of ethical issues. Ultimately,
planners will have to be willing to subordinate their own benefit to that of their clients,
regardless of what business model is used. Take for example a planner that can work on either an
hourly fee or commission basis. If the planner meets with a client that has $2 million earmarked
for retirement, then charging by the hour would result in a total fee of perhaps $5,000 - on the
very high end. On the other hand, choosing to charge the client a commission-based fee for
investing the $2 million in a variable annuity could pay as much as a 7% commission, which
would earn the planner $140,000! This extreme variance in compensation could easily sway even
the most stalwart planner. The key to remember is that you must act in the best interests of your
client, not your wallet. (For related reading, check out Paying Your Investment Advisor - Fees
Or Commissions? and Fee-Based Brokerage: The Latest Target For Regulators.)

Sales vs. Advice
The boundaries between sales and advice in the financial industry are also becoming increasingly
blurred as new platforms and methods of doing business continue to emerge. What this usually
boils down to is getting clients to do the right thing for the right reason.

Many clients will base their financial decisions on emotions rather than what their planner
advises. Suppose a 60-year-old woman has her entire savings of $100,000 in certificates of
deposit (CDs), and is terrified of risking her principal. If she lives for another 25 years, her
savings will likely be depleted long before she dies, since these low-risk investments pay a tiny
rate of return that will be offset by inflation over time.

As a planner, you obviously need to get your client to diversify her holdings with a sensible asset
allocation, or perhaps at least consider some sort of immediate annuity option. But how far
should you go in encouraging her to do this? Is it okay for you to use aggressive, fear-based sales
tactics, or even bend the truth a little, in order to help this client? After all, it clearly is in her best
interest to do this. Besides, if no action is taken, you could be held legally liable for failure to
provide adequate advice. In this case, the definition of "fear-based" sales tactics is also somewhat
subjective; if the planner shows the client a graphic illustration revealing how she will be
bankrupt in less than 10 years, is that using fear as a tactic, or is it merely a revelation of reality?
The argument can be made that it is both at once. (For advice on how to handle this situation,
see Manage Your Clients' Expectationsand Deal Effectively With Difficult Clients.)

Luckily, planners do have help in these types of situations. If a client refuses to take your advice,
you can present your client with a written disclaimer that states the client or prospect is refusing
to follow the recommendations presented by the planner. If your 60-year-old client wants her
CDs and she's signed this disclaimer, then you are in the clear.

Problems with the System
The fact is that there is no central ethical resource that is available for all types of financial
planners. Commission-based brokers can consult their supervisors or compliance departments on
certain matters, but they are likely to get "corporate" answers to many of their questions -
 answers that may allow the planner to create a profitable transaction without incurring liability,
but may not address what is truly best for the client.

CFP® practitioners may consult the CFP® Board with ethical questions, and other accredited
planners may have ethical codes of conduct to refer to as well. But non-credentialed planners are
essentially on their own for all practical purposes, as the rules imposed by the regulatory
agencies are not designed to address many day-to-day issues that planners face in their jobs.

Bottom Line
Despite the onslaught of legislation and regulations aimed at curbing unethical practices (such as
the Sarbanes-Oxley Act of 2002), financial planning in today's world depends more than ever
upon understanding a client's individual situation and objectives, and being willing to do right for
them. The correct application of ethics in modern financial planning essentially boils down to
having the client understand exactly what they are doing and why, with full knowledge of the
costs and risks involved. An ethical transaction occurs when a client trulyunderstands the
ramifications of the advisor's recommendations and is willing to go forward, assuming that all
pertinent laws and regulations are being obeyed. After all is said and done, ethics can still be
viewed as simply knowing the right thing to do, and then doing it.




Social Ethics
There's a lot said about humans being social animals and all that, but do all human beings know
correctly how to live in society? We all know the answer to that is doubtful. Here are the basic
tenets of social ethics. Check out if you fall short anywhere.

What is CSR?

Corporate Social Responsibility. Responsibility for the environment. www.tikspac.eu

You can remove a man from society but you cannot remove society from the man. Truer words
have never been said. Even if you are shipwrecked and lonely on an island à la Robinson Crusoe,
you will be straitjacketed about doing your morning business out there in the open. But that is
how we human beings are created. We learnt the meaning of modesty right there in the Garden
of Eden, and it has hounded us ever since. Of course, the depth to which social consciousness
exists in the human race varies from person to person, but it exists in everyone, without a doubt.

And yet, it is almost embarrassing to see how many people we meet everyday are totally ignorant
of social ethics. They are conscious about society, all right, but they are simply baboon-like
when it comes to obeying the unwritten social ethics that society has laid down since Genesis.
Why the differences? Simply because everyone is not made aware of social ethics in the same
manner. Social ethics are a part of a person's cumulative education, and that, of course, depends
on observation. Different people observe in different measures, and that‘s the reason everyone
has a different notion of social ethics.

Let us embark on a mammoth task now. Standardizing social ethics. Learning the right kind of
social ethics. That's one thing that has never been attempted before. But let me try. We have to
begin somewhere – this could be a good precursor to all the Neanderthals out there, a sort of
launching pad. Don't worry; I'll make this quick and painless ;-).

Social Ethics Principle # 1: Share

John: There's a hungry man outside, Mamma. Asking for food.
Mother: Give him your sandwich, dearie. I'll make you another.
Father: Yeah, all right. Just make sure you don‘t give him anything more from the larder. And
ask if he can help me mow the lawn.

We are creatures living in a very symbiotic society. As such, we need to share. Give and take.
And that becomes the first social ethic we need to learn. When you give something to a
deserving person, it does come back to you in some way or the other. It's not necessary to give
something material. Sometimes a smile or a pat on the shoulder could be the best gift you could
give.

But remember to give within limits. Too many gifts can spoil a person. And you will be
perennially hounded for more and more help. Give, but within limits; and when you have given,
do expect some kind of repayment, directly or indirectly.

Social Ethics Principle # 2: Acknowledge

Mother: How did school go today, John?
John: Oh, it was fun! Mrs. March actually praised my show-and-tell.
Mother: God bless her soul!
Father: Certainly! I am sure little Johnnie will be getting much more schoolwork done now. If
only that big boss of mine would appreciate what I chip in for his firm…

Society is built when people begin praising each other's talents. Whether we are talking about the
President or a newspaper boy, they are giving something to make this society roll. That is why it
is extremely important to give everyone their due credit. I don't know about you, but when
someone praises me for an article I write, I am just egged on to write a better one. So, whether it
is a schoolboy or your grandma, they need their acknowledgment to work better for you.

Social Ethics Principle # 3: Participate

John: Mamma, Justin's folks are having a garage sale this Saturday.
Mother: Yes, I know. Gina told me. I am baking some cookies for the sale, John.
John: Can I be with Justin on Saturday? There's no school as it is.
Mother: Sure! I'll be there too, anyways.
Father: Hope I can do something useful too. Now let me see what…

Living is fun when you live together. I am not speaking just about family, but the whole society,
in general. Helping the Joneses out in their events is always fun, especially if you know that they
will help out with yours too. Of course, we must not be meddlesome, and must understand when
we are not required. Being human, you will have an inner sense of understanding that.
Participation is required on a national and global level also. We must be aware of our politics and
civics, know our rights and duties, and perform them wholeheartedly. Social ethics demands that
we make a collective effort at success, like ants lifting a heavy tidbit of food. That‘s how
companies and nations succeed – doesn‘t matter what size they are. Unity is strength.

Social Ethics Principle # 4: Assert

John: It's Rupert again, Mamma.
Mother: What did he do now?
John: He ran away with my lunchbox and emptied it behind a tree.
Father: So, did you fight him back, or simply came running here to mamma?
Mother: Peter!

It's like driving on the freeway. Even if you are sure you are driving like a real good taxpaying
and law-abiding citizen, some speed maniac might come and mutilate your rear fender. Or the
front hood if you are not so lucky. Is it worth being a Sad Sack about it? Not at all! We must at
least have a tongue to speak out that we are in the right. And prove that to the authorities. Of
course, we must not go the mafia way about it – that will only compound matters and snowball
into unbearable things – but we must at least assert when we haven‘t done anything wrong.

When our nation's integrity is threatened by outside forces, what do we do? Sit back and watch
Nickelodeon? No, we give it back every bit. However, in the routine walk of life, we do not
actually fight, but we must surely Get up, stand up… Stand up for your rights… (thanks, Bob,
you said it for me.)

Social Ethics Principle # 5: Accept

John: I won the elocution too, Mamma. Here's the medal.
Mother: Lovely, John! Really!
Father: Wish someone would give me something for busting my bottom too.
Mother: Peter, why don‘t you learn to be a bit more optimistic and less grumpy about things? I
think you are getting old.
Father: Ah! Let's not put back our snorkeling vacation any more then.

Tell me frankly, how many weeping willows do you meet in a day? I am talking about those
typical people who always carry some sort of complaint on their shirt sleeve. The government is
going to the dogs, the traffic is gone bonkers, elections are a whole lot of garbage, bureaucracy is
sickeningly crazy, etc. etc. Don't you just get tired of just listening to these grievances? But then,
you will be surprised at how many times you complain yourself.
What we must actually do is, put our hands together and try, in whatever small way we can, to
better the society to live in. Do anything we can. Plant a tree for all it takes. But do something to
improve the quality of life. And, miraculously enough, when we actually do something
constructive – I mean, something socially benefiting for which we are not paid any greenbucks –
we will be amazed to see how much more acceptable we become of the society we live in.

Social ethics are a very complex subject, and there cannot be any parallels drawn in the way
different people must behave. But it does pay to be responsible for the society we live in, and
endeavor to make a better place to live in




The Role Of Ethics In Society
"When I do good, I feel good; when I do bad, I feel bad. That's my religion." Abraham Lincoln

To live morally in society i.e. to live with humane characteristics, to treat those we meet on a
daily basis with respect. A personal code of ethics to live by should come natural to us. However
living in society with rules and regulations, we are forced to uphold and to socialize with some
people who certainly show or use very little ethical behavior in their lives.




Ethical Culture is a nontheistic ( nontheism ) religion established by Felix Alder in 1876.
The Ethical Culture Movement is an ethical, educational, and religious movement. Individual
chapter organizations are generically referred to as Ethical Societies, though their names may
include "Ethical Society," "Ethical Culture Society," "Society for Ethical Culture," or other
variations on the theme of "Ethical."

Ethical Culture is premised on the idea that honoring and living in accordance with ethical
principles is central to what it takes to live meaningful and fulfilling lives, and to creating a
world that is good for all. It is observed that ethics is at the heart of all religions. Practitioners of
Ethical Culture focus on supporting one another in becoming better people, and on doing good in
the world.

Ethical perspective

While Ethical Culturists generally share common beliefs about what constitutes ethical behavior
and the Goodness and value theory good, individuals are encouraged to develop their own
personal understanding of these ideas. This does not mean that Ethical Culturists condone "moral
relativism," which would relegate ethics to mere preferences or social conventions. Ethical
principles are viewed as being related to deep truths about the way the world works and hence
not arbitrary. However, it is recognized that complexities render the understanding of ethical
nuances subject to continued dialogue, exploration, and learning.

While the founder of Ethical Culture, Felix Adler (Society for Ethical Culture) Felix Adler, was
a transcendentalist, Ethical Culturists may have a variety of understandings as to the theoretical
origins of ethics. Key to the founding of Ethical Culture was the observation that too often
disputes over religious or philosophical doctrines have distracted people from actually living
ethically and doing good. Consequently, ''" Deed before creed"'' has long been a motto of the
movement.

Religious aspect

Functionally, Ethical Societies are similar to churches or synagogues. Ethical Societies typically
have Sunday morning meetings, offer moral instruction for children and teens, and do charitable
work and social action. They may offer a variety of educational and other programs. They
conduct weddings, Domestic partnership commitment ceremonies, baby namings, and memorial
services.

Individual Ethical Society members may or may not believe in a deity or regard Ethical Culture
as their religion. In this regard, Ethical Culture is similar to traditional religions such
as Buddhism andTaoism, about whose practitioner's similar statements could be made. Felix
Adler said, "Ethical Culture is religious to those who are religiously minded, and merely ethical
to those who are not so minded." The movement does consider itself a religion in the sense that
''Religion is that set of beliefs and/or institutions, behaviors and emotions which bind human
beings to something beyond their individual selves and foster in its adherents a sense of humility
and gratitude that, in turn, sets the tone of one's world-view and requires certain behavioral
dispositions relative to that which transcends personal interests.''

The Ethical Culture 2003 ethical identity statement states:

''It is a chief belief of Ethical religion that if we relate to others in a way that brings out their best,
we will at the same time elicit the best in ourselves. By the "best" in each person, we refer to his
or her unique talents and abilities that affirm and nurture life. We use the term "spirit" to refer to
a person's unique personality and to the love, hope, and empathy that exists in human beings.
When we act to elicit the best in others, we encourage the growing edge of their ethical
development, their perhaps as-yet untapped but inexhaustible Human dignity worth.''

Since around 1950, the Ethical Culture movement has been increasingly identified as part of the
modern Humanism Humanist movement. Specifically, in 1952, the '''American Ethical Union''',
the national umbrella organization for Ethical Culture societies in the United States, became one
of the founding member organizations of the International Humanist and Ethical Union.

Note from the author:

I was born and raised with strict religious beliefs. However, living by God's supposed laws was
very difficult to comprehend when the rest of the world certainly was not living by the golden
rule. Religion can sometimes turn a moral and ethical person against the teachings of any
religion.

Sometime bad behavior is a way of striking back at the hypocrisy in society. I believe there
would be less violence and crime in the streets if more people would open their minds and their
hearts to their fellow man.

"A man's ethical behavior should be based effectually on sympathy, education, and social ties; no
religious basis is necessary. Man would indeed be in a poor way if he had to be restrained by fear
of punishment and hope of reward after death." Albert Einstein




The role of ethics in daily life as we choose between ... Right and Wrong


The Golden Rule, the Ten Commandments, Poor Richard's Almanac, and Aesop's Fables provide
simple concepts about right and wrong that lubricate society by reducing friction.
Trouble is, temptations tease us into wanting more, whether we're a guy stealing television sets
in soggy New Orleans, a teenager downloading music, or a governor failing to report gifts from
his rich cronies.
"Ethics is very much concerned with the effects of our behavior on others," says Randy Cohen,
author of The Good, the Bad & the Difference: How to Tell Right from Wrong in Everyday
Situations (Doubleday, 2002).
Many ethicists believe the guidelines for figuring out the best actions are shared by most
cultures, and include respect, trustworthiness, responsibility, compassion, citizenship, and
fairness.
To that list Cohen would add actions that discourage human suffering, and that promote
happiness, an egalitarian society, and the greatest good for the greatest number of people. A fair
deal, he says, is something like the way kids divide a cookie: one cuts and the other picks.
In Ohio, politics at the highest level collided with ethics in August, when Gov. Bob Taft was
convicted of four first-degree misdemeanor ethics violations for knowingly failing to disclose
dozens of golf outings and other gifts valued at above $75 that he received from lobbyists and
businessmen.

An avalanche of problems caused by the unethical actions of individuals, unhealthy institutions,
and poorly supervised situations seem to exist at every turn. "It's almost like a shell shock of
what's going to be next," says Michael Josephson, president of the Joseph and Edna Institute of
Ethics. "There's a heightened interest in everybody regarding ethics,"

Name an aspect of contemporary life and an ethicist can point out transgressions - Hurricane
Katrina (a lack of leadership, an inadequate evacuation plan for the underclass), sports (steroid
use), religion (the Catholic church's cover up of sex abuse), the military (torture of people at Abu
Ghraib prison), journalism (Jayson Blair's fabricated articles for the New York Times).
Mr. Josephson notes other eye-opening examples:
w 2002 was a banner year for business scandals according to Wikipedia, the online encyclopedia.
WorldCom, Tyco, Halliburton, and Adelphia were among 27 huge corporations that admitted
they misstated their accounts, often to the tune of billions of dollars. The previous year carried a
single entry: Enron. Many of the most prominent accounting firms, including Arthur Andersen,
had audited and approved the accounts.
w The sheriff's department in Florida's populous Broward County was discovered this year to
have falsified crime statistics by reclassifying scores of unsolved crimes as solved, and by
downgrading hundreds of other crimes, such as burglaries, to minor offenses.
w High school principals in Houston, pressured by their superintendent to comply with tough No
Child Left Behind standards, reported drop-out rates so low, the district was dubbed the "Texas
Miracle." But after an administrator blew the whistle on fraudulent figures, 14 of the 16 schools
that earned "best" classification were demoted to "failed."
Mr. Josephson says problems will continue until citizens elect people who have higher standards.
"[Supreme Court Justice Louis} Brandeis said every citizen in a democracy is a public official.
●…● How about demanding that competence be part of the credentials of leaders?"
When voting, people should consider candidates' overall skills, he adds, not whether they agree
with you on one or two issues.
"I think ethics is how we treat people face to face, day after day, over time," says Al Gini, a
philosophy professor at Loyola University Chicago and author of Why It's Hard to be Good, due
out in November.
"Should I extend myself for others, or should I do anything that's not in my best interest?"
Facing the biggest temptations and susceptible to the arrogance of power, are people with
money, power, and fame.
"It's not brain surgery. It's about the difficulty of standing outside of the shadow of self, to reach
out to others, to not be self-absorbed; whether this is about business or taking $10 from your
parents," Professor Gini says.
When Randy Cohen undertook an ethics column for the New York Times Magazine in 1999, he
figured ethics meant how an individual acts in a moment of crisis. "If you encounter a homeless
person and they ask you for money, you make a choice about how to act," he says.
Eventually, he realized what's often more important than whether you give a buck to the poor
fellow is what you do to change poverty and homelessness, for example, when you get home.
Laws, he notes, such as those permitting the ownership of slaves, are not always ethical. And
sometimes lying might be the most ethical action. If you worked on the Underground Railroad in
the 1850s and were asked the whereabouts of an escaped slave, would you lie? How about those
sticky little instances such as, "Does this make me look fat?" A sideways response ("That is your
color.") is probably preferable to a bruising "yes."
"Ethics often requires you to be an anthropologist and work out what the other person's behavior
means," says Mr. Cohen.
Mr. Cohen wasn't formally schooled in ethics. He wrote comedy for David Letterman and Rosie
O'Donnell. "When they (the New York Times) were starting the column, the topic sounded a bit
off-putting," he says. "I have an analytical mind and can write a lively sentence."
But sometimes, reasonable values bang into each other: truth versus loyalty, justice against
mercy, short-term against long-term, and individual versus community good.
"People would like it if these were simple matters. It's much harder than that," he says. "You
often have conflicting claims. These are often questions about which honorable people may
differ."
Technology's role
Downloading music was a favorite use of the home computer for years but was ruled to be a
copyright violation. "It turned millions of otherwise law-abiding people into criminals," says Mr.
Cohen. "The music industry were brutes."
However, if you give people an easy way to download music ethically, they'll do it, he says.
"Globally, technology opens up the potential for unethical behavior in ways we've never had
before," says Rushland Kidder, president of the Institute for Global Ethics and author of Moral
Courage (HarperCollins, 2005). The institute publishes Ethics Newsline, a review of current
ethical stories around the world (www.globalethics.org).
With just a few keystrokes, almost anybody can create havoc. The notorious Love Bug virus that
flooded computers around the world in 2000 was created by a pair of 20-somethings in a
Phillipines apartment.
And the proliferation of bloggers makes keeping secrets harder than ever. In the 1930s, if a U.S.
company was making shoes in a Third World country and paying its 12-year-old employees
pennies a day, there wasn't much a critic could do, he says. With computers, corporate and
political behaviors are more transparent. Moreover, the public voice becomes more meaningful.
Mr. Kidder advocates a preemptive approach to the ethics of technology rather than reacting
when problems surface. What about the technology of Global Positioning Systems that will be
able to track a car anywhere, or drugs that will make us feel good all the time?
"We need to think about those things beforehand," he says, noting an exemplary approach by the
Human Genome Project. It set aside 5 percent of its budget to examine its related ethical, legal,
and social implications.
Concerns about declining ethics isn't new.
"People have been complaining about political corruption for more than 2,000 years.
"And how the younger generation doesn't have the values we used to have, for more than 2,000
years," says Chris MacDonald, president of the Canadian Society for the Study of Practical
Ethics and operator of a well-stocked online ethics bookstore.
Whenever people's interests are at stake or someone has a choice about who gets what, ethics
come into play, says Mr. MacDonald, an assistant professor of philosophy at Saint Mary's
University in Halifax, Nova Scotia.
Several years ago, Sidney Ribeau was watching people squabble on a televised news show. He
realized they weren't listening to each other.
"There were different values," says Mr. Ribeau, president of Bowling Green State University.
"It seemed that we should as a university help students early on to think critically about their
values. What leads them to believe that academic dishonesty is wrong? Or about a genetic issue?
How do they reach conclusions that are good for more than just the individual?"
What should a student do if her or his friend is drinking heavily? "In terms of values, do you
value your friendship with your friend more than their well-being?"
Mr. Ribeau asked faculty to devise a plan that would open the conversation with students. Four
years ago, a pilot program was introduced, and it reached full bloom in August when all 3,600
freshmen took part in the values-focused BGeXperience for three days before classes began.
"There are issues we're dealing with as a society that are very, very complex.
"What's missing is that reflective step where people can step back and look at their decisions,"
says Mr. Ribeau.




Ethics in Finance
Ethics in general is concerned with human behavior that is acceptable or "right" and that is not
acceptable or "wrong" based on conventional morality. General ethical norms encompass
truthfulness, honesty, integrity, respect for others, fairness, and justice. They relate to all aspects
of life, including business and finance. Financial ethics is, therefore, a subset of general ethics.

Ethical norms are essential for maintaining stability and harmony in social life, where people
interact with one another. Recognition of others' needs and aspirations, fairness, and cooperative
efforts to deal with common issues are, for example, aspects of social behavior that contribute to
social stability. In the process of social evolution, we have developed not only an instinct to care
for ourselves but also a conscience to care for others. There may arise situations in which the
need to care for ourselves runs into conflict with the need to care for others. In such situations,
ethical norms are needed to guide our behavior. As Demsey (1999) puts it: "Ethics represents the
attempt to resolve the conflict between selfishness and selflessness; between our material needs
and our conscience."

Ethical dilemmas and ethical violations in finance can be attributed to an inconsistency in the
conceptual framework of modern financial-economic theory and the widespread use of a
principal-agent model of relationship in financial transactions. The financial-economic theory
that underlies the modern capitalist system is based on the rational-maximizer paradigm, which
holds that individuals are self-seeking (egoistic) and that they behave rationally when they seek
to maximize their own interests. The principal-agent model of relationships refers to an
arrangement whereby one party, acting as an agent for another, carries out certain functions on
behalf of that other. Such arrangements are an integral part of the modern economic and financial
system, and it is difficult to imagine it functioning without them.

The behavioral assumption of the modern financial-economic theory runs counter to the ideas of
trustworthiness, loyalty, fidelity, stewardship, and concern for others that underlie the traditional
principal-agent relationship. The traditional concept of agency is based on moral values. But if
human beings are rational maximizers, then agency on behalf of others in the traditional sense is
impossible. As Duska (1992) explains it: "To do something for another in a system geared to
maximize self-interest is foolish. Such an answer, though, points out an inconsistency at the heart
of the system, for a system that has rules requiring agents to look out for others while
encouraging individuals to look out only for themselves, destroys the practice of looking out for
others" (p. 61).

The ethical dilemma presented by the problem of conflicting interests has been addressed in
some areas of finance, such as corporate governance, by converting the agency relationship into
a purely contractual relationship that uses a carrot-and-stick approach to ensure ethical behavior
by agents. In corporate governance, the problem of conflict between management (agent) and
stockholders (principal) is described as an agency problem. Economists have developed an
agency theory to deal with this problem. The agency theory assumes that both the agent and the
principal are self-interested and aim to maximize their gain in their relationship. A simple
example would be the case of a store manager acting as an agent for the owner of the store. The
store manager wants as much pay as possible for as little work as possible, and the store owner
wants as much work from the manager for as little pay as possible. This theory is value-free
because it does not pass judgment on whether the maximization behavior is good or bad and is
not concerned with what a just pay for the manager might be. It drops the ideas of honesty and
loyalty from the agency relationship because of their incompatibility with the fundamental
assumption of rational maximization. "The job of agency theory is to help devise techniques for
describing the conflict inherent in the principal-agent relationship and controlling the situations
so that the agent, acting from self-interest, does as little harm as possible to the principal's
interest" (DeGeorge, 1992). The agency theory turns the traditional concept of agency
relationship into a structured (contractual) relationship in which the principal can influence the
actions of agents through incentives, motivations, and punishment schemes. The principal
essentially uses monetary rewards, punishments, and the agency laws to command loyalty from
the agent.

Most of our needs for financial services— management of retirement savings, stock and bond
investing, and protection against unfore-seen events, to name a few—are such that they are better
entrusted to others because we have neither the ability nor the time to carry them out effectively.
The corporate device of contractualization of the agency relationship is, however, too difficult to
apply to the multitude of financial dealings between individuals and institutions that take place in
the financial market every day. Individuals are not as well organized as stockholders, and they
are often unaware of the agency problem. Lack of information also limits their ability to monitor
an agent's behavior. Therefore, what we have in our complex modern economic system is a
paradoxical situation: the ever-increasing need for getting things done by others on the one hand,
and the description of human nature that emphasizes selfish behavior on the other. This
paradoxical situation, or the inconsistency in the foundation of the modern capitalist system, can
explain most of the ethical problems and declining morality in the modern business and finance
arena.

ETHICAL VIOLATIONS

The most frequently occurring ethical violations in finance relate to insider trading, stakeholder
interest versus stockholder interest, investment management, and campaign financing. Business
in general and financial markets in particular are replete with examples of violations of trust and
loyalty in both public and private dealings. Fraudulent financial dealings, influence peddling and
corruption in governments, brokers not maintaining proper records of customer trading, cheating
customers of their trading profits, unauthorized transactions, insider trading, misuse of customer
funds for personal gain, mispricing customer trades, and corruption and larceny in banking have
become common occurrences.

Insider trading is perhaps one of the most publicized unethical behaviors by traders. Insider
trading refers to trading in the securities of a company to take advantage of material "inside"
information about the company that is not available to the public. Such a trade is motivated by
the possibility of generating extraordinary gain with the help of nonpublic information
(information not yet made public). It gives the trader an unfair advantage over other traders in
the same security. Insider trading was legal in some European countries until recently. In the
United States, the 1984 Trading Sanctions Act made it illegal to trade in a security while in the
possession of material nonpublic information. The law applies to both the insiders, who have
access to nonpublic information, and the people with whom they share such information.

Campaign financing in the United States has been a major source of concern to the public
because it raises the issue of conflict of interest for elected officials in relation to the people or
lobbying groups that have financed their campaigns. The United States has a long history of
campaign finance reform. The Federal Election Commission (FEC) administers and enforces the
federal campaign finance statutes enacted by the Congress from time to time. Many states have
also passed lobbying and campaign finance laws and established ethics commissions to enforce
these statutes.

ETHICAL CODES

Approaches to dealing with ethical problems in finance range from establishing ethical codes for
financial professionals to efforts to replace the rational-maximizer (egoistic) paradigm that
underlies the modern capitalist system by one in which individuals are assumed to be altruistic,
honest, and basically virtuous.

It is not uncommon to find established ethical codes and ethical offices in American corporations
and in financial markets. Ethical codes for financial markets are established by the official
regulatory agencies and self-regulating organizations to ensure ethically responsible behavior on
the part of the operatives in the financial markets.

One of the most important and powerful official regulatory agencies for the securities industry in
the United States is the Securities and Exchange Commission (SEC). It is in charge of
implementing federal securities laws, and, as such, it sets up rules and regulations for the proper
conduct of professionals operating within its regulatory jurisdiction. Many professionals play a
role within the securities industry, among the most important of which are accountants, broker-
dealers, investment advisers, and investment companies. Any improper or unethical conduct on
the part of these professionals is of great concern to the SEC, whose primary responsibility is to
protect investor interests and maintain the integrity of the securities market. The SEC can
censure, suspend, or bar professionals who practice within its regulatory domain for lack of
requisite qualifications or unethical and improper conduct. The SEC also oversees self-regulatory
organizations (SROs), which include stock exchanges, the National Association of Security
Dealers (NASD), the Municipal Securities Rulemaking Board (MSRB), clearing agencies,
transfer agents, and securities information processors. An SRO is a membership organization that
makes and enforces rules for its members based on the federal securities laws. The SEC has the
responsibility of reviewing and approving the rules made by SROs.

Other rule-making agencies include the Federal Reserve System, the Federal Deposit Insurance
Corporation (FDIC), and state finance authorities. Congress has entrusted to the Federal Reserve
Board the responsibility of implementing laws pertaining to a wide range of banking and
financial activities, a task that it carries out through its regulations. One such regulation has to do
with unfair or deceptive acts or practices. The FDIC has its own rules and regulations for the
banking industry, and it also draws its power to regulate from various banking laws passed by
Congress.

In addition to federal and state regulatory agencies, various professional associations set their
own rules of good conduct for their members. The American Institute of Certified Public
Accountants (AICPA), the American Institute of Certified Planners (AICP), the Investment
Company Institute (ICI), the American Society of Chartered Life Underwriters (ASCLU), the
Institute of Chartered Financial Analysts (ICFA), the National Association of Bank Loan and
Credit Officers (also known as Robert Morris Associates), and the Association for Investment
Management and Research (AIMR) are some of the professional associations that have well-
publicized codes of ethics.

TOWARD A PARADIGM SHIFT

There has been an effort to address the ethical problems in business and finance by reexamining
the conceptual foundation of the modern capitalist system and changing it to one that is
consistent with the traditional model of agency relationship. The proponents of a paradigm shift
question the rational-maximizer assumption that underlies the modern financial-economic theory
and reject the idea that all human actions are motivated by self-interest. They embrace an
alternative assumption—that human beings are to some degree ethical and altruistic—and
emphasize the role of the traditional principal-agent relationship based on honesty, loyalty, and
trust. Duska (1992) argues: "Clearly, there is an extent to which [Adam] Smith and the
economists are right. Human beings are self-interested and will not always look out for the
interest of others. But there are times they will set aside their interests to act on behalf of others.
Agency situations were presumably set up to guarantee those times."
The idea that human beings can be honest and altruistic is an empirically valid assumption; it is
not hard to find examples of honesty and altruism in both private and public dealings. There is no
reason this idea should not be embraced and nurtured. As Bowie (1991) points out: "Looking out
for oneself is a natural, powerful motive that needs little, if any, social reinforcement. . . .
Altruistic motives, even if they too are natural, are not as powerful: they need to be socially
reinforced and nurtured" (p. 19). If the financial-economic theory accepts the fact that behavioral
motivations other than that of wealth maximization are both realistic and desirable, then the
agency problem that economists try to deal with will be a nonproblem. For Dobson (1993), the
true role of ethics in finance is to be found in the acceptance of "internal good" ("good" in the
sense of "right" rather than in the sense of "physical product"), which, he adds, is what classical
philosophers describe as "virtue"—that is, the internal good toward which all human endeavor
should strive. He contends: "If the attainment of internal goods were to become generally
accepted as the ultimate objective of all human endeavor, both personal and professional, then
financial markets would become truly ethical"

Ethics in Accounting

Ethics in accounting is of utmost importance to accounting professionals and those who rely on
their services. Certified Public Accountants (CPAs) and other accounting professionals know
that people who use their services, especially decision makers using financial statements, expect
them to be highly competent, reliable, and objective. Those who work in the field of accounting
must not only be well qualified but must also possess a high degree of professional integrity. A
professional's good reputation is one of his or her most important possessions.

The general ethical standards of society apply to people in professions such as medicine and
accounting just as much as to anyone else. However, society places even higher expectations on
professionals. People need to have confidence in the quality of the complex services provided by
professionals. Because of these high expectations, professions have adopted codes of ethics, also
known as codes of professional conduct. These ethical codes call for their members to maintain a
level of self-discipline that goes beyond the requirements of laws and regulations.

CODES OF ETHICS

By joining their professional organizations, people who work in the field of accounting agree to
uphold the high ethical standards of their profession. Each of the major professional associations
for accountants has a code of ethics. The Code of Professional Conduct of the American Institute
of CPAs (AICPA), the national professional association for CPAs, sets forth ethical principles
and rules of conduct for its members. The principles are positively stated and provide general
guidelines that CPAs (or any professionals, for that matter) should strive to follow. The rules of
conduct are much more explicit as to specific actions that should or should not be taken. The
Institute of Management Accountants (IMA) Standards of Ethical Conduct applies to
practitioners of management accounting and financial management, and the Institute of Internal
Auditors (IIA) Code of Ethics applies to its members and to Certified Internal Auditors (CIAs).

ETHICAL RESPONSIBILITIES

A distinguishing mark of professions such as medicine and accounting is acceptance of their
responsibilities to the public. The AICPA Code of Professional Conduct describes the accounting
profession's public as consisting of "clients, credit grantors, governments, employers, investors,
the business and financial community, and others who rely on the objectivity and integrity of
CPAs to maintain the orderly functioning of commerce." Many, but not all, CPAs work in firms
that provide accounting, auditing, and other services to the general public; these CPAs are said to
be in public practice. Regardless of where CPAs work, the AICPA Code applies to their
professional conduct, although there are some special provisions for those in public practice.
Internal auditors, management accountants, and financial managers most commonly are
employees of the organizations to which they provide these services; but, as professionals, they,
too, must also be mindful of their obligations to the public.

The responsibilities placed on accounting professionals by the three ethics codes and the related
professional standards have many similarities. All three require professional competence,
confidentiality, integrity, and objectivity. Accounting professionals should only undertake tasks
that they can complete with professional competence, and they must carry out their
responsibilities with sufficient care and diligence, usually referred to as due professional
care or due care. The codes of ethics of the AICPA, IMA, and IIA all require that confidential
information known to accounting professionals not be disclosed to outsiders. The most
significant exception to the confidentiality rules is that accounting professionals' work papers are
subject to subpoena by a court; nothing analogous to attorney-client privilege exists.

INDEPENDENCE

Maintaining integrity and objectivity calls for avoiding both actual and apparent conflicts of
interest. This notion is termed independence. Being independent in fact and in appearance means
that one not only is unbiased, impartial, and objective but also is perceived to be that way by
others. While applicable to all accounting professionals, independence is especially important for
CPAs in public practice. The AICPA's rules pertaining to independence for CPAs who perform
audits are detailed and technical. For instance, a CPA lacks independence and thus may not audit
a company if he or she (or the spouse or dependents) owns stock in that company and/or has
certain other financial or employment relationships with the client.

ETHICS ENFORCEMENT
To a large extent, the accounting profession is self-regulated through various professional
associations rather than being regulated by the government. The AICPA, the IMA, and the IIA
have internal means to enforce the codes of ethics. Furthermore, the professional organizations
for CPAs in each state, known as state societies of CPAs, have mechanisms for enforcing their
codes of ethics, which are usually very similar to the AICPA Code. Violations of ethical
standards can lead to a person's being publicly expelled from the professional organization.
Because of the extreme importance of a professional accountant's reputation, expulsion is a
strong disciplinary measure. However, ethical violations can lead to even more adverse
consequences for CPAs because of state and federal laws.

The state government issues a CPA's license to practice, usually through an organization known
as the state board of accountancy. Since state laws governing the practice of accountancy
typically include important parts of the AICPA Code, the Code thus gains legal enforceability.
Consequently, ethical violations can result in the state's revoking a CPA's license to practice on a
temporary or even permanent basis. Because a licensed CPA is also likely to belong to the
AICPA and the state society of CPAs, investigations of ethics violations may be carried out
jointly by the AICPA, the state society, and the state board of accountancy.

CPAs in public practice who audit the financial statements of public corporations are subject to
federal securities laws and regulations, including the Securities Exchange Act of 1934. The
Securities and Exchange Commission (SEC), which administers these laws, has broad powers to
regulate corporations that sell their stock to the public. One important SEC requirement is that
these corporations' financial statements be audited by an independent CPA. The SEC has the
authority to establish and enforce auditing standards and procedures, including what constitutes
independence for a CPA. The SEC has largely delegated standard setting to the private sector but
retains oversight and enforcement responsibilities. In 1998 the SEC and the AICPA jointly
announced the creation of the Independence Standards Board (ISB), a private-sector body whose
mission is to improve auditor independence standards. In announcing the formation of the ISB,
the SEC reaffirmed the crucial importance of the CPA's independence: "[M]aintaining the
independence of auditors of financial statements … is crucial to the credibility of financial
reporting and, in turn, to the capital formation process" (SEC Release FRR-50,1998).




What is Ethics in Research & Why is It Important?
When most people think of ethics (or morals), they think of rules for distinguishing between
right and wrong, such as the Golden Rule ("Do unto others as you would have them do unto
you"), a code of professional conduct like the Hippocratic Oath ("First of all, do no harm"), a
religious creed like the Ten Commandments ("Thou Shalt not kill..."), or a wise aphorisms like
the sayings of Confucius. This is the most common way of defining "ethics": norms for
conduct that distinguish between acceptable and unacceptable behavior.

Most people learn ethical norms at home, at school, in church, or in other social settings.
Although most people acquire their sense of right and wrong during childhood, moral
development occurs throughout life and human beings pass through different stages of growth as
they mature. Ethical norms are so ubiquitous that one might be tempted to regard them as simple
commonsense. On the other hand, if morality were nothing more than commonsense, then why
are there so many ethical disputes and issues in our society?

One plausible explanation of these disagreements is that all people recognize some common
ethical norms but different individuals interpret, apply, and balance these norms in different
ways in light of their own values and life experiences.

Most societies also have legal rules that govern behavior, but ethical norms tend to be broader
and more informal than laws. Although most societies use laws to enforce widely accepted moral
standards and ethical and legal rules use similar concepts, it is important to remember that ethics
and law are not the same. An action may be legal but unethical or illegal but ethical. We can also
use ethical concepts and principles to criticize, evaluate, propose, or interpret laws. Indeed, in the
last century, many social reformers urged citizens to disobey laws in order to protest what they
regarded as immoral or unjust laws. Peaceful civil disobedience is an ethical way of expressing
political viewpoints.

Another way of defining 'ethics' focuses on the disciplines that study standards of conduct, such
as philosophy, theology, law, psychology, or sociology. For example, a "medical ethicist" is
someone who studies ethical standards in medicine. One may also define ethics as a method,
procedure, or perspective for deciding how to act and for analyzing complex problems and
issues. For instance, in considering a complex issue like global warming, one may take an
economic, ecological, political, or ethical perspective on the problem. While an economist might
examine the cost and benefits of various policies related to global warming, an environmental
ethicist could examine the ethical values and principles at stake.

Many different disciplines, institutions, and professions have norms for behavior that suit their
particular aims and goals. These norms also help members of the discipline to coordinate their
actions or activities and to establish the public's trust of the discipline. For instance, ethical
norms govern conduct in medicine, law, engineering, and business. Ethical norms also serve the
aims or goals of research and apply to people who conduct scientific research or other scholarly
or creative activities. There is even a specialized discipline, research ethics, which studies these
norms.

There are several reasons why it is important to adhere to ethical norms in research. First,
norms promote the aims of research, such as knowledge, truth, and avoidance of error. For
example, prohibitions against fabricating, falsifying, or misrepresenting research data promote
the truth and avoid error. Second, since research often involves a great deal of cooperation and
coordination among many different people in different disciplines and institutions, ethical
standards promote the values that are essential to collaborative work, such as trust,
accountability, mutual respect, and fairness. For example, many ethical norms in research, such
as guidelines for authorship, copyright and patenting policies, data sharing policies, and
confidentiality rules in peer review, are designed to protect intellectual property interests while
encouraging collaboration. Most researchers want to receive credit for their contributions and do
not want to have their ideas stolen or disclosed prematurely. Third, many of the ethical norms
help to ensure that researchers can be held accountable to the public. For instance, federal
policies on research misconduct, conflicts of interest, the human subjects protections, and animal
care and use are necessary in order to make sure that researchers who are funded by public
money can be held accountable to the public. Fourth, ethical norms in research also help to
build public support for research. People more likely to fund research project if they can trust the
quality and integrity of research. Finally, many of the norms of research promote a variety of
other important moral and social values, such as social responsibility, human rights, animal
welfare, compliance with the law, and health and safety. Ethical lapses in research can
significantly harm human and animal subjects, students, and the public. For example, a
researcher who fabricates data in a clinical trial may harm or even kill patients, and a researcher
who fails to abide by regulations and guidelines relating to radiation or biological safety may
jeopardize his health and safety or the health and safety of staff and students.

Codes and Policies for Research Ethics

Given the importance of ethics for the conduct of research, it should come as no surprise that
many different professional associations, government agencies, and universities have adopted
specific codes, rules, and policies relating to research ethics. Many government agencies, such as
the National Institutes of Health (NIH), the National Science Foundation (NSF), the Food and
Drug Administration (FDA), the Environmental Protection Agency (EPA), and the US
Department of Agriculture (USDA) have ethics rules for funded researchers. Other influential
research ethics policies include the Uniform Requirements for Manuscripts Submitted to
Biomedical Journals (International Committee of Medical Journal Editors), the Chemist's Code
of Conduct (American Chemical Society), Code of Ethics (American Society for Clinical
Laboratory Science) Ethical Principles of Psychologists (American Psychological Association),
Statements on Ethics and Professional Responsibility (American Anthropological Association),
Statement on Professional Ethics (American Association of University Professors), the
Nuremberg Code and the Declaration of Helsinki (World Medical Association).

The following is a rough and general summary of some ethical principals that various codes
address*:

Honesty

Strive for honesty in all scientific communications. Honestly report data, results, methods and
procedures, and publication status. Do not fabricate, falsify, or misrepresent data. Do not deceive
colleagues, granting agencies, or the public.

Objectivity

Strive to avoid bias in experimental design, data analysis, data interpretation, peer review,
personnel decisions, grant writing, expert testimony, and other aspects of research where
objectivity is expected or required. Avoid or minimize bias or self-deception. Disclose personal
or financial interests that may affect research.

Integrity

Keep your promises and agreements; act with sincerity; strive for consistency of thought and
action.

Carefulness

Avoid careless errors and negligence; carefully and critically examine your own work and the
work of your peers. Keep good records of research activities, such as data collection, research
design, and correspondence with agencies or journals.

Openness

Share data, results, ideas, tools, resources. Be open to criticism and new ideas.

Respect for Intellectual Property

Honor patents, copyrights, and other forms of intellectual property. Do not use unpublished data,
methods, or results without permission. Give credit where credit is due. Give proper
acknowledgement or credit for all contributions to research. Never plagiarize.

Confidentiality
Protect confidential communications, such as papers or grants submitted for publication,
personnel records, trade or military secrets, and patient records.

Responsible Publication

Publish in order to advance research and scholarship, not to advance just your own career. Avoid
wasteful and duplicative publication.

Responsible Mentoring

Help to educate, mentor, and advise students. Promote their welfare and allow them to make
their own decisions.

Respect for colleagues

Respect your colleagues and treat them fairly.

Social Responsibility

Strive to promote social good and prevent or mitigate social harms through research, public
education, and advocacy.

Non-Discrimination

Avoid discrimination against colleagues or students on the basis of sex, race, ethnicity, or other
factors that are not related to their scientific competence and integrity.

Competence

Maintain and improve your own professional competence and expertise through lifelong
education and learning; take steps to promote competence in science as a whole.

Legality

Know and obey relevant laws and institutional and governmental policies.

Animal Care

Show proper respect and care for animals when using them in research. Do not conduct
unnecessary or poorly designed animal experiments.

Human Subjects Protection
When conducting research on human subjects, minimize harms and risks and maximize benefits;
respect human dignity, privacy, and autonomy; take special precautions with vulnerable
populations; and strive to distribute the benefits and burdens of research fairly.

* Adapted from Shamoo A and Resnik D. 2009. Responsible Conduct of Research, 2nd ed. (New
York: Oxford University Press).

Ethical Decision Making in Research

Although codes, policies, and principals are very important and useful, like any set of rules, they
do not cover every situation, they often conflict, and they require considerable interpretation. It is
therefore important for researchers to learn how to interpret, assess, and apply various research
rules and how to make decisions and to act in various situations. The vast majority of decisions
involve the straightforward application of ethical rules. For example, consider the following
case,

Case 1:

The research protocol for a study of a drug on hypertension requires the administration of the
drug at different doses to 50 laboratory mice, with chemical and behavioral tests to determine
toxic effects. Tom has almost finished the experiment for Dr. Q. He has only 5 mice left to test.
However, he really wants to finish his work in time to go to Florida on spring break with his
friends, who are leaving tonight. He has injected the drug in all 50 mice but has not completed all
of the tests. He therefore decides to extrapolate from the 45 completed results to produce the 5
additional results.

Many different research ethics policies would hold that Tom has acted unethically by fabricating
data. If this study were sponsored by a federal agency, such as the NIH, his actions would
constitute a form of research misconduct, which the government defines as "fabrication,
falsification, or plagiarism" (or FFP). Actions that nearly all researchers classify as unethical are
viewed as misconduct. It is important to remember, however, that misconduct occurs only when
researchers intend to deceive: honest errors related to sloppiness, poor record keeping,
miscalculations, bias, self-deception, and even negligence do not constitute misconduct.
Also, reasonable disagreements about research methods, procedures, and interpretations do not
constitute research misconduct. Consider the following case:

Case 2:

Dr. T has just discovered a mathematical error in a paper that has been accepted for publication
in a journal. The error does not affect the overall results of his research, but it is potentially
misleading. The journal has just gone to press, so it is too late to catch the error before it appears
in print. In order to avoid embarrassment, Dr. T decides to ignore the error.

Dr. T's error is not misconduct nor is his decision to take no action to correct the error. Most
researchers, as well as many different policies and codes, including ECU's policies, would say
that Dr. T should tell the journal about the error and consider publishing a correction or errata.
Failing to publish a correction would be unethical because it would violate norms relating to
honesty and objectivity in research.

There are many other activities that the government does not define as "misconduct" but which
are still regarded by most researchers as unethical. These are called "other deviations" from
acceptable research practices and include:

      Publishing the same paper in two different journals without telling the editors
      Submitting the same paper to different journals without telling the editors
      Not informing a collaborator of your intent to file a patent in order to make sure that you
       are the sole inventor
      Including a colleague as an author on a paper in return for a favor even though the
       colleague did not make a serious contribution to the paper
      Discussing with your colleagues confidential data from a paper that you are reviewing for
       a journal
      Trimming outliers from a data set without discussing your reasons in paper
      Using an inappropriate statistical technique in order to enhance the significance of your
       research
      Bypassing the peer review process and announcing your results through a press
       conference without giving peers adequate information to review your work
      Conducting a review of the literature that fails to acknowledge the contributions of other
       people in the field or relevant prior work
      Stretching the truth on a grant application in order to convince reviewers that your project
       will make a significant contribution to the field
      Stretching the truth on a job application or curriculum vita
      Giving the same research project to two graduate students in order to see who can do it
       the fastest
      Overworking, neglecting, or exploiting graduate or post-doctoral students
      Failing to keep good research records
      Failing to maintain research data for a reasonable period of time
      Making derogatory comments and personal attacks in your review of author's submission
      Promising a student a better grade for sexual favors
      Using a racist epithet in the laboratory
         Making significant deviations from the research protocol approved by your institution's
          Animal Care and Use Committee or Institutional Review Board for Human Subjects
          Research without telling the committee or the board
         Not reporting an adverse event in a human research experiment
         Wasting animals in research
         Exposing students and staff to biological risks in violation of your institution's biosafety
          rules
         Rejecting a manuscript for publication without even reading it
         Sabotaging someone's work
         Stealing supplies, books, or data
         Rigging an experiment so you know how it will turn out
         Making unauthorized copies of data, papers, or computer programs
         Owning over $10,000 in stock in a company that sponsors your research and not
          disclosing this financial interest
         Deliberately overestimating the clinical significance of a new drug in order to obtain
          economic benefits

These actions would be regarded as unethical by most scientists and some might even be illegal.
Most of these would also violate different professional ethics codes or institutional policies.
However, they do not fall into the narrow category of actions that the government classifies as
research misconduct. Indeed, there has been considerable debate about the definition of "research
misconduct" and many researchers and policy makers are not satisfied with the government's
narrow definition that focuses on FFP. However, given the huge list of potential offenses that
might fall into the category "other serious deviations," and the practical problems with defining
and policing these other deviations, it is understandable why government officials have chosen to
limit their focus.

Finally, situations frequently arise in research in which different people disagree about the proper
course of action and there is no broad consensus about what should be done. In these situations,
there may be good arguments on both sides of the issue and different ethical principles may
conflict. These situations create difficult decisions for research known as ethical dilemmas.
Consider the following case:

Case 3:

Dr. Wexford is the principal investigator of a large, epidemiological study on the health of 5,000
agricultural workers. She has an impressive dataset that includes information on demographics,
environmental exposures, diet, genetics, and various disease outcomes such as cancer,
Parkinson‘s disease (PD), and ALS. She has just published a paper on the relationship between
pesticide exposure and PD in a prestigious journal. She is planning to publish many other papers
from her dataset. She receives a request from another research team that wants access to her
complete dataset. They are interested in examining the relationship between pesticide exposures
and skin cancer. Dr. Wexford was planning to conduct a study on this topic.

Dr. Wexford faces a difficult choice. On the one hand, the ethical norm of openness obliges her
to share data with the other research team. Her funding agency may also have rules that obligate
her to share data. On the other hand, if she shares data with the other team, they may publish
results that she was planning to publish, thus depriving her (and her team) of recognition and
priority. It seems that there are good arguments on both sides of this issue and Dr. Wexford
needs to take some time to think about what she should do. One possible option is to share data,
provided that the investigators sign a data use agreement. The agreement could define allowable
uses of the data, publication plans, authorship, etc.

The following are some step that researchers, such as Dr. Wexford, can take to deal with ethical
dilemmas in research:
What is the problem or issue?

It is always important to get a clear statement of the problem. In this case, the issue is whether to
share information with the other research team.

What is the relevant information?

Many bad decisions are made as a result of poor information. To know what to do, Dr. Wexford
needs to have more information concerning such matters as university or funding agency policies
that may apply to this situation, the team's intellectual property interests, the possibility of
negotiating some kind of agreement with the other team, whether the other team also has some
information it is willing to share, etc. Will the public/science be better served by the additional
research?

What are the different options?

People may fail to see different options due to a limited imagination, bias, ignorance, or fear. In
this case, there may be another choice besides 'share' or 'don't share,' such as 'negotiate an
agreement.'

How do ethical codes or policies as well as legal rules apply to these different options?

The university or funding agency may have policies on data management that apply to this case.
Broader ethical rules, such as openness and respect for credit and intellectual property, may also
apply to this case. Laws relating to intellectual property may be relevant.

Are there any people who can offer ethical advice?
It may be useful to seek advice from a colleague, a senior researcher, your department chair, or
anyone else you can trust (?). In the case, Dr. Wexford might want to talk to her supervisor and
research team before making a decision.

After considering these questions, a person facing an ethical dilemma may decide to ask more
questions, gather more information, explore different options, or consider other ethical rules.
However, at some point he or she will have to make a decision and then take action. Ideally, a
person who makes a decision in an ethical dilemma should be able to justify his or her decision
to himself or herself, as well as colleagues, administrators, and other people who might be
affected by the decision. He or she should be able to articulate reasons for his or her conduct and
should consider the following questions in order to explain how he or she arrived at his or her
decision: .

      Which choice could stand up to further publicity and scrutiny?
      Which choice could you not live with?
      Think of the wisest person you know. What would he or she do in this situation?
      Which choice would be the most just, fair, or responsible?
      Which choice will probably have the best overall consequences?

After considering all of these questions, one still might find it difficult to decide what to do. If
this is the case, then it may be appropriate to consider others ways of making the decision, such
as going with one's gut feeling, seeking guidance through prayer or meditation, or even flipping a
coin. Endorsing these methods in this context need not imply that ethical decisions are irrational
or that these other methods should be used only as a last resort. The main point is that human
reasoning plays a pivotal role in ethical decision-making but there are limits to its ability to solve
all ethical dilemmas in a finite amount of time.

Promoting Ethical Conduct in Science

Many of you may be wondering why you are required to have training in research ethics. You
may believe that you are highly ethical and know the difference between right and wrong. You
would never fabricate or falsify data or plagiarize. Indeed, you also may believe that most of
your colleagues are highly ethical and that there is no ethics problem in research.

If you feel this way, relax. No one is accusing you of acting unethically. Indeed, the best
evidence we have shows that misconduct is a very rare occurrence in research, although there is
considerable variation among various estimates. The rate of misconduct has been estimated to
be as low as 0.01% of researchers per year (based on confirmed cases of misconduct in federally
funded research) to as high as 1% of researchers per year (based on self-reports of misconduct on
anonymous surveys). See Shamoo and Resnik (2009), cited above.
Clearly, it would be useful to have more data on this topic, but so far there is no evidence that
science has become ethically corrupt. However, even if misconduct is rare, it can have a
tremendous impact on research. Consider an analogy with crime: it does not take many murders
or rapes in a town to erode the community's sense of trust and increase the community's fear and
paranoia. The same is true with the most serious crimes in science, i.e. fabrication, falsification,
and plagiarism. However, most of the crimes committed in science probably are not tantamount
to murder or rape, but ethically significant misdeeds that are classified by the government as
'deviations.' Moreover, there are many situations in research that pose genuine ethical dilemmas.

Will training and education in research ethics help reduce the rate of misconduct in science? It is
too early to tell. The answer to this question depends, in part, on how one understands the causes
of misconduct. There are two main theories about why researchers commit misconduct.
According to the "bad apple" theory, most scientists are highly ethical. Only researchers who are
morally corrupt, economically desperate, or psychologically disturbed commit misconduct.
Moreover, only a fool would commit misconduct because science's peer review system and self-
correcting mechanisms will eventually catch those who try to cheat the system. In any case, a
course in research ethics will have little impact on "bad apples," one might argue. According to
the "stressful" or "imperfect" environment theory, misconduct occurs because various
institutional pressures, incentives, and constraints encourage people to commit misconduct, such
as pressures to publish or obtain grants or contracts, career ambitions, the pursuit of profit or
fame, poor supervision of students and trainees, and poor oversight of researchers. Moreover,
defenders of the stressful environment theory point out that science's peer review system is far
from perfect and that it is relatively easy to cheat the system. Erroneous or fraudulent research
often enters the public record without being detected for years. To the extent that research
environment is an important factor in misconduct, a course in research ethics is likely to help
people get a better understanding of these stresses, sensitize people to ethical concerns, and
improve ethical judgment and decision making.

Misconduct probably results from environmental and individual causes, i.e. when people who are
morally weak, ignorant, or insensitive are placed in stressful or imperfect environments. In any
case, a course in research ethics is useful in helping to prevent deviations from norms even if it
does not prevent misconduct. Many of the deviations that occur in research may occur because
researchers simple do not know or have never thought seriously about some of the ethical norms
of research. For example, some unethical authorship practices probably reflect years of tradition
in the research community that have not been questioned seriously until recently. If the director
of a lab is named as an author on every paper that comes from his lab, even if he does not make a
significant contribution, what could be wrong with that? That's just the way it's done, one might
argue. If a drug company uses ghostwriters to write papers "authored" by its physician-
employees, what's wrong about this practice? Ghost writers help write all sorts of books these
days, so what's wrong with using ghostwriters in research?
Another example where there may be some ignorance or mistaken traditions is conflicts of
interest in research. A researcher may think that a "normal" or "traditional" financial relationship,
such as accepting stock or a consulting fee from a drug company that sponsors her research,
raises no serious ethical issues. Or perhaps a university administrator sees no ethical problem in
taking a large gift with strings attached from a pharmaceutical company. Maybe a physician
thinks that it is perfectly appropriate to receive a $300 finder‘s fee for referring patients into a
clinical trial.

If "deviations" from ethical conduct occur in research as a result of ignorance or a failure to
reflect critically on problematic traditions, then a course in research ethics may help reduce the
rate of serious deviations by improving the researcher's understanding of ethics and by
sensitizing him or her to the issues.

Finally, training in research ethics should be able to help researchers grapple with ethical
dilemmas by introducing researchers to important concepts, tools, principles, and methods that
can be useful in resolving these dilemmas. In fact, the issues have become so important that the
NIH and NSF have mandated training in research ethics for graduate students.




Alcohol, Ethics & Society-Daily Summary

Alcohol, Ethics & Society: An International Conference on Rights and Responsibilities
opened today at the new campus of the National College of Ireland (NCI) in Dublin. The
conference, sponsored jointly by the International Center for Alcohol Policies (ICAP) and
NCI, seeks to explore the roles of key players in the alcohol debate. It is intended to
provide a framework for constructive dialogue and to explore the rights and
responsibilities, shared values and partnership potential among all relevant stakeholders.
The opening session of the conference was chaired jointly by Prof. Joyce O‘Connor,
President of NCI, and Mr. Marcus Grant, President of ICAP, who introduced the session
by providing a historical backdrop of the relationship between the two organizations and
their ongoing work in the area of corporate social responsibility. In 1998, the partnership
between NCI and ICAP produced the Dublin Principles, a framework to guide the
relationship between the beverage alcohol industry and the research community.
Opening Address
Setting the stage for the discussion about partnership in the development of sound alcohol
policies, the conference was opened by Minister Michael McDowell TD, Ireland‘s
Minister for Justice, Equality and Law Reform. The Minister focused on the current
national debate in Ireland about how best to address the harms that result from the abuse
of alcohol. To date, no clear consensus has emerged on how to deal with the changing
patterns in the consumption of alcohol among the Irish and the resulting problems. This
changing trend in consumption, according to the Minister is attributable to ―societal
changes, changing lifestyles and expectations, more disposable income, the lessening of
parental control on young people and a strong focus on consumerism.‖
―This suggests to me that simplistic solutions will not work‖, continued Minister
McDowell. ―Effective action will involve partnership and dialogue.‖ The conference, in
his view, will assist in the process of identifying common ground. In the specific case of
Ireland, reform of licensing laws by the Commission on Liquor Licensing, will go a long
way towards addressing some of these issues, provided they are based on clear legislation
and its enforcement and an open and transparent decision-making process. This process
will involve partnerships, both between different government entities and between
government, public health, and a responsible industry.
The Minister‘s opening address was followed by eminent speakers from the international
arena who represent the broad reach of the conference and its inclusion of all those with a
stake in the dialogue on rights and responsibilities in the alcohol field.
―Corporate Social Responsibility – A Context for Alcohol Policy‖
Mr. Peter Coors, Chairman of the Coors Brewing Company, one of the largest breweries
in the United States, confronted directly the issue of corporate social responsibility.
Using the case of his own company as an example, Mr. Coors examined the rationale
behind the increasing commitment by companies to making corporate social
responsibility an essential part of their business mission, strategy and operations. Coors,
he said, supports this approach, for ―(s)upporting sound alcohol policies is the right thing
to do.‖
Along with good corporate citizenship, there are several other elements that should be
combined in this effort -- personal accountability, understanding cultural context, and
working in partnership. ICAP, he said, through its activities, had broken new ground
within this area, ―moving from dialogue to action.‖ While skeptics will always exist,
their criticism can be constructive if it ―encourages us to relentlessly examine our efforts
to improve our communities.‖ Mr. Coors concluded, ―Our progress should not be
impaired or distracted by debate about WHO is right, but rather fueled by discussion
about WHAT is right.‖
―Through a Looking Glass: Corporate Social Responsibility and the Use of Alcohol‖
His remarks were echoed by Prof. Joyce O‘Connor, President of NCI, who addressed the
need for corporate social responsibility to include an interaction between social,
economic and environmental issues. The core of corporate responsibility, she added,
rests on openness and honesty.
Alcohol in Ireland, said Prof. O‘Connor, is an integral part of society and a highly
emotional issue, which has not changed significantly since the 18th century. While much
of Irish drinking is centered around social interaction, fun and enjoyment. Addressing
the close relationship between alcohol and Irish society, most importantly, relies on the
integration of issues. Key elements in the strategy must include a balance between
individuals‘ right to choose and the right of society to protect the community from harm.
The process is one that needs leadership from government, business, parent groups and
others. Prof. O‘Connor‘s challenge to the conference, ―Let the dialogue begin.‖
―Alcohol in Ireland: A Lot of Damage Done, More To Do‖
Providing a context to the role of alcohol in Ireland and a public health perspective on the
ethical debate to that particular country was Dr. Joseph Barry, Senior Lecturer in Public
Health at Trinity College, Dublin. In his presentation, Dr. Barry addressed the rising
alcohol consumption in Ireland and the efforts of the government to address the
associated harm resulting from misuse. In its interim report, the Strategic Task Force on
Alcohol has recommended approaches to reducing the social and health costs in Ireland,
many of which have been opposed by the alcohol industry in Ireland.
Approaches that have proven effective, according to Dr. Barry, involve regulation of
alcohol. Education on alcohol issues, he said, have not proven successful. What is
needed is an approach that addresses the emotional aspects of alcohol in Ireland, and the
myriad factors that are part of it. While ―drinking is an individual act, individuals do not
make their choices in a vacuum.‖
GOVERNMENT REGULATION, INDUSTRY SELF-REGULATION AND PERSONAL
PLEASURE
\
Where do the rights of the consumer end and those of government begin?
Who decides what ―responsible drinking‖ means?
The first thematic session of the conference was designed to explore two questions
central to the alcohol debate: Where do the rights of the consumer end and those of
government begin? Who decides what ―responsible drinking‖ means? The session was
chaired by Ms. Jodie Bernstein, former Director of Consumer Protection at the U.S.
Federal Trade Commission, the government body charged with overseeing regulatory
issues.
―Government Regulation, Corporate Responsibility and Personal Pleasure: A
Public Health Perspective From New Zealand‖
Dr. Mike MacAvoy, CEO of the Alcohol Advisory Council of New Zealand (ALAC),
offered a perspective on an ideal society in which alcohol consumption is a source of
individual pleasure, yet where its consumption is responsible and the rights and wellbeing
of individuals are safeguarded.
The presentation addressed various players and issues that must be considered in order to
achieve this end: ―the rights and responsibilities of the individual; the role of government
in regulating those rights and responsibilities, whilst preserving the freedom of the
individual as far as is possible; and the responsibility of the alcohol industry to ensure
that communities, at the very least, are not harmed by alcohol in the drive for market
share and shareholder satisfaction.‖
At the heart of the debate is society‘s inability to form a balanced view of what an ideal
society in which alcohol is present might look like. ―History has taught us the folly of
many attempts to prohibit alcohol, particularly where there are no compelling cultural,
religious or moral beliefs to support such an approach. The reality is that alcohol will
remain an intrinsic part of most societies in which it has found a niche. Therefore, the
debate should be about how to live harmoniously with alcohol rather than how to battle to
live without it.‖
―Why Doctors Should Not Interfere In Their Patients‘ Drinking Habits‖
The health profession, in particular primary care physicians, has long been encouraged to
guide their patients‘ drinking behavior. From the perspective of a primary care
physician, Dr. Michael Fitzpatrick, author of ―The Tyranny of Health‖, examined the
role of physicians to in determining the drinking behavior of their patients. The criteria
for such recommendations rely on a ‗population strategy‘, that attempts to offer blanket
advice to the general populus. This approach, according to Fitzpatrick, is ineffective and
not of much use. Rather, a role for the physician is called for only when a patient is
clearly in need of help with his or her drinking.
―God, Country and the Spirit of Man‖
Drawing upon the historical context for the debate on alcohol between those who would
allow it and those who would seek its prohibition, Dr. Vijay Mallya, Chairman of the
United Breweries of India, offered the perspective of the beverage alcohol industry in
society‘s quest for the ―golden mean‖ in alcohol consumption. The key to the quest lies
―not in regulation but in education, it lies not in prohibition, but in moderation, not in
confrontation but a mutual appreciation of (…) viewpoints and cooperation.‖
Using the example of India with its democratic tradition, its multicultural and
multilingual society and the integral presence of prohibition in its Constitution, Dr.
Mallya described the juxtaposition of industry and government in alcohol issues.
Excessive regulation and taxation, he said, lead to abuse and evasion. The proper
approach to alcohol issues is one that focuses on misuse, with the industry as a platform
for educating consumers. People must have the freedom to do what they will, he said,
but must be warned about its ill effects.
―Alcohol Policy through Partnership: Is the Glass Half-Empty or Half-Full?‖
The closing presentation of the day was delivered by Mr. Marcus Grant, President of
ICAP, one of the conference sponsors, who focused on the theme of partnership in
developing sound alcohol policies. According to Grant, ―Partnership is not a goal but a
way to achieve a goal. The goal is defining the role of alcohol in a society so that
benefits are maximized and problems are minimized.‖ Any effective partnership must be
based on the general principles developed by the World Health Organization, ―mutual
respect, trust, transparency, and shared benefits‖
Drawing upon the results of an international survey of key policymakers conducted by
ICAP, Mr. Grant addressed priorities and directions for partnerships in alcohol policy
development. While existing partnerships with the industry are more common in mature
industrialized countries than in developing countries, the world, according to the survey,
is evenly divided between those who view them as desirable and those who do not. For
those who would favor such partnerships, public education about alcohol is clearly the
main priority for action. The challenge remains how best to respond to the need for
better education – it is a challenge for the beverage alcohol industry, for educators and
health advocates, for researchers and for governments alike.
―Is the financial health of the beverage alcohol industry incompatible with the good
health of the drinking population?‖ asks Grant. The proof of the pudding may well lie in
partnership.




Alcohol, Ethics & Society-Daily Summary
The second day of the conference continued the attempt to establish an ethical framework
for alcohol policy development. Addressing the role of research and education, the
morning session posed some critical questions:
When it comes to research, does the source of funding always create bias?
Who has the responsibility to educate the public about the ―good‖ and ―bad‖ aspects of
drinking?
Chairing the session was Mr. Graeme Willersdorf, Senor Vice President for Corporate
Affairs at Foster‘s Group and Chairman of ICAP‘s Board of Directors. This session, said
Mr. Willersdorf, is an extension of the work already done by the sponsoring
organizations in the area of research and education, particularly the Dublin Principles and
the Geneva Partnership on Alcohol: Towards a Global Charter. These two consensus
documents addressing the issues of research and education can be found on the ICAP
website.
―Approaches to Primary Prevention of Alcohol Use: Research and Ethical
Questions‖
Dr. Mark Morgan, Head of the Education Department of St. Patrick‘s College of
Education in Dublin and a founding member of the ESPAD study on alcohol, reviewed a
range of approaches to prevent alcohol problems among young people that have been
applied in many countries around the world. The basic dichotomy in approaches that are
implemented in schools lies the choice of reducing demand versus reducing supply.
According to Dr. Morgan, while the former has shown but modest success, the latter
holds considerable promise as an effective tool.
School education programs, said Dr. Morgan, can be effective under certain
circumstances: where there is active participation by the learners, those at whom the
program is directed; where there is understanding of the social influences that are at
work; where parental influences are involved; where there is an emphasis on health, not
on punitive measure; where the program is an integral part of the curriculum.
However, ―(o)ne major conclusion is that no policy can be effective unless it is
accompanied by enforcement and there is awareness on the part of the intended targets of
both the policy and the enforcement efforts.‖
―Campus-Community Collaboration – A Practical Approach to Curbing Alcohol
Abuse on Campus"
Bringing with him the experience from university campuses on the other side of the
Atlantic, Dr. Peter Cressy, President and CEO of the Distilled Spirits Council of the
United States (DISCUS), reviewed the problem of alcohol misuse currently facing
college administrators and students in that country. The presentation focused on the
drinking behavior on university campuses in the United States and examined the dilemma
faced by universities in their responsibility for a student body largely under the legal
drinking age. Dr. Cressy addressed some of the approaches that have been implemented
to solve this dilemma and to change students‘ drinking behaviors that are associated with
harm.
In particular, Dr. Cressy‘s presentation focused on an industry–campus–community
partnership effort that is being carried out in several regions of the United States with
considerable success. The ―American Campus and Alcohol Conference‖ involves all
relevant sectors at all stages of its execution, from planning to funding. In this approach,
all partners involved work in tandem towards a common goal. According to Dr. Cressy,
the lessons learned include that ―the industry must be at the table and seen as part of the
solution‖. In addition, it is especially important to ―pay attention to dangerous
consequences associated with risky and abusive drinking.‖
―The Promise of Partnership for Research and Education‖
Adding a different perspective, Dr. John Luik from the Niagara Institute in Canada,
examined the three arguments fundamental to the case that is often made against
partnerships including the beverage alcohol industry. First, there is the notion that the
alcohol industry, on the one hand, and the public health community on the other are each
dominated by irreconcilable interests – increased profit versus public good. The second
argument is that the industry manipulates the ―‗ideological climate‘ by an idea and
research agenda that is founded on questionable science.‖ Third, the ―essential tension‖
that ensues makes partnership impracticable.
According to Dr. Luik, these three arguments ―present a misconceived debate about the
nature of industry science‖, ignoring the significant promise partnership holds. Conflicts
of interest need not arise exclusively from commercial organizations, but can equally
stem from government and other entities with their own agendas. ―The public health
community‘s interests are thus not necessarily right, either in part or in whole, they enjoy
no privileged status; rather they must be argued for in the same fashion as any other
interests.‖
Partnerships in the alcohol filed require that three principles be respected – a recognition
of the benefits of moderate drinking, a focus on the reduction of problematic drinking,
and the use of the best available science to determine the root causes of problems.
It is possible for all parties in a partnership to accept each other‘s core interests,
according to Dr. Luik. In fact, disagreement on some core interests need not be an
obstacle to agreement on others. In developing such partnerships, ―(w) hat starts out as
‗sleeping with the enemy‘ may over time lead to setting up a home and having a family.‖
―Drinking Education: Minimizing Negatives and Optimizing Positives‖
The pleasurable aspects of alcohol consumption have been chronicled over time and
across cultures, yet not all cultures view alcohol as a source of pleasure. Focusing on the
element of pleasure that often accompanies alcohol consumption, the last presenter in this
session, Dr. Stanton Peele, author and addiction expert from the U.S., offered ―The Joy of
Drinking‖ as a positive model that can promote successful drinking patterns.
While most people, asked individually about their views of alcohol and its effects, would
place pleasure foremost, public health groups place harms foremost, particularly as they
relate to young people. Yet, according to Dr. Peele, ―ignoring health and pleasure
benefits while referring only to the danger and harm associated with alcohol may delay –
even permanently impair – people‘s ability to adopt sensible and pleasurable drinking
practices.‖ It is therefore important that, as young people learn about drinking, they be
taught about both the potential harms and the benefits – physiological and psychological
– to be derived from alcohol.
The goal should be to learn moderate drinking. ―The development of moderate drinking
is both possible and beneficial; it is beneficial for the individual and for those around the
person as well as for the society at large. In other words, people should learn as an
ethical tenet that excessive drinking and antisocial behavior while drinking is wrong.‖
ADVERTISING, MARKETING AND SALES
(2pm to 3:30pm)
At the heart of the debate around ethical practices and corporate social responsibility lies
the issue of advertising and marketing of consumer products. In relation to alcohol, this
debate has broader implications that extend into the realm of public health.
Is it enough that advertising should be ―truthful, honest and decent,‖ or are higher
ethical standards needed for beverage alcohol?
Who should have the last word?
The session was chaired by Mr. Jose Domingo Gomez Castallo, Chairman of the
European Advertising Standards Authority, who positioned the session within the context
of alcohol abuse among young people. This issue, he said, is the collective responsibility
of society, however, the industry, too, must accept its share.
―Drinking It In: Findings of the Valencia Meeting on Marketing and Promotion of
Alcohol to Young People‖
Ms. Leanne Riley, Scientist at the World Health Organization‘s Headquarters in Geneva,
presented the conclusions and recommendations of a meeting held earlier in 2002 to
address the effect of alcohol marketing and advertising on young people around the
world. While alcohol advertising is not the sole factor responsible for alcohol misuse
among young people, its highly visible role makes it an important one.
Alcohol misuse is a key contributor to morbidity and mortality, and is increasing among
young people the world over. The involvement of beverage alcohol advertising,
according to Ms. Riley, is an influence on changing beliefs and expectations among
young people about drinking, which is generally portrayed in advertising as positive,
desirable, and the norm in most societies. These portrayals are problematic and make the
environment a hostile one to public health messages.
Current responses to marketing – codes, warnings, restrictions and counter-advertising –
are inadequate to deal with the new forms of advertising and new products that are on the
market and have appeal for young people. WHO has developed recommendations for
these issues, which should be implemented in countries around the world. In addition,
partnerships and the input of the beverage alcohol industry are to be encouraged. In Ms.
Riley‘s words, WHO‘s challenge to the industry is that it ―can be part of the problem or
part of the solution.‖
―Are Alcohol Advertisers Drinking In the Last Chance Saloon?‖
Speaking from three differing perspectives, that of an adman who has spent thirty years
in advertising, many of them working on alcohol brands, that of a regulator within the
UK‘s Advertising Standards Authority, and that of a parent of a teenage son, Mr. Hugh
Burkitt offered a critique of alcohol advertising in the United Kingdom. While rules on
the advertising of alcohol exist, according to Burkitt, they are largely being ignored,
particularly on television. The three main issues that need particular attention in this
regard are targeting of young drinkers, binge drinking and depictions of sexual success in
advertising.
Using examples of existing television commercials to illustrate his point, Mr. Burkitt
offered a response to one of the key questions addressed in this session -- higher ethical
standards are needed for alcohol than the standard rules on truth and decency, for
―(a)lcohol brings great pleasure to an enormous number of people. But it is also
dangerous, and I would agree with myself – in all three of my roles – that young people,
in particular, need to learn how to drink it sensibly.‖
―Alcohol Advertising and Promotions: The Good, the Bad and the Ugly?‖
Professor Ann Roche, Director of the National Centre for Education and Training on
Addiction at Flinders University in Australia, discussed the contentious field of alcohol
advertising and the disparate and often adversarial views held on the subject by the
beverage alcohol industry and the public health field. The presentation was an attempt to
lay the groundwork for what constitutes good and bad, or inappropriate, advertising, as
well as responsible consumption and discussed the ambivalence that bedevils both its
consumption and its advertising and promotion.
Using examples, Prof. Roche illustrated both the good and the bad, the responsible and
irresponsible in alcohol advertising. New products whose packaging or delivery raises
concerns regarding responsible serving and consumption were highlighted. Another area
for particular concern, according to the speaker, includes the sale, promotion and
distribution of beverage alcohol through the internet. However, there also exists a large
body of advertising that is acceptable from a public health perspective. Many of these
―depict images that reflect low risk drinking patterns, place drinking in the context of
eating food, or, more specifically, consuming good quality food with good quality
alcohol.‖
Prof. Roche concluded her remarks with an assessment of the current state of advertising
of beverage alcohol. In its efforts, she said, the industry is misreading today‘s culture and
pushing the envelope beyond acceptable limits of taste. The limit to advertising is clearly
marked around several ―hands-off‖ areas – youth, the objectification of women, sex,
risky behavior, and sports.
―Setting the Standards for Responsible Consumer Marketing‖
The final presentation in the session was delivered by Mr. Chris Britton, Global
Marketing Director for Diageo plc. In an overview of marketing practice in general, Mr.
Britton stressed the role of the consumer in driving the market. Marketing, he said, is
based on insight into the values, attitudes and preferences of consumers. In the alcohol
field, as in others, it is consumers who drive the business.
However, ―great brands have to be produced and marketed to the highest standards of
social acceptability and responsibility.‖ This tenet must lie at the very core of the
advertising and marketing process. In setting the standards for responsible marketing,
Diageo has pledged to take a leading role towards developing the concept of ―drinking
well‖. Responsible consumer marketing, he said, should not be a constraint, but a
positive driver linked to company performance and the creation of the educated
consumer.
As a demonstration of this commitment, Mr. Britton announced publicly that Diageo has
signed on to the U.N. Global Compact on corporate social responsibility, making it the
first drinks company to do so. Yet at the end of the day, it should be borne in mind that
―(j)ust as the brand owner must market responsibly, so the consumer has a responsibility
to drink responsibly.‖




ALCOHOL, ETHICS & SOCIETY-DAILY SUMMARY

Who are the stakeholders in the alcohol debate?
What are the rights and responsibilities of each?
How do we put abstract principles into real-world action?
The final session of the Alcohol, Ethics & Society conference began with an address by
the President of the European Parliament, who, on the eve of the Irish referendum on the
Nice Treaty emphasized the important role played by civil society in the transformation
that has been ongoing in Europe over the last two decades. Corporate social
responsibility, he stressed, is an important factor in the debate around sustainability in
which Europe needs to engage.
Presentation of General Conclusions
The dialogue initiated at the conference opened the door to the exchange of diverse points
of view. However, there were several areas in which there was consensus and which
hold promise for the development of future partnerships. While these do not represent a
consensus statement to ensue from the conference, they are areas of agreement upon
which future dialogue can be built. Professor Hurst Hannum, Professor of International
Law at Tufts University and Mr. David Logan, Director, the Corporate Citizenship
Company in the U.K., and Adjunct Professor at the National College of Ireland.and Mr.
David Logan summarized the points on which agreement was apparent.
• The development of an appropriate alcohol policy requires complex solutions.
However, they must include honesty and transparency between partners and an
understanding of the role of social and cultural norms.
• There must also be agreement on what the goals of appropriate alcohol policies
should be. While there is consensus that the reduction of harm should be a key
goal, there is less consensus on whether this should be the only goal, and, if it is
not, what other goals should be.
• Education is necessary, but not sufficient for promoting the responsible
consumption of alcohol. It should also be borne in mind that there are two
components to education – the provision of information and the inculcation of
social values. These two components must be kept separate.
• Everyone has responsibilities around alcohol – individuals, families,
communities, the industry and government.
• Partnerships are not only possible, but necessary to achieve goals and for
successful implementation.
There are several additional issues that should be considered in the implementation of
partnerships. No single entity can be held solely responsible. Partnerships require the
willing participation of all entities. However, not all groups need participate in all
partnerships, and not all issues can or should be addressed – each sector should examine
its own capacity and what it is able to do. It is also important to understand that the pace
of partnership must depend on the willingness of the parties involved and should be
appropriate. Finally, each party must have an appreciation of the culture and taboos of
the others.
―Aligning Business Interests and Corporate Social Responsibility: Congress‘
Perspective‖
Senator Joe O‘Toole, President, Irish Congress of Trade Unions offered another
perspective on the place of alcohol in Irish society and the approaches that are useful in
addressing problems and minimizing harm. According to Senator O‘Toole, any alcohol
strategy aimed at the supply side is doomed to failure. A more effective approach is one
that focuses on demand and the reasons people drink and how they drink. Success can
only be achieved if societal attitudes are changed. However, any policy and its objectives
must be reasonable, sensible, and attainable. The end goal in alcohol policy should be
moderation, making drinking ―part of a social occasion, rather than the social occasion
itself.
―Aligning Business Interests and Corporate Social Responsibility: An Employers‘
Perspective‖
Corporate responsibility and accountability have increasingly gained importance in
aspects of corporate life, influencing most aspects of business. Mr. Maurice Pratt,
President of the Irish Business and Employers Confederation (IBEC), discussed how this
change has manifested itself in the initiatives undertaken by the Drinks Industry Group of
Ireland.
In response to the need for greater social responsibility around alcohol, a new
organization was founded, its mandate reflected in its name, Meaningful Enjoyment of
Alcohol in Society (MEAS). The general message of the organization is ―that the
reasonable and responsible consumption of alcohol is fine.‖ Its vision reflects the notion
that the balanced understanding of alcohol issues, the promotion of sensible drinking and
the reduction of alcohol related harm are achievable through partnership.
The member companies of MEAS, including some of the major producers of beverage
alcohol active in Ireland, presents a unified voice for the beverage alcohol industry on
social responsibility and drinking. Its creation ―is a statement of responsibility. We are
responsible people working in a responsible industry accepting our responsibilities to
society. In return, we expect a fair debate about the issues we all face relating to the
social aspects of alcohol.‖
Closing Speech
―A Fresh Look on the Role of NGOs: How Secure is Our Financial Future?‖
In a changing economic and political world, with increasing pressures and diminishing
availability of funding, the very existence of many non-governmental organizations
(NGOs) is threatened. As a result, ―NGOs must begin to develop at least some degree of
self-sufficiency if they are to have any medium to long-term plans and aspirations.‖
Using the Population and Community Development Association (PDA) of Thailand as an
illustration, Senator Mechai Viravaidya, the organization‘s founder, described the
partnerships that PDA has forged with the private sector to promote sustainable and stem
population growth in rural and urban communities throughout that country.
    The plan for action developed can serve as a module that can easily be adapted and
    changed for a range of circumstances. It relies on the establishment of for-profit
    companies, each serving as a source of funding for a not-for-profit. These would rely, in
    the first instance on private donors, then also involve the business sector. PDA has
    established 16 for-profit companies in Thailand, including the well-known Cabbages and
    Condoms Restaurants that provide a source of funding for the NGOs own activities.




    A world stage for developing alcohol policy
    Developing effective policy is a dynamic process fostered by meaningful dialogue. This
    conference served as a crucial step in building consensus among diverse experts, thus paving the
    way for putting theories about alcohol policy into practice.

    Alcohol, Ethics and Society was attended by leaders from around the world, including
    representatives and officials from the government, commercial and nongovernmental sectors, as
    well as consumers, clinicians, and educators.

    Participants included professionals from the following areas:
   Advertising
   Beverage Alcohol Producers
   Education
   Government
   Health
   Intergovernmental Organizations
   Law Enforcement Media
   Nongovernmental Organizations
   Public Policy
   Research
   Retail
Conclusion

Ethics are important not only in business but in all aspects of life because it is an essential part of
the foundation on which of a civilized society is build. A business or society that lacks ethical
principles is bound to fail sooner or later.

								
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