June 03, 2016 (LBO) – Ethics is crucial to business in the context of redefining our social order, Thilak Karunaratne, the chairman of Sri Lanka’s Securities and Exchange Commission said, speaking to the Junior Chamber International Biz Meet.
It is imperative that we “redefine the current social order and revitalize our actions and thoughts in the sphere of business and personal life,” he said at the event.
“The importance of business ethics are strongly felt at a time the Government is committed towards inclusive development. From a social point of view the concept refers to shared responsibility and accountability in the business world that transcends to the society at large.”
His full speech is below:
It gives me great pleasure to be among you and speak on the “Importance of Ethics in Business”. ‘Ethics’ is a precept that I personally cherish as it is focal in sustaining the goodness of mankind. The need for an open dialogue on ethics is strongly felt in an era where people are lost and entangled in all forms of evil. Inhumanity has taken over humanity. Endurance, love, respect, self dignity and integrity are long forgotten. It often torments me to wonder what the future would hold in the absence of these traits which at one time nurtured the wellbeing of the human race.
Thus it is imperative that we redefine the current social order and revitalize our actions and thoughts in the sphere of business and personal life. It is promising to observe the youth gathered together through this programme to endorse the importance of ethics. It gives me a glimmer of hope for a better tomorrow. I also wish to thank the Organizing Committee for giving me an opportunity to be a part of this fruitful endeavour.
What do you mean by ethics? Throughout the years in both my personal and business life I have come to believe that ethics is a fundamental trait which one adopts and follows as a guiding principle of basic dharma in one’s life. It implies moral conduct and honorable behavior on the part of an individual. Ethics in most of the cases runs parallel to law and shows due consideration to others rights and interests in a civilized society. It entails individual character, including what it means to be “a good person,” and social rules that govern and limit our conduct, especially the ultimate rules concerning right and wrong, which we call morality. Ethics are usually instilled in us from a very early age through the process of socialization. It cannot be instilled by force but inculcated throughout the years. An ethical person will uphold good values in all forms of social interaction, may it be at home, with friends or at the work place.
It is widely accepted that capitalism in its early stages ripped ethics from business and focused on profit making (inhuman working conditions during the industrial revolution that continued to modern times in the form of blood diamonds, slave labor prevailing in cocoa plantations in Africa, carpet weaving in some Asian countries etc). With time the business community realized that such extreme profit seeking is not viable. Recently, there has been an increasing awareness and more importantly interest in the field of Business Ethics. This trend is accepted with open arms in the present stage of globalization. People are becoming more concerned about what is actually happening in business organizations in the name of competition, growth, and profitability. This development has gained momentum due to the commitment of international organizations and NGOs (UN-Business for 2030).
Yet what do we mean by ethics in business? Differently stated what is business ethics? It is the standard of conduct and moral values governing actions and decisions in the work environment. It is based on broad principles of integrity and fairness and focuses on stakeholders’ issues such as product quality, customer satisfaction, employee wages and benefits, local community and environmental responsibilities.
The importance of business ethics are strongly felt at a time the Government is committed towards inclusive development. From a social point of view the concept refers to shared responsibility and accountability in the business world that transcends to the society at large. Ethics are equally important for the wellbeing of an organization. It is very important that organizations practice business ethics in order to ensure good governance in their organizations. Proper implementation of business ethics in organizations can ensure maximization of lawful profits and effectively protect the interests of all stakeholders. This eventually can ensure a viable and competitive business environment.
Most of the Trade Chambers, professional bodies and similar organizations in Sri Lanka have codes of ethics or codes of conduct. Some are very well documented. They expect their members to be ethical. But how many of these institutions have taken action against their members for not conforming to these? My own experience is very rarely if at all.
When we talk of business ethics we cannot ignore the importance of ethics in capital markets which is a source that fuels business activities. As the person heading the organization entrusted with the duty of regulating the capital market of Sri Lanka, I will be failing in my duty if I do not address this important aspect.
In the stock market we expect market stakeholders to inculcate professionalism and ethics in all their dealings in order to foster trust. Trust is the live wire of confidence and as all of you are aware market confidence provides impetus for the development of a robust and efficient stock market.
We experienced how the market had to pay dearly during 2010/ 2011 due to the actions of few individuals who resorted to unethical and downright scandalous methods of manipulating the market. It is with great concern and distress I reflect on how attempts were made by again a few investors, stockbrokers, investment advisors and even influential politicians to transform the market to a casino during the previous regime. Market manipulation was the talk of the day. In the process a large number of innocent and ignorant small time investors who followed with herd instinct these manipulators got ruined and we are still in the process of giving some redress to these investors. These unethical behaviour patterns were well grounded on unlimited greed and power politics.
The rainbow revolution paved the way towards an ethical dimension/perspective. Since January 2015, our Commission along with the Secretariat has been committed towards creating a conducive environment to foster ethical behavior in the market through policy, regulation and enforcement. A great deal of emphasis is placed on uplifting professionalism in the industry through continuous training, investor awareness etc. These initiatives are geared at ensuring a regulatory and governance framework that reinforces a culture of accountability and integrity. The importance of political commitment and suitable policy in fostering ethical investing cannot be undermined. However it is equally important to note that ethics cannot simply be subjected to regulation as it usually emanate from ‘within’ an individual. The ethics learned at a young age are usually the ones maintained through adulthood and put into practice in daily lives.
The complex world we live in compels people to combat psychological, legal, commercial, philosophical, social and political problems in order uphold ethical behavior. It is indeed not an easy path to follow but we must try our best to do so. However many may drift away from ethics amidst these difficulties. Way back in 2012, when I was the Chairman of the SEC I was confronted by the highest in the land when I stood up for what was just as I was not ready to trade my values I handed over my resignation in August 2012.
One would rationalize that it is ever more promising to indulge in the materialistic gains offered by unethical behavior instead of travelling in the rocky path of ethics. Some would even boast about the flamboyant lifestyles they lead by acquiring wealth through unethical means. Yet such pride is short lived. It was only a couple of weeks ago a controversial business tycoon in an interview with a Sunday Sinhala paper boasted about his collection of Patek Philippe watches, Armani trousers, Burberry shirts, crocodile skin shoes and Montblanc pens. Unfortunately the journalist who interviewed him didn’t have the presence of mind or the courage to ask him how much he donates to charity. The answer wouldn’t have surprised many.
As I conclude my speech I sincerely hope that all of you will be blessed with the will power and inner strength required to overcome all forms of complexities and strive towards leading ethical lives. Remember that the day we bid farewell to this world we do not take with us money, power or fame but the simplest deeds of generosity, integrity, respect, honesty and love.
As Brazilian anthropologist Valdemar W. Setzer said “Ethics is not definable, is not implementable, because it is not conscious; it involves not only our thinking, but also our feeling”, I wonder whether he was correct