Code of Ethics: Principles for Business
Explanatory Note: What is a Code of Ethics?
The Cooperative’s “code of ethics” is a set of principles adopted by the Cooperative governing “right and wrong conduct” by the Cooperative and its Directors/Committee Members, Members, management and staff. It has been extended to include the expectations of the Cooperative regarding “right and wrong conduct” by joint venture partners and contractors and suppliers to the Cooperative and may give rise to a restraint of trade based on moral principles. It has also been extended to include expectation of “right conduct” by customers (which might also give rise to restraint of trade based on moral principles). It might even extend to expectations of “right conduct” from politicians and members of the public.
This code of ethics is at a very high level. It takes the form of a declaration made by the Management Committee/Board of Directors and made freely available to the public. It differs from the code of practice of a profession or the code of conduct signed off by the Committee Member, manager, or worker of a Cooperative when they take up their employment.
The code of practice contains the rules or standards governing the conduct of a member of a profession. It tells professionals and contractors advising the Cooperative what they must and must not do to remain as a member of their profession or trade; i.e. how they must act if they want to retain their certificate of membership or licence to practice. The Cooperative expects them to conform to any applicable code of practice.
The code of conduct contains the rules or standards governing the conduct of an employee of the Cooperative. The code of conduct tells employees of the Cooperative how they must act if they want to remain as a member of the Cooperative.
The practical “code of practice” and “code of conduct” are based on a higher-level code of ethics which tells you why it is right to act in this manner.
Principle 1: Personal and Professional Relations
The Cooperative believes that no laws or contracts can anticipate the possible vicissitudes of life. Very often the Cooperative must make a decision based on the prompting of common sense and conscience. The Cooperative will embody ethical and moral principles into personal and professional relations, and remember to:
- always do business within it’s means;
- have respect for the partners and participants in a shared business venture;
- refrain from violence or the threat of violence as a method of achieving business success;
- resist crime and corruption, and do it’s part to see that crime and corruption become unprofitable for everyone;
- live up to the trust placed in it; trust is the foundation of entrepreneurship and a key to success; and
- endeavour to earn a reputation for integrity, competency, and excellence.
Principle 2: Corporate Governance: Relationships with Members
The Cooperative believes a trusting relationship between the Management Committee/Board of Directors, management and Members is critical. Investors and lenders must be satisfied with the manner in which Members oversee the performance of management and participate in key decisions.
Sound principles of corporate governance within the Cooperative include the following:
- delineating in the Cooperative charter the respective roles and responsibilities of the Management Committee/Board of Directors, management and Members;
- transparency of voting rules;
- open communications with Members through the provision of audited accounts, and information about the progress and operations of the Cooperative; and
- a well-functioning Management Committee/Board of Directors who have the skills, the time, and the access to information needed to discharge its responsibilities effectively. The Management Committee/Board of Directors will act in a fiduciary capacity on behalf of all the Members.
Principle 3: Relationship with Employees
The Cooperative believes that it has an important responsibility towards its employees. This responsibility is based on the following basic principles toward its employees:
- due regard for labour laws;
- commitment to adequate standards of worker health and safety;
- non-discrimination in the recruitment, compensation, and promotion of employees;
- respect for the rights of workers to engage in union activity;
- effective systems for consultation with employees on employment conditions and other issues that affect the employees;
- clearly stated and transparent policies relating to compensation, benefits, promotions, and other employment conditions; and
- commitments by the Cooperative for contributions to superannuation plans; and strict protection of the integrity of Cooperative-sponsored superannuation plans.
These principles do not limit the right of a Cooperative to enforce discipline on its labour force or to terminate workers in accordance with applicable law
Principle 4: Relationship with Other Enterprises
The Cooperative believes that a relationship of mutual trust in which all parties benefit is the most significant aspect of relations between the Cooperative and its partners in joint ventures, contractual arrangements or business relations with other enterprises. The reputation of the Cooperative is its most valuable asset. Once the reputation of the Cooperative is tarnished, it is very difficult to gain trust with the same or other business relations. A number of basic principles that typically promote mutual trust in business relations include:
- commitment to excellence in products and services;
- commitment to gain respect and trust in all business relations;
- respect for the sanctity of contracts and business relations;
- in case of a commercial dispute, a willingness to negotiate and compromise in order to reach an amicable solution; and
- respect for the sanctity of rule of law, including abiding in a timely manner with decisions of any court, arbitral panels, or other administrative bodies.
Principle 5: Relationship with the Global Community
The Cooperative believes that an enterprise is an integral part of the community in which it operates and therefore a sound relationship with the community is essential. This means that caring for the environment is a responsibility of the Cooperative towards the immediate community, but it also extends to all communities and areas whose environment may be affected by the Cooperative’s activities.
The Cooperative will:
- be sensitive to concerns of the local population;
- communicate with the local population;
- abide by all applicable environmental laws and regulations; and
- show tolerance for people of other cultures, races, beliefs, and countries.
Principle 6: Relationship with Government Authorities
The Cooperative believes that well-managed enterprises are law-abiding enterprises. The Corporate shall maintain a sound relationship with governmental authorities, and shall:
- pay all taxes that are owed and due;
- abide by all mandatory government and local regulations;
- obtain all governmental permits, licenses, and approvals required to do business;
- deal with government authorities on an arm’s length basis, and make no attempts to improperly influence governmental decisions;
- establish transparent procedures regarding transactions engaged in by Cooperatives with any government agency or official or in dealings with any enterprise owned or controlled by a government agency or official; and
- in transactions with any government agency or officials or with any enterprise owned or controlled by government or government official, include appropriate provisions to ensure compliance with international or national codes against extortion and bribery.
Principle 7: Proper Checks and Balances
The Cooperative believes that a proper system of checks and balances is necessary to ensure the ongoing integrity of the Cooperative and of its relationship with its constituencies. Such a system must be based on the general principles of full disclosure, management accountability, separation of responsibility, and sound internal controls.
The Cooperative shall have a full disclosure policy concerning:
- statements of the Cooperative’s strategic aims and policies, how these have been achieved in the past reporting period and how the Cooperative will act in the future;
- prompt reports to the Cooperative’s constituencies on events that could have a material effect on the Cooperative; and
- prompt disclosure of all-important relationships between officials of the Cooperative and other parties.
The key element of a system of checks and balances is that the Members are able to monitor management’s performance and to condemn poor performance, including through the removal of management.
Principle 8: Prevention of Extortion and Bribery
The Cooperative believes that bribery and extortion threaten democratic institutions and cause grave economic distortions. The Cooperative objects to all forms of extortion and bribery. The Cooperative directs the highest priority to ending extortion and bribery involving politicians and senior officials.
The Cooperative shall observe both the letter and spirit of the following rules:
- no one may, directly or indirectly, demand or accept a bribe;
- the Cooperative will not, directly or indirectly, offer or give a bribe, and any demands for such a bribe will be rejected;
- the Cooperatives shall take measures reasonably within its power to ensure that any payment made to any agent represents no more than an appropriate remuneration for legitimate services rendered by the agent; that no part of any such payment is passed on by the agent as a bribe or otherwise in contravention of these principles;
- all financial transactions must be properly, accurately, and fairly recorded in appropriate books of account available for inspection by the Management Committee/Board of Directors as well as by auditors. The Cooperative shall take all necessary measures to establish independent systems of auditing in order to bring to light any transactions that contravene these principles. The Cooperative will then take appropriate corrective action;
- the Management Committee/Board of Directors of the Cooperative shall periodically review compliance with these principles and take appropriate action against any Committee Member or employee who acts in a manner inconsistent with these principles; and
- contributions to political parties or to individual politicians may be made only in accordance with applicable law, and in accordance with all applicable requirements for public disclosure of such contributions.
Principle 9: Creation of a Culture that Fosters Sound Business Standards and Corporate Practices
Ultimately, for the Cooperative to live by sound business standards and ethical practices it must develop a culture that fosters such standards of integrity. The Management Committee/Board of Directors believes that the Cooperative’s management and key Members must lead this effort. Steps that management and key Members may take to promote this positive attitude throughout the Cooperative include:
- the preparation and dissemination within the Cooperative of a code of conduct for employees;
- employee training;
- encourage proper conduct and sanctions against misconduct; and
- creation of an ethics office and ethics officers to advise and educate employees, and provide guarantees for confidential counselling.