Codes of Practice of a Company - Essay Example

This is because ethical policies and codes of practice may only be seen as guidelines and at any given time, a company or a member of the board may do what is more beneficial to them rather than do what is most ethical. If policies were enough to manage corporate governance, there would be no need for governments and regulatory bodies to make the laws necessary to keep corporate and personal greed in check. For instance, environmental degradation is a very important topic for the world today and governments as well as non-governmental organizations are looking at various ways and means by which they can help the environment (Green, 2005). However, corporations often have to be forced through regulations and laws to minimize their impact on the environment (Schulte, 2006).

Had a code of practice that encourages social responsibility been enough, no board member of a company could have agreed to a policy of the company which damages the environment regardless of the profits that could be made. It is only when the profits of a company are at risk that it can be made to apply the rules of good corporate governance. For example, Apple Inc. was forced to change the packaging for its famous iPod since Greenpeace objected to the amount of waste material that came with the iPod. Fearing angry customers, Apple altered the packaging to make it environmentally friendly (Planque, 2006).

When Steve Jobs (the CEO of the company) launched a new version of the product he focused on the subject and said, “We've got some new packaging for the new Nano as well. And it's 52% less volume. This turns out to be an environmentally great thing. Because it dramatically reduces the number of fossil fuels we have to spend to move these things around the planet" (Planque, 2006, Pg. 1). Of course, Apple could have changed the packaging and made it environmentally friendly from the start but only a threat of lost sales moved it to do so. Without that threat, the more attractive packaging would continue to have been used to get more sales.

The case is not only true for Apple Inc. but also for companies such as Nike, GAP, eve Cadbury Schweppes who had to give cocoa farmers a better deal since news reports were focusing on the plight of the farmers in Africa who were more or less being exploited by the company. Had no one found out about it, it is doubtful if the board of governors would have lost any sleep over it but when it comes to the image of the firm being damaged due to negative practices being discovered, companies may be very quick to change their policies and thus show that they are socially responsible and have good corporate governance policies.

However, it must be noted that this is not necessarily a bad thing since companies can be forced to become ‘good’ and be responsible corporate citizens since they seem to be working with the theory of ethical egoism (Lachapelle, 2005). Companies will continue to do what is good for them rather than what is good for society therefore, to ensure good corporate governance, society needs to have more awareness and have consumers who are ethical and will not buy from companies who do not show positive corporate governance. The image of the company is important to the company and anything which tarnishes that image will be avoided since it would hurt profits. In conclusion, it is easy to see that codes of practices for the board of directors or any such document will hold little meaning to corporate governance while government regulations, laws of the land, profits, and an impact on sales will certainly push a company towards being better at corporate governance.