Business Ethics and Corporate Governance: Unilever Case Study Analysis

This report explores the critical aspects of business ethics and its strong connection with corporate governance. It defines business ethics as the set of rules followed by organizations, particularly during ethical dilemmas, and highlights its significance in building a positive brand image and fostering customer trust. The report then examines corporate governance, emphasizing its role in ensuring ethical and legal compliance. A key example of corporate failure, the Facebook-Cambridge Analytica data breach, illustrates the consequences of ethical lapses. The report then analyzes the structure of Unilever's board of directors, including the roles of the CEO, CFO, and board committees, and how they ensure efficient corporate governance through their business principles, codes of conduct, and the establishment of confidential ethics hotlines. The report also examines the role of shareholders and board committees in ensuring the principles of good corporate governance.

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BUSINESS ETHICS IN CORPORATE WORLD
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Table of Contents
Answer 1....................................................................................................................................2
Business Ethics.......................................................................................................................2
Importance of Business Ethics in Contemporary Business....................................................2
Linkage of Business Ethics with Corporate Governance.......................................................3
Example of Corporate Failure due to Business Ethics Failure..............................................4
Answer 2....................................................................................................................................4
Structure of the Board of Directors of Uniliver.....................................................................4
Principles of Efficient Corporate Governance.......................................................................5
References..................................................................................................................................7

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Answer 1
Business Ethics
Ethics in business are the set of rules that are followed by the employees of the
organizations in times of controversial circumstances or ethical dilemmas. These situations
can be related to any incident including governance of a business, role of business in social
issues, trading of stocks or many other similar situations. Hence, the study of business ethics
can be associated with philosophy, science as well as law. Although, legal aspects are dealt
with utmost sincerity in case of ethical dilemmas (Hicks 2018). The law plays an important
role in the determining the business ethics of an organizations and if violated by anyone, will
lead to suffering of the person through legal measures.
The organizations implement business ethics rules in their policies not only to
safeguard themselves from legal issues, but also to build a branded and reputed image in the
eyes of the customer. If an organization adheres to the set of business ethics, the customers of
the organization finds it easy to trust the organizational processes and its activities and rely
on the service offered by the organization (Etchanchu and Djelic 2019). Ethics are developed
in an organization based on the incidents and experience of the senior experts. The rules
generated by them helps the other employees to determine the right part and the wrong part of
the business and take actions accordingly.
Importance of Business Ethics in Contemporary Business
The modern-age business personnel are highly concerned about the brand image and
reputation of their organization. Hence, it is obvious for them to establish the set of ethical
rules in business in order to safeguard the goodwill of their organization in the market. Due to
the globalization in the contemporary businesses in the current age, there has been a
consistent growth in the economy of the businesses (Hong, Li and Minor 2016). In this

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scenario, the companies are becoming more conscious about their image in the market not
only amongst the consumers but also amongst the competitors. Hence, the contemporary
businesses are more inclined to maintain their positive attitude. The set of ethical principles
helps the employees of the business organizations to maintain the right attitude and take the
right actions in the best interest of the members of the organization, the involved stakeholders
and the clients (Crane et al. 2019). Thus, business ethics are an integral part in the
contemporary businesses because it helps to maintain the consistency in the image and the
economy of the business.
Ethics in business policies helps the organizations to establish honesty and
transparency in the business processes. If the organizations are ethically correct in their
decisions and actions, they can flaunt their organizational activities in the market and in turn
gain confidence of the customers. In order to make monetary profit, it will be unethical of the
companies to take actions that will hamper the quality of the business. This will lead to loss
of customers and the companies will fail to gain pace in the market against its competitors
(Wasieleski and Weber 2019). Thus, business ethics is highly beneficial for the organizations
in this contemporary world in terms of brand image as well as monetary profit.
Linkage of Business Ethics with Corporate Governance
Corporate Governance is the term used to establish ownership of an organization and
account for the activities and policies associated regarding the same. Governance of corporate
sectors includes the application of efficient management practices, maintenance of the
business standards by following the ethical principles in adverse situations and thereby
contribute to the sustainable development of the business (Davies 2016). Now, while
ensuring best corporate governance, it is implied that the organizations will adhere to the
situations of ethical dilemma with the help of business ethics such that they do not have to
face any legal issues. However, ethical rules and legal rules does not always align with each

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other. There might be situations where an organization will have to go against the legal rules
in order to follow the ethics on humanitarian ground (Steckler and Clark 2019). Thus, good
corporate governance incorporates a blend of ethical and legal rules that is applied
accordingly depending upon the situation of dilemma.
Example of Corporate Failure due to Business Ethics Failure
Leakage of data from Facebook to Cambridge Analytica, political intelligence firm, is
one of the most recent examples of business ethics failure in the world of corporate
governance. Approximately, the personal information of 87 million Facebook users were
revealed to the firm that led to the leakage of confidential data (Jaeger and Jaeger 2020). As
explained by the Facebook CEO, Mark Zuckerberg, it happened due to some software bug
issues. However, they admitted their failure to limit the access of the information developers
and thus could not meet the standard of the business ethics that determines in safeguarding
the data of their users.
Answer 2
Structure of the Board of Directors of Uniliver
The organization of Unilever in United Kingdom as well as Ireland comprises of the
CEO, CFO, the Division Presidents, the Chief R&D officer, Chief HR Officer, Chief Legal
Officer, Chief Marketing Officer and the Chief Supply Chain Officer. The Chief Executive
Officer is Mr Alan Jope and another is the Chief Finance Officer, Mr Graeme Pitkethly
(Adefemi, Hassan and Fletcher 2018). The executives monitor the operational processes.
Apart from the operational activities, the board members are responsible for corporate
governance, dividend approval and supervision of strategies. The Board assigns
responsibilities to the chief executives while the executives in turn delegate responsibilities to
the Unilever Executives. The ULE comprises of CEO, CFO and other senior professionals.

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The other ULE executives in turn report to the CEO of the company and depends on him to
handle the issues. The CEO is the major person who orders the ULE executives and instructs
them to perform their assigned roles and responsibilities.
Apart from the executive professionals at Unilever, the Board Committee of the
organization determines the various aspects of Corporate Governance and sets the policies of
business ethics. The members of the boards have developed four board committees to handle
each aspect of corporate governance separately. The four boards are the Corporate
Responsibility Committee Compensation Committee, the Audit Committee, the Nominating
and the Corporate Governance Committee. These board committees determines the
management of the organization as well as assist the CEO in taking decisions about the
operational processes. They also responsibly hold board meetings to take important decisions
about the organizations. Although the senior executive officers apart from the CEO and the
CFO do not deliver their opinions in the meetings held by the board committees, they do
attend them in order to be well aware about the insights and visions discussed by them and
apply them effectively in their organizational processes (Olanlokun Adewale and Sholola
Babajide 2019). However, only the CFO and the CEO of the company can be a part of the
board committee and hold their opinions in the meetings regarding the discussions about the
organization.
Principles of Efficient Corporate Governance
The organization of Unilever has a documentation of their own business codes and
conducts known as ‘Unilever’s Code of Business Principles’. This documentation is provided
to all the business employees of the organization such that they can follow the code of
business ethics in their regular activities and meet their business standards (Osemeke and
Adegbite 2016). This ‘Code of Business Ethics’ is set as a benchmark that will be seen by the
clients as well as the competitors in the market and be able to judge their business activities

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accurately. Hence, the members are to adhere to this code under any circumstances. The CEO
takes the responsibility to forward this code of ethics to the other leadership executives and
their subordinates in the clustered organizations. The Code of Principles incorporates a
hotline of confidential ethics where the employees of Uniliver can submit their concerns
anonymously regarding the accounting and auditing issues as well as report about any
violations against the business ethics.
The organization of Uniliver accounts for effective governance by:
 Arranging for meetings with shareholders of NV or PLC and thereby setting an
agenda to ensure a satisfactory dialogue.
 The shareholders should adopt Annual Reports and Accounts.
 Nominate the Board appointments including appointment of Vice-President.
 The proposal from the Compensation Committee should be reviewed and approved.
 The proposal for the meeting of shareholders to decide on the remuneration policy
and packages for the Directors (Ghosh 2020).
 The appointment or removal of the Group Secretary of the organization.
 Reviewing the functionality of the Board Committee members.
 Amendment of the ‘Code of Business Ethics’.
 Acknowledgment of the remits and membership of the Board Committee and
deciding on the issues for the same.
 Deciding on the conflict of interest that involves the Directors or the potential
stakeholders.
 Taking the overall responsibility for compliance with all the significant rules and
regulations.

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References
Adefemi, F., Hassan, A. and Fletcher, M., 2018. Corporate governance disclosure in Nigerian
listed companies. Folashade Adefemi, Abeer Hassan and Mary Fletcher.(2018).“Corporate
Governance Disclosure in Nigerian listed Companies”. International Research Journal of
Business Studies, 11(2), pp.67-80.
Crane, A., Matten, D., Glozer, S. and Spence, L., 2019. Business ethics: Managing corporate
citizenship and sustainability in the age of globalization. Oxford University Press, USA.
Davies, A., 2016. Best practice in corporate governance: Building reputation and
sustainable success. Routledge.
Etchanchu, H. and Djelic, M.L., 2019. Old wine in new bottles? Parentalism, power, and its
legitimacy in business–society Relations. Journal of Business Ethics, 160(4), pp.893-911.
Ghosh, S., 2020. Narrative Analysis of Annual Reports—A Study of Corporate Social
Disclosure in the Pre-and Post-Mandate Period. In Mandated Corporate Social
Responsibility (pp. 45-83). Springer, Cham.
Hicks, S.R., 2018. Ayn Rand and contemporary business ethics. Perspectives on Ayn Rand's
Contributions to Economic and Business Thought, p.239.
Hong, B., Li, Z. and Minor, D., 2016. Corporate governance and executive compensation for
corporate social responsibility. Journal of Business Ethics, 136(1), pp.199-213.
Jaeger, J. and Jaeger, J. (2020). Top ethics and compliance failures of 2018. [online]
Compliance Week. Available at: https://www.complianceweek.com/opinion/top-ethics-and-
compliance-failures-of-2018/24720.article [Accessed 3 Mar. 2020].

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Olanlokun Adewale, E. and Sholola Babajide, M., 2019. CORPORATE GOVERNANCE
AND QUALITY OF FINANCIAL REPORTING; NIGERIA PERSPECTIVE. CORPORATE
GOVERNANCE, 2(03).
Osemeke, L. and Adegbite, E., 2016. Regulatory multiplicity and conflict: Towards a
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pp.431-451.
Steckler, E. and Clark, C., 2019. Authenticity and corporate governance. Journal of Business
Ethics, 155(4), pp.951-963.
Wasieleski, D.M. and Weber, J. eds., 2019. Business Ethics. Emerald Group Publishing.