What is a Code of Ethics?
Written by True Tamplin, BSc, CEPF®
Updated on July 10, 2021
Code of Ethics Definition
A code of ethics refers to a set of guiding principles that help professionals and companies conduct business with honesty and integrity.
These principles may be based on the mission and values of the organization, as well as on other widely accepted business ethics practices.
The purpose of a code of ethics is to maintain an honest and equitable business environment. It applies both to employees and executives.
Is a Code of Ethics Required?
Some industries, such as the banking and finance industries, have laws that govern business behavior and require actions that promote integrity.
Other businesses may institute a code of ethics voluntarily.
Often a code of ethics will govern employee conduct, professional practice, and even the ways in which professionals approach certain problems.
Code of Ethics Examples
A good example of a code of ethics comes from the Chartered Financial Analyst Institute.
The CFA charterholder designation is one of the most prestigious and respected in the finance business, and its integrity is represented in its code of ethics.
Here are a few of its tenets:
- To act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, and professionals in the investment industry and other industries
- To place the interest of the investment profession and clients above their own
- To act and encourage others to act in a professional manner that reflects well on the profession and themselves
- To maintain and improve their professional competence and strive to maintain and improve the competence of other professionals