What is a Code of Ethics?

The Institute of Business Ethics defines a Code of Ethics as a document that sets out the standards of behavior a company expects from its employees. Its purpose is to guide decision-making and help employees act in line with the organization’s values—especially in situations where the right choice may not be obvious.

Example:
Imagine a bank employee is offered an expensive gift or hospitality in exchange for awarding a contract. By referring to the bank’s Code of Ethics, the employee can determine whether accepting the gift aligns with the bank’s values and ethical standards.

A strong Code of Ethics serves as a decision-making compass—particularly in situations where laws, regulations, or internal policies don’t provide specific guidance. After all, no organization can create rules for every possible scenario, but a Code of Ethics can ensure decisions consistently reflect the company’s principles.