On an individual level, King IV™ considers that ethics refer to that which is good and right in human interaction. Ethics involves three key, integrated concepts – self, good and other. Thus, one’s conduct is ethical if it gives due consideration not only to that which is good for oneself, but also good for others.
According to King IV™ ethics in the context of organisations refers to the ethical values applied to decision-making, conduct and the relationship between the organisation, its stakeholders and the broader society.
Compliance is about the letter of the law whilst ethics is about the spirit of the law with respect to the values of fairness, transparency and responsibility. Meeting compliance obligations is usually carried out by an organisation to avoid the threat of sanctions whereas ethical behaviour happens because the organisation and the staff members are motivated to act in an ethical manner out of choice and not
because they are required to. However, ethics and compliance are closely linked in that maintaining an effective compliance function and a visible compliance culture within an organisation is not just about keeping the regulators satisfied, but it is also one of the most important ways for an organisation to hold onto its ethics and values while also prospering and growing in the long term.
A close link between compliance and ethics is recommended in King IV. It states that the governing body should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the organisation being ethical and a good corporate citizen. The more highly valued ethical behaviour is the more likely the organisation and its staff members are to meet compliance obligations.