EDITORIAL: VOLUNTARY CODE OF CONDUCT FOR DIRECTORS
June 2024 Edition - Written by Lesley Stephenson
The Institute of Directors has launched a consultation paper introducing a draft voluntary code of conduct for directors. As the introduction to the code says:
‘Modern directorship is increasingly challenging. It involves more than simply complying with the law or applying specialist knowledge and expertise. Directors are expected to define and embed the values of their organisation and apply high ethical standards. They must apply judgement to complex situations in which competing interests, both personal and organisational, as well as the rights and interests of various stakeholders, must be prioritised and balanced. In such scenarios, identifying the right way forward is not always straightforward.’
This code of conduct is designed to be a practical tool to help directors make better decisions and provides a behavioural framework that can help directors build on and maintain the trust of the wider public in their business activities. It applies to organisations of all sizes in the private, public and not-for-profit sectors.
The code is structured around six key ‘principles of director conduct’ which were, in turn, based on the seven principles of public life (commonly known as the Nolan principles). The six principles are:
1. Leading by example – demonstrating exemplary standards of behaviour in personal conduct and decision-making.
2. Integrity – acting with honesty, adhering to strong ethical values, and doing the right thing.
3. Transparency – communicating, acting and making decisions openly, honestly and clearly.
4. Accountability – taking personal responsibility for actions and their consequences.
5. Fairness – treating people equitably, without discrimination or bias.
6. Responsible business – integrating ethical and sustainable practices into business decisions, taking into account societal and environmental impacts.
This document is designed for consultation and the IoD is asking for comments from the business community and the general public by Friday 16th August 2024. Comments can be addressed to codeofconduct@iod.com.
The full consultation document can be downloaded here.