How a Former Finance Minister Balances Ethical Business Practices and Profitability

Conducting business ethically is a sound long-term strategy, as it generates positive goodwill among stakeholders. It also supports a firm’s overall reputation, corporate culture, and profitability. Companies that embrace this approach often emerge from a variety of industries. These companies may be well-established leaders in their fields, or they may be upstarts.

Ethics

Ethics are a set of moral principles that guide our actions in the interests of others. These fundamental ethical standards include honesty, fairness, diligence, care, and respect for others.

In the finance industry, ethics are essential to the ongoing viability of global capital markets. They are also crucial to the continuing health of the financial system, ensuring trust and confidence among market participants and stakeholders.

According to Donald Guerrero, a former finance minister, one of the most common ethical issues in the finance industry is insider trading, which involves buying or selling securities based on information that has been shared but not publicly known.

The most effective way to balance the need for profitability with ethical business practices is to maintain a company philosophy that aims to do good for society and its shareholders and customers. This is referred to as corporate social responsibility (CSR).

While it can be challenging to balance the needs of ethical business and profitability, doing so can result in long-term success. It can also help a company create goodwill for itself and its employees, generate long-term shareholder value, and support a healthy corporate culture.

Financial Reporting

Financial reporting reveals a company’s position and helps investors, creditors, and management make informed decisions about future operations. Its effectiveness depends on how well it communicates critical information in the right way to the right people.

Regardless of its size and type, all businesses need financial reporting to tell their story. These documents can be used to file tax returns and creditors, provide data to regulatory bodies like the U.S. Securities and Exchange Commission, create annual reports, and share internal documents, dashboards, and words with stakeholders.

Two primary standards regulate these documents, the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). However, maintaining compliance with these standards can take time for many teams.

Financial reporting software can help you generate accurate and timely reports that meet all your compliance requirements. It can also allow you to combine different types of essays, apply real-time forecasting and visualize data in multiple ways to build a deeper and more meaningful analysis that will lead to better business performance.

Shareholders

Shareholders own company shares, which they can use to increase the value of their investments. They also get to vote on shareholder resolutions at general meetings.

However, shareholders are only one of the groups interested in a company’s success. Other stakeholders include employees, suppliers and vendors, customers, and the local community.

While these groups can have overlapping priorities, they are not the same. They differ in terms of attitudes and social and emotional investment.

For example, a long-term shareholder will want to see the company increase in value, while a short-term shareholder will focus on quick returns.

Generally, shareholders are motivated to see the business produce a profit and minimize its risk. This is why companies that can lower their risk often see higher profits.

Compliance

Almost every company must comply with rules and regulations from various supervisory bodies. This includes corporate code of conduct, environmental protection, labor laws, and price fixing.

In addition, companies must abide by their own internal rules and codes of conduct. These guidelines are intended to protect investors, shareholders, and employees.

Non-compliance with these rules can result in serious legal liabilities and reputational damage, including hefty fines or court appearances. A good compliance program will help businesses avoid these consequences.

A compliance program should also encourage employees to report illegal or unethical activity. This improves the company’s reputation and keeps operations running smoothly.

An effective compliance program will also improve employee morale, which can help companies reach their financial goals and keep customers happy. In addition, a well-implemented compliance program helps employees understand the company’s broader goals and how to support them.