Do We Need a Canada Code Of Ethics for Businesses?

Posted by Shannon Walker

on August 1, 2013

stock photo 3 direction signpost integrity commitment truthWhen a private organization experiences internal wrongdoing, it can be somewhat easier to control (though we know it’s never easy to manage or correct). For example, with whistleblowing process, or even a good human resources department that encourages honest and open communication, a violation of a code of conduct can be dealt with without involving the public, in most cases. Persons can undergo corrective action, company procedures can undergo a review, and any illegal activity can be reported to authorities. Though it sounds easier said than done, the short end of it is that internal code of conduct violations can be managed in a private organization, privately.

But what happens when that private organization is a company that provides a bad product, introduces overly high fees or tricks customers with unfair contract terms – all within legal bounds? On the one hand, there are strong proponents of the ‘free market’ who will vouch for letting the market regulate itself; if a company or product is no good, customers will stop buying it, and the business will fail.

In practicality however, this is not always the case, and that’s why there are proponents of government intervention. Sometimes companies get away with bad behaviour. And it’s not until the government steps in with a law that counter measures can be taken to ensure the true freedom of the market.  In some ways, this can be seen as a country’s code of conduct for doing business in that country. Canada has a code of conduct that it enforces on some industries. For example:

Credit and Debit Card Industry

In 2010 the Canadian Minister of Finance released a Code of Conduct for the Credit and Debit Card Industry. The problem it intended to solve was that merchants felt credit card companies were charging too much in unfair ways to use their services, and due to that, those fees were being dumped onto end consumers. What’s bad for business is bad for the economy. So the government stepped in. Now it’s necessary for merchants to know up front what credit card processing fees will be, when they will change and to have the ability to cancel their contracts if they don’t like the changes in fees.

The Diamond Industry

Canada may not be as famous for its diamonds as more exotic parts of the world, but buying a Canadian diamond ensures a consumer that it was both environmentally and ethically mined. This is because once again, a Canadian Diamond Code of Conduct has stepped in to regulate businesses in this arena; or at least those that chose to claim the “Canadian diamond” label on their products through a series of certifications. The Competition Bureau of Canada, the World Jewellery Confederation (CIBJO), the RCMP and other associations work to enforce this code of conduct. For some, there can be the argument that a Code of Conduct such as this one only increases market rates and heightens the barrier to entry due to the strict regulation and certification processes. So how can that be good for business and the Canadian economy, right? Well, in cases like this, those of us who have watched the movie Blood Diamond may sympathize with the cause that sometimes enforcing morals and ethics supersede the need to lower market rates, in order to preserve humanity and integrity in the marketplace.

The mobile phone industry

A topic gaining a lot of attention in the media recently is the decision by the government-run Canadian Radio-television and Telecommunications Commission (CTRC) to put a cap on the fees that mobile phone companies can charge consumers. This soon-to-be implemented law is brought to you by the same people who ensure channels like CTV play Canadian programming shows like Degrassi High and Corner Gas; the CTRC does everything it can to make sure radio waves and wireless frequencies are used in the best interest of Canadians (as it sees it).

According to the CTRC, a fitting Canada-wide code of conduct for Canadians and their mobile phones is to remove contract terms and cap the charge amounts on data and roaming which mobile companies can get away with. But as businesses see it, the problem with the government intervention here is that the new laws will apply retroactively to contracts already signed by consumers. According to major mobile carriers, this is “overstepping,” and they’re going to court to defend their case.

The above three examples are just three cases in which Canada has stepped in with it’s own code of conduct to regulate private organizations. As noted above, proponents of the free market will argue that government intervention should never happen. But as we can see, “never” is a risky term to use, and each case can be different. So, what do you think, do we need a Canada code of ethics for businesses, or don’t we?