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The Foundation for Law, Justice and Society (FLJS) is an independent not-for-profit institution that aims to promote an understanding of the role of law in society. We identify and analyse issues of contemporary interest and importance, disseminating the insights of decision-makers and experts to a global audience through our extensive online resource of free-to-download Policy Briefings, Opinion Pieces, and multimedia podcasts.

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The International Adoption of Ethical Business Regulation

The International Adoption of Ethical Business Regulation
Author: 
Christopher Hodges
Ruth Steinholtz
Publication date: 
Wed, 23 May 2018

This Policy Brief is the latest in a series on Ethical Business Practice (EBP) and Ethical Business Regulation (EBR). It summarizes current thinking on these topics, based on a Conference held at Wolfson College, Oxford on 4 May 2018.

Drawing on the scientific findings of behavioural psychology research, the authors find that there is little empirical evidence that traditional theories of deterrence affect future business behaviour, and that a collaborative, positive approach between business and regulators is most effective in improving behaviour along ethical lines. 

Traditional policy on encouraging private enforcement of law is based on deterrence, and approaches to enforcement and hence regulation produce an adversarial culture. While some public regulatory and enforcement authorities cling to deterrence as their sole policy, a number of authorities in some countries (led by the UK) have moved to a supportive approach, as a result of practical experience and the impact of Better Regulation policy.

The policy brief identifies the civil aviation industry as leading the way in adopting an open, just (no blame) culture, which is essential if performance is to be maintained. The initiation of ethical business practice (EBP) has to come from the businesses themselves, individually or in sectors, and based on the organizational values as identified at all levels within the organizational structure, rather than as a 'tick box' or compliance-based approach.

The policy brief concludes with implications of the findings for policymakers, calling on politicians to support an EBP/EBR policy, as has already been the case in Scotland, where senior Scottish ministers have indicated that they will follow a no-blame approach.