The concept of business ethics necessitates a set of standards by which a corporate entity regulates its behaviour in terms of what is legitimate and acceptable in the pursuit of its corporate goals.

Business ethics may be defined as 'giving fair value to all stakeholders in exchange for fair value from all stakeholders'. This view finds an echo in the Tata Group's purpose statement: “Our heritage of returning to society what we earn evokes trust among consumers, employees, shareholders and the community.”

Evoking trust among stakeholders simplifies decision making for them in the context of the business, thereby generating goodwill for the company. Globally, the realisation that goodwill is essential for the longevity of corporations has emerged only recently, as articulated in The King Report on Corporate Governance, 2002. The experience of the Tata Group shows, however, that such goodwill has held Tata enterprises in good stead for over 140 years.

Need for the Code
'Trust' typically evolves out of past experiences and future expectations. Today, Tata companies and their employees are faced with new challenges in building on the trust traditionally placed in Group companies, due to increasing competitive pressures, rising expectations of stakeholders, spiralling aspirations of individuals and communities, and the lag in the fulfilment of such aspirations. Against this backdrop, to ensure that this trust is continuously reinforced, the need to formalise the high standards of behaviour expected from employees and companies assumes renewed significance.

While attempting to strike a balance between aspirations, value conflicts, competitive and performance pressures, one should be guided by the Tata values of integrity, understanding, excellence, unity and responsibility.

Towards Institutionalising Ethics
Organisational challenges in institutionalising ethics:

• Diverse socio-cultural environment
• Increasing competitive pressure
• Diverse regulatory environment
• Diverse enforcement environment
• Diverse value systems
• Entry into new sectors with different types of ethical concerns
• Very high performance expectations
• Rapid performance delivery
• Very high employee turnover

The pull from competitive pressures and challenges need to be circumvented with Tata values. In pursuit of this objective, the Group has articulated and deployed the Tata Code of Conduct (TCoC). This reference manual provides broad-based and non-prescriptive guidance to implement the TcoC in the Group's enterprises.

It has been designed to enable Tata companies to embark on a path of ethical corporate and personal conduct, by ensuring the alignment of individual and corporate conduct with the requirements of the TCoC.

Applicability of the code
This manual has adopted a systems approach towards embedding the code. It aims:

• To guide Tata companies in addressing current and future challenges
• To provide optional approaches to prevention; detection; correction; and assurance
• To establish the relevance of the codes in day-to-day work undertaken by employees
• To set out the suggested roles and responsibilities of:
  • The board of directors in embedding the code in Tata companies
  • The senior leadership team in ensuring adherence to the code
  • Ethics counsellors in deploying the code and taking charge of the process for management of concerns
  • Employees in ensuring personal and corporate compliance with the clauses of the code

Who should follow the code?
The TCoC is applicable to:

• Each and every Tata company's directors and employees
• Each and every subsidiary including their directors and employees
• All third parties representing a Tata company (consultants, agents, sales representatives, distributors, independent contractors, etc)

The Code