Corporate Sustainability and Ethical Codes Effectiveness

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6

Corporate Sustainability and Ethical Codes Effectiveness Daniela M. Salvioni, Riccardo Astori, Raffaella Cassano and Giovanni Simonelli In the last years the issues regarding both sustainable development and business global responsibility have qualified the corporate governance effectiveness. Many international institutions have intervened (Table 1) and the companies, at least formally, have increased their attention to the interaction between stakeholder relation management and economic, social and environmental responsibility. The numerous and frequent scandals underline the discrepancy between the firms’ formal statements and the substantial behaviours. Most of the companies, in the industrialized country, publish code of ethics and conduct well-structured, explicating the strategic values assign to the global responsibility. The research consider the capability of the code of conduct to influence effectively the behaviour, in relation with the needs of transparency, sharing, coherent individual behaviour and control.

Keywords: Sustainable Development, Management, Internal Control, Risk Management Field: Management

1. Introduction and Literature Review For a long time, the choices of corporate governance have privileged profits maximisation objective in order to satisfy the shareholders expectations (Friedman M., 1962), revealing therefore significant dissimilarities among diverse groups of shareholders (for instance, among insiders systems, majority and minority shareholders). More recently, a new approach towards the companies‟ role in the society has emerged (Freeman, 1984; Evan and Freeman, 1988; Donaldson and Preston, 1995; Friedman A.L. and Miles, 2002; Freeman, Martin and Parmar, 2007; Miles, 2012;). It is due to persistent frauds and poor business management, but also due to evolution, all over the world, of new paradigms of sustainable development and shareholders relations management. (Steurer, Langer, Konrad, Martinuzzi, 2005). In fact, in the last years the issues regarding both sustainable development and business global responsibility have qualified the corporate governance effectiveness. Many international institutions have intervened (Table 1) and the companies, at least formally, have increased their attention to the interaction between stakeholder relation management and economic, social and environmental responsibility.

______________________________________________________________ Salvioni D.M., University of Brescia, Italy. email: [email protected] Astori R., University of Brescia, Italy. email: [email protected] Cassano R., University of Brescia, Italy. email: [email protected] Simonelli G., University of Brescia, Italy. email: [email protected]

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 Table 1. The sustainable development and its evolution*. 1972 1980 1983 1987 1992 1994 1996 2000 2001 2002 2006 2007 2009 2012

Stockholm – United Nations conference on „the human environment‟ IUCN, „International Union for Conservation of Nature‟ Strategy World Commission on Environment and Development, created by United Nations and headed by Gro Harlem Brunotland as Chairman Brundtland‟s Report, Our Common Future Rio de Janiero – United Nation Conference on Environment and Development  Convention on Climate Changing (subscribed in New York, 9 May, 1992) Aalborg – 1° European Conference on Sustainable Cities  Aalborg Card Lisbon – 2° European Conference on Sustainable Cities  Plan of Action: Card of Action Hannover – 3° European Conference on Sustainable Cities  Local Sustainability plan for the 21st century EU 6° Action Plan; Environment 2010: „our future, our choice‟ Johannesburg – World Sustainable Development Summit. From Our Origins to the Future. Bruxelles – European Sustainable Development Strategy: seven main challenges. Siviglia – 5° European Conference on Sustainable Cities Copenhagen – 15° United Nation Conference on Climate Rio de Jainero – United Nations Conference on Sustainable Development

* Italy is home to some important moments for the establishment of sustainable development. In particular, we mention the stage in 1993 for the National Plan for Sustainable Development and the 1999 for the Conference of Ferrara: the establishment of the Italian Local Agenda 21 and the establishment of the Service for Sustainable Development at the Ministry of the Environment.

Naturally, corporate sustainability does not mean loss of importance in the creation of value and of adequate remuneration of risk capital contributors. On the contrary it is appropriate to emphasize the interdependence among stakeholder relation management, economic social and environmental responsibility, results (economic and otherwise), capability of obtaining consensus and resources. It is evident, in fact, a governance approach that aims at increasing the shareholders abilities of creating values over time through the exploitation of opportunities and management of social and environmental risks, which companies currently have to compare with. (Esty and Winston, 2008). A company oriented to sustainable development is clearly aware of its responsibilities towards different stakeholders and adopts methods and tools of governance aimed at improving its economic, social and green/ecologic performances. It is an approach based on a wide vision of responsibility, on a modern interpretation of the links between the longlasting company success and the equal composition of all stakeholders' interests. (Salvioni 2003; Salvioni e Bosetti 2006). The maintenance of satisfying level of effectiveness requires the development based on: assessment of stakeholders‟ expectations and their alignment with corporate strategies; transfer of the top management orientation in business conduct; verification of coherence between purposes, managerial objectives and actual results, optimizing the performances and the relations. On these basis, the codes of ethics and conduct are becoming more relevant (Schwartz, 2002; Valentine, Barnett, 2003; Stohl C., Stohl M., Popova, 2009; Kaptein, 2004, 2011), informing of the principles and values adopted for the corporate responsibility (Waddock, Bodwell, Graves, 2002) and conditioning the top-management‟s decision and the organisation. Moreover, the firms seek to design all the business activities in respect to principles of stakeholders, environment and future generations‟ protection. The codes of ethics, in fact, express the strategic value of global business responsibility. For these

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 reasons the effectiveness adoption require transparency, sharing, coherence of individual behaviours and control.

2. Methodology and Research Design The following paper aims to give testimony to corporate governance effectiveness in light of sustainable development. In fact, the article examine the code of ethics as a tool necessary for the corporate global responsibility implementation. In particular, the paper focus on three main questions: 1) What is the role of code of ethics for a proper management of relations with stakeholders and how do they treat the issues of social and environmental responsibility? 2) What are the dimensions of sustainability mainly applied by the firms and what are the relations between formal aspects and substantial workability of code of ethics? 3) What are the processes and tools used to ease regular, coordinated, efficient orientation to sustainable development and what is necessary to generate effectively the sustainable value? In relation to the importance conferred to the sustainable development by the EU, the analysis examines listed companies with the greatest market capitalization operating in different European countries, in order to verify the firms‟ behavioural uniformity and the effectiveness of sustainability policies. The following analysis shows some of the results of the research on sustainable development, risk management and internal control, with intent to find answers for the questions mentioned above. In particular, this paper analyses ten of the companies with the greatest market capitalization in Great Britain, Germany and Italy, studying the relation between the code of ethics characteristics and the corporate scandals regarding the firms mentioned (Table 2). The logic that stands behind the choice of focusing on ten companies with the greatest market capitalization, springs from their leadership status on respective stock markets: large dimensions, global scale companies, subjected to stronger regulatory measures and market controls that require transparency to stakeholders. The choice of three countries, on the other hand, allows to pinpoint the major differences in prevailing corporate governance models. In particular:  Great Britain, with the „outsider system‟, which contemplates only the monistic model of corporate governance;  Germany, with the „insider system‟, which acknowledge only the dualistic vertical system (with partners and workers‟ empowerment);  Italy, with the „insider system‟, which contemplates, since 2004, different corporate governance models, even if dualistic horizontal models are predominant; In order to evaluate the effectiveness of communication to stakeholders in a global perspective, the analysis of the company was based on data and information published online in English. In particular, reference was made to the code of ethics and/or of conduct, as well as the last report of corporate governance and the financial annual published report.

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 For the scandals involving some of the firms examined, the reference point is the press and other available information sources. Table 2: Companies under investigation (capitalization values at 28.03.2013) Name Eni Enel

ITALY Capitalization (MLN euro) 64.079,67 24.019,68

GERMANY Capitalization (MLN euro) SAP 74.891,49 Siemens 70.847,00 Name

Unicredit

19.373,13

Volkswagen

68.332,96

Assicurazion i Generali

19.064,92

Bayer

66.545,61

Intesa San Paolo

18.831,39

Basf

62.958,25

18.594,11

Allianz

47.973,52

18.439,77

BMW

44.150,28

Snam

12.065,86

Daimler

42.993,20

Saipem

10.622,08

Telecom Italia

10.299,21

Luxottica Group Tenaris

Deutsche Telekom Deutsche Bank

GREAT BRITAIN Name Capitalization (MLN euro) Bhp Billiton 154.466,74 Bp 135.192,71 Royal Bank of Scotland 132.908,05 Group Hsbc 131.261,42 Holdings British American 103.195,87 Tobacco Vodafone 91.766,60 Group Unilever 78.839,37 GlaxoSmith 74.526,41 Kline

35.461,62

Rio Tinto

56.999,25

28.253,49

SABMiller

52.036,33

3. Discussion and Findings 4. Code of Ethics and Sustainable Development The globalization of markets has brought: on the one hand, the affirmation of general principles of correctness in the company governance, often formalized in codes of ethics and conducts; on the other hand, the affirmed importance of sharing these principles with own stakeholders, with dissemination and participation of the organization and of main external partners. With reference to the transparency of the codes, it is relevant their edition in the company website clearly, precisely and comprehensive (Table 3), in addition to the subscription by the main operating stakeholders. Table 3: Level of transparency on the code of ethics Edition of the code of ethics/ ethics of Behaviour (in English)

Italy 100%

Germany 100%

Great Britain 90%

The orientation of sustainable development also involves the declination of principles and rules of behaviour with respect to compatible environmental performances and to different kinds of social actors, whom the company interacts with. In this regard, the analysis of the published codes highlighted the frequent presence of expressive variables of sustainability, even though with some qualitative differences between companies and countries (Table 4).

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 Table 4: Level of orientation to sustainability Italy Environment 60% Shareholders 90% Management, employees and associates 100% Suppliers and associates 90% Customers and consumers 90% Competitors 50% Local communities 70% Political organizations and unions 80% Authorities and Public Institutions 70% (*) Data referred to the 9 companies which have the code.

Germany 80% 50% 100% 60% 70% 70% 60% 60% 50%

Great Britain (*) 67% 44% 89% 67% 78% 78% 78% 100% 78%

The enhancement of ethic dimension of environment protection has increased in parallel with the affirmation of global responsibility, even though with significant differences related to the activity sector and to the connected ecological impact. The adoption of a governance approach, based on rules which take the sustainability into account, takes on a specific relevance with regard to the internal and external net of relationships in order to facilitate the creation of virtuous circles between the stakeholders' expectations, company behaviours and corporate results. Overall, the range of the stakeholders categories contemplated in ethic codes is quite large. This number is, however, sterile if we do not consider the specific dimensions which different principles are faced with, in relation to each category. In this sense, the link between standard privileged behaviours and relevant stakeholders' classes is significant. The role of the codes of ethics for the effectiveness of relationships with the stakeholders, depends on the relevant behaviour principles compared with the different social actors who interact with the company. With this regard, it is necessary to consider the standard behaviour for each category. a) Shareholders In the last ten years the European Union has implemented intervention in order to promote a corporate governance that protects shareholders' rights, facilitate relationships between shareholders and corporate governance boards and protect the third partiesi. In particular, UE has intervened on transparency promoting the improvement of the relations with the stakeholders and firstly, with the shareholders. The codes of ethics seem to reflect the european guidelines, provided that the standards behaviours which are privileged at the level of relationship with the stakeholders emphasise participation, transparency of information and information symmetry (Table 5). Table 5: Standard behaviours in the relations with the shareholders. Facilitate the participation Transparency of information Information symmetry and information management (insider trading, internal dealing, Market abuse)

Italy 50% 70%

Germany 0% 60%

Great Britain 0% 78%

90%

80%

78%

Most of the codes contains the rules of managing the external communication which must be true, comprehensive, timely and available. These features are not always cited in code of ethics but they sometimes relate references to truthfulness and/or timeliness of information. Substantially, it is common the reference to the need of respecting the rule that guides the treatment of price sensitive information and market communication.

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 Typically Italian is the declaration of promoting the participation of shareholders in the company life. b) Management and employees The standard behaviours in relationship with managers and employees mainly regard: healthcare and safety at work; promotion of human resources training; adoption of criteria for selection and carrier based on the logic of merit; the appreciation of the differences among people; the prohibition of harassment and bullying/mobbing (Table 6). Table 6: Standard behaviour in relationship with management and employees. Healthcare and safety at work Training promotion Merit system criteria and carrier Policy against discrimination Policy against harassment and bullying

Italy 90% 40% 90% 90% 70%

Germany 80% 10% 30% 70% 40%

Great Britain 78% 22% 44% 67% 67%

It is useful to consider that, as regards the involvement in the employees' governance, Germany differs from Italy and England. It is a country where co-management exists, for which workers are involved in the mandate of governance. This situation shows a different relationship with the employees, that doesn't highlight relevant discrepancies in the standard behaviour. In general, it is frequently the respect of the Universal Declaration of Human Rights rejecting child labour and highlighting the commitment to promote better working conditions. A company (Enel) establishes also the policy of intervention in case of reorganization of work activities, safeguarding the value of human resources through training and/or professional retraining activities and uniform distribution, where possible, of reorganization of tasks. 70% of UK societies (against 50% Italian and 20 % German) points out the problem of alcohol and drugs abuse. In some cases the companies are willing to provide the necessary medical and psychological assistance, besides highlighting the negative effects on health and possible consequences in terms of sanctions, when the problem is reflected at the workplace. Suppliers Standard behaviours in relationships with suppliers tend to emphasize the criteria for selecting suppliers and the willingness to share their ethics within the supply chain (Table 7). c)

Table 7: Standard behaviour in relationship with suppliers Criteria of selection of suppliers Sharing of code of ethics

Italy 90% 60%

Germany 50% 40%

Great Britain 56% 67%

As regards the choice of suppliers, the reference emphasizes the criteria of transparent, efficient and effective selection, based on specific skills aimed at establishing and maintaining these long-term collaborations. In this regard, Enel also states the adoption of procedures that ensure the rotation of people responsible for supply. Moreover, given the critical nature of relationship with suppliers, some companies adopt to specific codes.

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 d) Customers and consumers Key principles in managing the relationships with customers are mainly related to the correctness of commercial policies, quality of products/services offered as well as to the completeness and accuracy of information provided (Table 8). Table 8: Standard behaviour in relationship with customers and consumers. Correctness of commercial policies Quality of not harmful products Completeness and accuracy of products information

Italy 80% 50%

Germany 60% 20%

Great Britain 56% 11%

70%

50%

33%

Competitors Relationships with competitors are mentioned in 50% of Italian codes, 70% of German codes and 67% UK codes (Table 9). e)

Table 9: Standard conduct/behaviour in relationships with competitors Fair competition

Italy 50%

Germany 70%

Great Britain 67%

Relationships with competitors are often fairness oriented and appreciate the competitive success through the merit of their results. It is often referred to anti-trust rules and prohibition to implement agreements with competitors for fixing prices or achieving goals otherwise not pursued. Sometimes it is referred to policies that prohibit the abuse of dominant position, the imposition of restrictions to suppliers and customers at the expense of competition, as well as the realization of joints and acquisitions which may harm the image and the reputation of the company. Local communities Relationships with local communities are ruled in the code of ethics, respecting the local rights and with awareness of the existing relationships (Table 10). f)

Table 10: Standard behaviours in relationships with local communities Respect of local rights Philanthropic activities

Italy 60% 60%

Germany 30% 50%

Great Britain 60% 40%

The involvement of local communities in business activities and the promotion of relative consensus are possible through the companies willingness of promoting the territory, even with philanthropic activities. In this regard six out of ten Italian societies declare it. g) Political organizations Relations with political organizations are often accepted in codes, especially in the Anglo-Saxon outsider systems (Table 11). Table 11: Standard behaviour in relations with political organizations Policy of distribution of donations to political parties.

Italy

Germany

Great Britain

70%

60%

100%

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 As regards the relations with the political organizations, and in particular declarations about the behaviour of companies towards financing the parties are relevant. These declarations are commonly present, especially in the codes of ethics of UK companies, and tend to report the exclusion of the company from any form of financing the political parties. In some companies, however, financing the political party is accepted in compliance with specific and/or internal regulatory limits, not expressed in the codes of ethics. The management of relationships with the political parties requires respect of each worker's political idea, to whom, according to his/her role, is precluded to express an opinion which, even indirectly, can be traced to the company. h) Authorities and Public Institutions With reference to the relations between companies and authorities and public institutions, the analysis of codes of ethics has marked the presence of declarations about the necessity of correctness, that must be maintained in the management of the relation and of transparency of information (Table 12). This principle is often accompanied by the definition of possible nature of the relationship, mainly due to the need to bring own interests and those of category to the attention of the authorities, cooperating constructively for the development of legislation and regulation. Table 12: Standard behaviour in relationships with authorities and public institutions Correctness in relationships Competence reserved to specific functions

Italy 70% 60%

Germany 50% 10%

Great Britain 67% 33%

Six out of ten Italian companies have also stated that the competence in managing these relations is exclusively reserved to specific functions, precluding every unauthorized person to establish relations with authorities and public institutions. The analysis of codes of ethics underlines even values and rules of conduct which are transversal to the different categories of stakeholders (Table 13). In this field it may be considered: policies which regulate the exclusive use of corporate assets and protection of tangible and intangible assets of the company; anti-money laundering and anti-terrorism policies, which need constant attention and monitoring activities from all operators involved; the regulatory policies of conflicts of interests, sometimes also with examples of possible cases; anti-corruption policies, active and passive, which commonly prohibit giving or accepting gifts, donations and benefits, except modest value gifts; the security policies of data and information, specifying privacy and storage requirements. Table 13: Other standard behaviour Policy of use and protection of the corporate's assets Anti-laundering policy Anti-terrorism policy Policies for regulating the conflicts of interests Anti-corruption policies Protection of privacy and security of information

Italy

Germany

Great Britain

70%

80%

89%

10% 10% 100% 80% 100%

40% 20% 100% 100% 100%

33% 22% 100% 100% 89%

Standard behaviours are flanked by instructions for the proper implementation of the code (Table 14), reference point for risk management system and internal control.

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 Table 14: The implementation details of code conditions Promotion of the knowledge and diffusion of the codes of ethics Details of the reference organization and supervision Forecast of reporting system and complaint Penalty system

Italy

Germany

Great Britain

70%

50%

56%

90%

90%

78%

80% 70%

80% 90%

100% 78%

4.1 Relations between code of ethics and effective sustainability Typically, the best practices of corporate governance are distinguished by the code of ethics implementation. The code of ethics, in fact, regards corporate responsibility‟s fundamental values and principles, consequently shared in order to integrate business activities with interests of all the stakeholders. The firm is called to protect such interests and to preserve the environmental resources for the future generations. The code of ethics, then, concerns a number of essential rules for the corporate sustainable development. Our research confirms the ordinary character of code of ethics usage, but on the other hand spotlights the issue of numerous frauds and poor management in reference to the companies with the greatest market capitalization operating in three European countries. The main public information sources confirm a poor effectiveness of code of ethics, highlighting a discrepancy between the firms‟ formal statements and substantial behaviours. The tables below cite major corporate scandals articulated as follows:  Country where the firm is listed;  Corporate governance model;  Type of business. The first one allows to understand the nature of relations between corporate behaviours, regulations and „insider‟/„outsider‟ models (Table 15). In fact, the Anglo-Saxon countries differ by: the Common Law system (legal order according to which the law is developed by judges through decision of courts or similar tribunals, and not by codes, laws, rules developed by national authorities); a major openness of the market to the risk capital, which underlines shareholders controlling function (outsider system or market oriented). In Germany and in Italy, where the Civil Law is in force (laws and norms are subjected to codes) and the companies are characterized by shareholder concentration (insider system), the market has a poor power control, making the corporate governance systems of control extremely relevant. Table 15: Corporate Scandals Respect to the Country where the Firm is Listed Country Great Britain Germany Italy

Companies Involved BP-Shell; Glaxo; HSBC; RBS; Unilever; Vodafone Deutsche Bank; Siemens; Volkswagen Eni-Saipem; Intesa San Paolo; Unicredit

Value % 60% (6 out of 10) 30% (3 out of 10) 30% (3 out of 10)

A high scandal rate is particularly evident in case of British companies. Although only the biggest ten companies were analysed, the study induces to a deep reflection regarding

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 possible discordances between the stock market control and the affirmation of stakeholder relation management (Table 16). In Italy, where the companies can choice among three different corporate governance models, it‟s useful underlying behavioural anomalies in reference to the governance model adopted (monistic, dualistic vertical and horizontal). Table 16: Corporate Scandals Respect to the Corporate Governance System Corporate Governance Model Monistic model Dualistic vertical Dualistic horizontal

Companies Involved

Bp-shell; Glaxo; HSBC; RBS; Unilever; Vodafone; Deutsche Bank; Volkswagen; Intesa San paolo; Siemens Eni-Saipem; Unicredit

Value %

54,54% (6 out of 11) 36% (4 out of 11) 25% (2 casi su 8)

In particular, 11 out of 30 companies analysed adopts the monistic system of governance (10 listed in UK and 1 in Italy). The dualistic vertical system, on the other hand, is present in 11 out of 30 companies (10 listed in Germany and 1 in Italy) and the dualistic horizontal is present in 8 out of 30 (all listed in Italy). The figure below summarises the information present in table 15 and 16 in order to underline the relation existing between the corporate scandals frequency and the country of origin, the governance model and legal systems (Figure 1). Figure 1. Corporate scandals respect to the corporate governance system, the system of law, control and the country of listing

The study shows that some industries are particularly exposed to the cases of corruption and irresponsible behaviours or, in other words, if, for some industries, such actions can have particularly negative consequences. Thus, the table 17 verifies the relation between the industry of origin and corporate scandal rate (Table 17).

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 Table 17: Corporate Scandals and the Industry of Origin Industry of Origin Manufacturing Energy Banking Servicies Chimical - pharmaceutical

Companies Involved Volkswagen; Siemens Bp-Shell; Eni-Saipem HSBC; RBS; Deutsche Bank; Unicredit; SEB Unilever; Vodafone Glaxo

Value % 28,57% (2 out of 7) 25% (2 out of 8) 100% (5 out of 5) 28,57% (2 out of 7) 33,33% (1 out of 3)

As it was easily predictable, the banking reveals the highest scandal rate (100% of cases). The banking seem to be characterized by an evident discrepancy between the ethical and moral values declared and actual behaviours. This sector struggles with a high corruption rate, evasions, fiscal frauds, destined to favour only few, majority stakeholders and to disadvantage the minority stakeholders, saving, growth in general. The integration of data from the table 15 and 17 shows the relation between the sector and the stock market of origin (Figure 2). Figure 2. Corporate scandals respect to the sector and the country of listing

The analysis shows that the codes of ethics remain only formal declarations. A conscious and rational governance not only transfers values and principles of sustainability to the firm‟s behaviours and its results system, but also goes beyond a mere diffusion and formalization of codes of ethics and of conduct. To achieve that, it is necessary to develop productive behaviours focused on the risk control and on managing behaviours of all the organization‟s members, in particular in reference to the stakeholders relation management. The codes of ethics, in fact, seems to assume a poor relevance for the corporate sustainability promotion if a correct formal structure doesn‟t occur integrated with strategies and processes which assure a constant workability. It request especially the ethic culture diffusion and sharing of related values and principles; definition and integration of critical success dimensions in relation to economic, environmental and ecological responsibilities; identification of relevant ethical parameters and control of their observance.

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 5. Conclusions In most of the industrialized countries, frequently the firms adopt well-structured code of ethics and of conduct, without particular differences in reports and regard of different legal and markets contexts and of diverse governance models. Typically, the differences stand in the codes‟ workability. It is often, in fact, that the firms don‟t respect the global responsibility, favouring only specific classes of stakeholders or their sub-groups, also in relation to manufacturing delocalisation processes. In reference to the firms analyzed, although the codes of ethics are usually wellstructured and based on the sustainability principles, the limiting character of codes falls back into a high scandals rate. It becomes impossible, then, to affirm that the governance approach is by force based on the wide responsibility system or on the relation between a durable success and a fair composition of stakeholders‟ interests. The code of ethics reflects the strategic importance of global responsibility. It‟s role, then, is to promote and spread values and principles that generate behaviours fundamental for the sustainable value creation. The code of ethics, if well-structured, sets principles and behavioural rules retained essential respect to compatible environmental performances and different actors with whom the firm interacts. It is evident, however, that rarely does the ethical culture affect corporate behaviours: it is necessary, then, to actuate processes and tools that would systematically support the sustainability. The operative effectiveness of codes requires, in fact, transparency, sharing, coherency of individual behaviours and control. In particular, the exploitation of opportunities and economic, social and environmental risk management require to redesign internal control systems, which for many years had privileged purely financial objectives. The optimization of corporate potential in terms of sustainable value creation is significantly influenced by: strategic value of economic, social and environmental responsibility integration; internal diffusion and sharing of sustainability-oriented values and principles; set up of integrated and complete risk management systems (Kaplan, Mikes, 2012; Salvioni, 2012); introduction of operative procedures designed with awareness of risk related to possible violations in the firm‟s workability. Risk management and internal control system: procure fundamental elements for the firm‟s decision-making system; empower the intermediation between stakeholders expectations and managerial behaviours; encourage the firm to act in accordance with law and internal regulations; guarantee a completeness and transparency of disclosure (Salvioni, 2010). An efficient governance and control system represent, for all the companies, a necessary condition for the risk minimization, in the long run. The validity of internal risk and control management systems for a systematic, coordinated and efficient sustainable development is conditioned by the ability to manage proactively the complexity the firms has to struggle with. Thus, such condition requires an

Proceedings of 22nd International Business Research Conference Melia Galgos Hotel, Madrid, Spain, 9 - 10 September 2013, ISBN: 978-1-922069-30-6 integrated approach, which appraises the ethical culture and global responsibility on the corporate governance‟s and the network‟s level. The internal control system, then, should represent an important tool activating responsible managerial behaviours: a necessary condition for the optimization of sustainable value creation processes. In this context, the codes of ethics represent a prerequisite of sustainability, necessary, but not sufficient, to guarantee an efficient realisation. Barclays, for instance, after the Libor scandal, not only dismissed the topmanagement and tried to recover after multi-million sanctions, but also decided to develop among its employees an ethical behaviour spirit (numerous trainings were organised in order to make the staff rediscover values like respect, integration, service, excellence, good administration) and to apply an awarding system for the ethical code observance.

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