Global Ethics Day 2025, with the theme “ethics reenvisioned,” is being celebrated today, Oct. 15, 2025. Today presents an ideal opportunity to consider that ethical leadership is more than simply doing the right thing; it’s about doing the smart thing, as integrity is the ultimate competitive advantage. CFOs can be a beacon of ethical behavior by preaching the importance of ethics in the workplace and infusing ethics across the entire organization.
Ethical leadership is a leadership style grounded in moral principles and universal values like integrity and respect for others. When making decisions, ethical leaders consider the common good of their organization and the community, not just personal self-interest or the bottom line. Such leaders, moreover, tend to be role models, shaping their organization’s ethical environment and influencing the ethical behavior of others.
A strategic differentiator
Many mistakenly believe that the purpose of business ethics is compliance or that ethics is a set of rules to follow. Ethical leadership is actually strategic leadership. Embedding ethics in your organization’s culture, strategies and overall decision-making processes can be a competitive advantage in the following areas.
Brand reputation. If you need to replace the roof on your building, will you engage a contractor known for using inferior materials, poor workmanship and frequent billing issues? No, of course not. The contractor’s reputation is an important consideration. It can take years, even decades, to build a company or brand known for high-quality products and services, top-notch customer support and general trustworthiness. However, once you have, you will enjoy a distinct competitive advantage over your competitors who lack such a reputation.
Governance. Good governance entails effective decision-making, risk management and oversight. As a small business CFO, I appreciate having independent board directors who ask the tough questions and challenge our assumptions. Although it can be very uncomfortable when one of your directors asks an unexpected but totally relevant question, the ensuing discussion invariably leads to better decisions.
Talent. Retaining current employees and attracting new hires is much easier if you build a culture of inclusion and respect, a culture people want to be part of. Many years ago, as a newly minted MBA, I was recruited by Campbell Soup. It was easy to say yes, and to stay for many years.
Innovation. If you are seeking innovation, whether smaller continuous improvement suggestions or breakthrough ideas to change the course of the company itself, ensure you promote openness, creativity and risk-taking. And recognize and reward those who are your innovators.
Business sustainability. To ensure long-term business sustainability and value creation, you need responsible stewardship. That is, ethically and responsibly manage your assets, people and other resources. Review current operations, simplifying, streamlining and building in best practices. And review your policies and procedures, ensuring they are practical, efficient and effective. By increasing capacity at a lower cost, you can grow the business and save money.
Ethical leadership, therefore, can indeed be a strategic differentiator, but caution: One ugly incident handled poorly or outright unethically can severely damage the fine reputation that took years to build.
Enablers of an ethical culture
The following are five ways to build an ethical culture within your organization:
1. Tone at the top. Define your organization’s values, operating philosophy and standards of conduct, expressing these expectations in value statements, ethical codes, company policies and communications. Then, importantly, “walk the walk,” ensuring your actions and behaviors reflect those you expect of the broader organization.
2. Code of conduct. Formally document your organization’s business code of conduct, train employees in how it applies to real-life situations and require them to acknowledge their understanding and acceptance of it.
3. Conflict of interest policy. Specifically clarify your policy regarding conflicts of interest — situations where an employee’s professional responsibilities and personal interests may conflict — providing examples, outlining steps to be taken if an actual or perceived conflict arises and highlighting potential consequences of being out of compliance.
4. Governance structure. Establish a framework of rules, processes and leadership oversight. Formalize delegation of authority related to routine purchases, one-time expenditures and capital investments. And ensure effective segregation of duties, clearly defining roles, training employees on their responsibilities and then holding them accountable.
5. A “speak up” culture. Over 40% of occupational fraud is detected by a tip, with employees supplying most of them. Create a “speak up” culture where employees are comfortable sharing their concerns, ideas and mistakes without fear of reprisal. Establish a whistleblower hotline, and commit to acting on the feedback received.
The cost of ethical lapses
Ethical risks are business risks, and ethical failures are business failures. In November 2024, for example, Macy’s announced that an employee intentionally hid ~$154 million in delivery expenses. Macy’s also said it would be delaying the full release of its third-quarter earnings report pending completion of an independent investigation and forensic analysis of the irregularity. Macy’s shares subsequently fell more than 8% in pre-market trading due to this surprise announcement.
Similarly, Boeing faced a scandal during 2024, though its issues were more pervasive. The most notable incident related to Alaska Airlines Flight 1282, a Boeing 737 Max that experienced a door plug blowout shortly after takeoff. The FAA grounded 171 planes after the incident. The FAA also proposed $3.1 million in civil penalties for multiple safety and quality-system violations. Boeing’s stock tumbled more than 30% during 2024.
The significant cost of an ethical lapse is real, but so is the upside to creating a culture driven by ethical leadership. Indeed, over the five years from January 2020 through 2025, those honored as the World’s Most Ethical Companies 2025 outperformed a comparable index of global companies by ~7.8%.
As CFO, you can be a beacon of ethical behavior, so shine the light on potential ethical blind spots, foster accountability throughout the organization and gain a strategic advantage through ethical leadership.
