A robust code of corporate conduct forms an important component of governance practices. A well implemented code of conduct may reduce the risk of inappropriate behavior. Moreover, promotion of ethical and responsible decision making and conduct, will lead to the development of practices that take into account a company's legal obligation and enhance confidence in the company's integrity.

The role of boards is critical because the ultimate responsibility of an organization's activities resides with them. Hence it is important that the board and senior executives are committed to a code of conduct which is backed up by well-defined core values. Regulators play a role, but it is up to the board to impose a culture of risk assessment, compliance and ethical behavior in an organization. Policies such as a whistleblower protection policy to protectemployees' rights if they report suspected wrongdoings can be seen as a strong signal in support of ethical decision making.

Notwithstanding, it is impossible to regulate for ethics or common sense. Corporate governance sets the tone, but it is important that individuals take responsibility for doing the right thing.

Question

The paragraph above argues that it is impossible to legislate for ethics. Do you agree, and if so, does this mean that regulation is ineffective?