Why being ethical is a must for startups

What exactly does ‘ethical’ mean when it comes to business? Some would say it means that the company is environmentally friendly in their business practices. However, this term can also extend to how employees and suppliers are treated, such as avoiding fraud and exploitation.

We’ll be taking a look into why being ethical should no longer optional, but a must for any startup.

What is an ethical business?

Early on this year, Ethisphere announced their lineup for the most ethical companies of 2021, which you can explore here. From the list of honorees, five companies were based in the UK. So what makes these businesses special?

They were able to demonstrate outstanding ethical business practices.

Taking Nationalgrid for example, their Supplier Code of Conduct states that they take all necessary precautions to help protect the health of their employees, as well as the conditions of the environment they work in. Not only this, but they expect their suppliers to also adhere to ethical guidelines, like protecting the biodiversity of the environment they work in.

Under the umbrella term of ethics, a business that wishes to take on these values must consider the well-being of their employees, the environment, as well as the ethical practices of their suppliers. 

Why do startups choose an ethical approach?

Profits are essential for the existence of a business clearly, but they often don’t seem to be the sole reason for its existence. Founders are interested in maximising total value creation for employees, customers and suppliers. Startups are making positive impacts on society and the environment, on an equal footing with profits.

Tak Matsuday Crest Legal

From a pragmatic point of view, ensuring that your business adheres to ethical guidelines from the outset helps prevent any lapses in values that may occur over time. In doing so, you can avoid legal repercussions that may come from poor treatment of staff or damage to the environment.

Another reason to choose an ethical approach concerns the marketing of your business. Many consumers look for the label of an ‘ethical company’, so by building and branding your company in such a way, you tick this box.

What are the benefits?

According to Zahir Accounting

Consistent ethical behavior significantly increases the positive image and as consideration to potential investors and shareholders. A business must be committed to operating an ethical foundation relates to employees treatment, respect the environment and create fair market practices.

Consumer satisfaction

One aforementioned benefit of being an ethical company is your positive impact on your consumers. Not only do they consider you a business of integrity, but they can be rest assured that the products they are purchasing derive from ethical sources.

Benefiting employees

Building a positive reputation with your workforce is a vital step, which is another reason why startups should consider ethical business from the outset. Employees want to work for an ethical company, knowing that the work they do has a positive benefit not only for them but for the consumer and environment. 

Promoting ethical treatment of suppliers

Conducting your business with ethical suppliers and treating your suppliers well is an important part of being an ethical business. Ensuring that your suppliers are not exploited or manipulated in any way is crucial to building your reputation as an ethical business.


By cementing good ethical practice into the foundation of your startup from the get-go, you arm yourself against any potential incidents, as well as setting your newfound company apart from your competitors. Treating your employees well, as well as your suppliers is a fundamental component of being an ethical business.

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