Ethical Governance

Do you remember the CrowdStrike global IT outage in 2024?

In July 2024, cybersecurity company CrowdStrike released a faulty software update to its Falcon security platform. Instead of protecting systems, the update caused millions of Windows devices worldwide to crash, disrupting airlines, hospitals, banks, emergency services, government offices, and businesses across several countries. The incident became one of the largest IT outages in history.

The crisis exposed serious weaknesses in software testing, change management, risk management, and organizational oversight. Although the outage resulted from a technical error rather than a cyberattack, its global impact highlighted the ethical responsibility of technology companies to ensure rigorous quality assurance before deploying critical updates. CrowdStrike acknowledged the mistake, maintained transparency, investigated the root cause, and introduced stronger testing and governance mechanisms to restore stakeholder confidence.

Such a crisis could have been avoided if the organization had prioritized ethical governance—a framework of integrity, accountability, transparency, responsibility, and effective risk management that ensures the highest standards of organizational conduct. Ethical governance is not merely about complying with legal or regulatory requirements; it is about making morally responsible decisions, protecting stakeholder interests, and maintaining public trust even during crises.

What is Ethical Governance?

Ethical governance refers to the application of ethical principles and values in the administration and management of public affairs. It ensures that the actions of public officials align with moral and ethical standards, promoting fairness, justice, and integrity.

Governance vs Good Governance vs Ethical Governance

Governance: According to the UNDP, Governance refers to the exercise of political, economic and administrative authority to manage a country’s affairs. It involves decision-making processes, policy formulation, and the implementation of laws by governments, institutions, and individuals in positions of authority.

Good Governance: According to the World bank, Good governance is the qualitative aspect of governance which involves the manner in which power is exercised in the management of a country’s economic and social resources for development.

Good Governance: Key Principles

●       Participation: Encourages the involvement of all citizens in decision-making processes.

●       Rule of Law: Ensures that laws are applied fairly and consistently to protect the rights of all citizens.

●       Transparency: Provides citizens with access to information to hold the government accountable.

●       Responsiveness: Requires governments to address the needs and concerns of the public efficiently and effectively.

●       Consensus-Oriented: Involves mediating differing interests to achieve the broadest possible consensus for the common good.

●       Equity and Inclusiveness: Ensures that all members of society feel included and have equal access to resources and opportunities.

●       Effectiveness and Efficiency: Ensures that institutions make the best use of resources to meet the needs of society.

●       Accountability: Holds public officials responsible for their actions and decisions, ensuring they meet the public’s expectations

Ethical Governance: It goes beyond the procedural aspects of good governance by integrating moral principles into decision-making processes. It prioritizes values such as integrity, honesty, fairness, and justice, ensuring that all actions and policies are aligned with ethical standards.

Ethical Governance in Public Sector: Key Principles

●  Integrity: Acting with honesty and strong moral principles in all public dealings. Public officials avoid conflicts of interest and disclose any potential conflicts transparently, ensuring trust in their integrity.

●      Transparency: Making government actions and decisions open and accessible to the public.

For example, publishing procurement and expenditure data through the Government e-Marketplace (GeM) and the PM Gati Shakti National Master Plan portal promotes transparency and allows public scrutiny.

●      Accountability: Holding public officials responsible for their actions and decisions.

For example, Action taken by the Election Commission and anti-corruption agencies against public officials for violations of the Model Code of Conduct or corruption ensures accountability.

●      Fairness and Equity: Ensuring that all citizens are treated equally and justly. 

For example, Implementation of the Nari Shakti Vandan Adhiniyam (Women’s Reservation) and reservation policies for SCs, STs and OBCs promotes the inclusion of underrepresented groups, ensuring fair treatment.

●      Responsiveness: Being responsive to the needs and concerns of the public.

For example, Platforms such as CPGRAMS, the PMO Public Grievance Portal and integrated state grievance portals enable citizens to report grievances and receive timely responses, demonstrating a commitment to responsiveness.

●  Rule of Law: Ensuring that all actions by public officials are within the boundaries of the law. Consistently enforcing laws without favoritism or bias maintains the rule of law.

●      Ethical Leadership: Leaders setting a good example by adhering to high   ethical standards and inspiring others to do the same.

Ethical Governance in Private Sector: Key Values and Principle

According to the Council of Europe, the following are key values and principles of ethical business conduct:

●      Rule of Law: All rules and regulations must be adopted through lawful procedures and enforced impartially.

●      Ethical Conduct: Efforts should be made to prevent and combat corruption, and conflicts of interest should be avoided.

●      Openness and Transparency: Decisions should be made according to clear rules, with information about these decisions and their outcomes accessible to all stakeholders.

●      Competence and Capacity: Continuous improvement of performance and procedures should be encouraged to build capacity and achieve better results.

●      Sustainability and Long-Term Orientation: A broad and long-term perspective should be taken to ensure sustainability and consider future generations in current policies.

●      Sound Financial Management: Financial management should be accurate, prudent, and involve proper risk assessment and management.

●      Accountability: Decision-makers should take responsibility for their actions, with effective remedies in place for any maladministration.

Importance of Ethical Governance:

●      Social Justice: Ethical governance aligns with the constitutional vision of social justice, aiming to reduce inequalities and ensure equal opportunities for all.

●      Public Confidence: By upholding truth and transparency, ethical governance fosters trust and cooperation between the government and citizens.

●      Upholding Human Rights: Ethical governance emphasizes the protection of basic human rights, particularly for marginalized and vulnerable groups.

●      Efficiency and Integrity: It ensures that public resources are used effectively and ethically, reducing the risk of corruption and mismanagement.

Ethical Governance: Way Ahead

●      Create a Code of Conduct and Ethics Policies: With multiple parties involved, ethical views may differ. A clear code of conduct and ethics policies help to set expectations and prevent decisions that could damage the company’s reputation or contradict its values.

●      Use Monitoring and Reporting Mechanisms: Regular audits, whether third-party or internal, can help monitor progress. A robust reporting mechanism is also essential for detecting and addressing any ethical breaches.

●      Whistleblower Protection: Whistleblowing is a powerful tool to expose and prevent corruption. To encourage whistleblowers to come forward, their safety must be ensured.

●      Data Protection: With the vast amount of customer data companies collect, it’s an ethical responsibility to ensure its protection. Investing in robust cybersecurity measures is one way to prevent data leaks.

●      Environmental Sustainability: Companies can reduce their environmental impact by purchasing carbon credits, using sustainable materials, sourcing locally and supporting environmental nonprofits.

●      Diversity, Equity, and Inclusion: Ethical organizations must ensure that the decisions are merit-based and that everyone has equal opportunities.

●      Labor Practices: Organizations should foster a fair and supportive environment for employees to ensure healthy and safe working conditions.

Previous Year Questions

Q. What do you understand by the terms’ governance’, ‘good governance’ and ‘ethical governance’?

Q. Explain the term social capital. How does it enhance good governance?

Q. An independent and empowered social audit mechanism is an absolute must in every sphere of public service, including judiciary, to ensure performance, accountability and ethical conduct.

Question for Practice

Q. What are the core principles of ethical governance, and how do they differ from those of good governance? (10 marks, 150 words)

Q. “The transition from human-centric oversight to automated data tracking has streamlined administrative efficiency, yet it risks encouraging a culture of superficial, checkbox compliance if the framework is not anchored in deep internal accountability.” Critically evaluate this statement with contemporary examples. (10 Marks, 150 Words)

Case Study

You are the District Magistrate (DM) of a coastal district in Kerala, where a large-scale infrastructure project, the Kerala Coastal Gateway, is being developed with significant investment from a consortium of Indian and foreign companies. The project, aimed at boosting the local economy through enhanced port facilities, logistics hubs, and tourism infrastructure, is a key component of both the state’s economic

development plan and a strategic element in India’s trade and diplomatic relations with East Asian countries.

However, the project has faced severe opposition from “Coastal Lives Matter”, an influential NGO that has raised concerns about the project’s environmental impact, particularly on marine ecosystems and the livelihoods of local fishing communities. The NGO claims that the project violates environmental laws and threatens the cultural heritage of indigenous coastal tribes. They have organized protests, legal challenges and international campaigns to halt the project.

The situation escalates when intelligence reports reveal that Coastal Lives Matter has been receiving substantial funds from foreign entities that might have geopolitical interests in undermining India’s economic and strategic initiatives. These reports suggest that the NGO is using these funds to fuel the protests, organize violent demonstrations and influence legal outcomes by coercing local judicial officers.

In response, following directives from the State Home Secretary, you issue notices to all NGOs operating within your jurisdiction, mandating a thorough review of their financial activities and sources of funding. This move triggers a backlash from various quarters, including the local media, politicians, and community leaders, who accuse you of stifling civil society and acting under political pressure.

The situation becomes more complex when you instruct the police to file an FIR against the leaders of Coastal Lives Matter for allegedly accepting illegal foreign funds and inciting violence. Following this,

several NGOs approach you, pleading for leniency and warning that stringent actions could force them to shut down, leading to job losses and the suspension of crucial social services in health, education, and poverty alleviation. Concurrently, local community representatives submit a petition demanding the withdrawal of the FIR, claiming that the NGO is merely protecting their rights and environment.

Amidst these developments, you receive anonymous threats, warning you to back off from your investigations. Despite these challenges, some colleagues within the administration advise you to proceed cautiously and ensure that all actions are legally sound and ethically justified.

a)    What are the ethical issues involved in the above case?

b)    What are the ethical dilemmas being faced by you?

c)    Suggest preventive measures and formulate a policy guideline aimed at preventing threcurrence of a similar situation  (20 Marks, 250 Words)

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