How should governance address the ethics of multinational subsidiaries across different regulatory environments?

• A. Standardize a global code of ethics, ensure local policies comply with local and international rules, and implement cross-border oversight and reporting.
• B. Each country acts independently with no alignment.
• C. Only focus on global code with no local adaptation.
• D. Delegate all ethics to local managers without oversight.

Answer: (A)

The governance of ethics in multinational subsidiaries relies on a balance between global standards and local realities, with clear oversight. A global code of ethics establishes universal expectations—such as integrity, anti-corruption, fair dealing, and whistleblower protection—that apply to every subsidiary. Local policies then tailor and implement those standards to fit local laws, regulatory requirements, and cultural context, ensuring compliance and practical enforcement where operations occur. Cross-border oversight and reporting link the layers, allowing consistent monitoring, auditing, and escalation of issues across the organization. This approach reduces compliance gaps, supports coherent decision-making, and protects the company’s reputation and long-term value. Relying on independent national actions, overemphasizing a global code without local adaptation, or leaving ethics entirely to local managers without oversight would create governance gaps and increase risk.