Federal guidelines are the only reason that an organization needs to consider its ethical practices.

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Ethics in business is guided by more than just legal mandates. Federal guidelines help set minimum standards and can shape expectations, but they aren’t the sole reason organizations choose to act ethically. Companies also operate based on internal values and mission, respond to what customers, employees, communities, and investors expect, and manage risks that could damage reputation or long-term success. Ethical practices often go beyond what the law requires to protect the organization’s trust, viability, and brand. So the statement is not correct because ethics encompass much more than federal guidelines alone.